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Issue ID: 111527
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service tax on freight and cenvat credit thereon

Date 20 Feb 2017
Replies 10 Replies
Views 1480 Views
Asked by
Place of removal determines inclusion of freight in assessable value, affecting excise duty and cenvat credit eligibility.
In consignment sales the place of removal controls whether freight and commission from factory gate to the agent's depot are included in the excise assessable value and whether cenvat credit may be availed. A consignment agent is an agent, not a customer, so discounts and commissions are distinct; converting the agent into a dealer shifts the place of removal to the factory, alters the transaction from stock transfer to taxable sale, may make the dealer responsible for freight, and could permit service tax credit on freight, subject to input credit rules and legal developments. (AI Summary)

Dear Experts,

We are selling our goods through consignment agent and bear all the expenses like freight and commission. We are availing cenvat credit on freight and commission up to place of removal means up to consignment agent godown. By doing this, we are paying excise duty on such freight and commission because our price is inclusive of freight and commission. Now, we want freight should be bear by our consignment agent and take service tax credit theron. Further we want to given discount on invoice in place of commission. By doing this, we can save excise duty on such freight and commission. What will be the legal implication by implement this procedure. Please suggest.

Thanks & Regards

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