CENVAT Credit of Freight out ward

[Pradeep Jain]

Dear Sir,

 

We are availing CENVAT Credit of Service Tax on Freight out ward on despatch of finished goods.

Delivery condition is FOR . We are mentioning the Freight amount separately in the Excise Invoice and no excise duty is being charged on the Freight amount.

After making the freight we are paying the Service Tax on Freight out ward and availing the CENVAT credit on the basis of the Service Tax payment challan  since 2005.

In view of AG audit para Central Excise Department has issued us  SCN from 2008 to Sept.11 for availment of the said CENVAT Credit.

Pl. confirm the legal position about the availment of CENVAT Credit on the Freight out ward.with leatest judgements.

 

Best Regards

 

Pradeep Jain

[YAGAY andSUN]

If your place of removal (FOR) is customer's destination then you may avail the CENVAT credit on GTA Services.  But in this scenario, freight up-to the destination will be includible in assessable value, please refer Section 4(3)(c)(iii).

CCE Vs. Punjab Tractors  2010 (7) TMI 392 - CESTAT, NEW DELHI = (2010) 259 ELT 123 (CESTAT).

 

[NANDKUMAR SAGWEKAR]

Dear Mr. Pradeep Jain

Where  excisable goods are cleared from  factory on payment of duty but delivery and property of the goods is transferred to the buyer at his destination , then the place of removal is destination of buyer , all expenses incurred till goods reaches to the buyers destination like outward freight , insurance etc are form the part of assessable value , that means the outward freight / insurance to be added in the assessable value and excise duty to be paid on that portion also as sales get completed not at  factory but at the destination of buyer where  owneship of goods and risk associated with the same are transferred from seller to buyer.

Such freight outward is input service and seller after making payment of freight , has to pay the service tax and thereafter can take the cenvat credit as input service.

Also refer the case laws on this subject

 

Thanks

 

ANAND SHEMBEKAR

CELL NO 9421187122

 

AI Summary

Place of removal determines assessable value; freight is an input service and CENVAT credit permitted after payment of service tax. When the place of removal is the buyer's destination, outward freight up to that destination is part of the assessable value and must be included in excise valuation. Outward freight paid to transporters is an input service; after payment of service tax the seller may avail CENVAT credit on that service, consistent with authority such as CCE v. Punjab Tractors.