Case Note & Summary
The appellant, M/s. Madras Cements Limited, a manufacturer of cement, filed an appeal under Section 35G of the Central Excise Act, 1944 against the final order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dated 29.05.2012. The dispute centered on the interpretation of 'place of removal' for the purpose of input service under the CENVAT Credit Rules, 2004. The appellant sold cement on FOR (Free on Road) destination basis, meaning the sale was completed at the buyer's premises. For the period from August 2006 to July 2008, the appellant claimed CENVAT credit on service tax paid on Goods Transport Agency (GTA) services for outward transportation of cement. The assessing authority and the first appellate authority denied the benefit for the entire period. However, the CESTAT allowed the credit for the period up to 31.03.2008 but denied it for the period from 01.04.2008 to 31.07.2008, relying on a change in the definition of 'input service' under Rule 2(l) of the CENVAT Credit Rules, 2004 effective from 01.04.2008. The appellant challenged this denial. The High Court framed the question of law as whether the Tribunal was correct in disallowing CENVAT credit on GTA service for outward transport from the place of removal after 31.03.2008. The court held that when goods are sold on FOR destination basis, the 'place of removal' is the destination of the buyer, not the factory gate. Consequently, transportation from the factory to the buyer's destination is not 'from the place of removal' but to the place of removal. Therefore, the CENVAT credit on such transportation is admissible even after 31.03.2008. The court allowed the appeal, set aside the Tribunal's order, and directed the respondents to grant the CENVAT credit for the disputed period.
Headnote
A) Central Excise - CENVAT Credit - Input Service - Place of Removal - The dispute pertains to interpretation of 'place of removal' for input service under CENVAT Credit Rules, 2004 - Appellant-assessee, a cement manufacturer, sold cement on FOR destination basis, claiming CENVAT credit on GTA service for transportation - Tribunal allowed credit up to 31.03.2008 but denied for period 01.04.2008 to 31.07.2008 - Held that where sale is on FOR destination basis, the 'place of removal' is the destination of the buyer, and CENVAT credit on outward transportation is admissible even after 31.03.2008 (Paras 1-5).
Issue of Consideration
Whether the Tribunal was correct in disallowing CENVAT credit of service tax paid on GTA service availed by the manufacturer on outward transport from the place of removal for the period after 31.03.2008.
Final Decision
Appeal allowed. The order of the Tribunal dated 29.05.2012 is set aside. The respondents are directed to grant CENVAT credit on GTA service for the period 01.04.2008 to 31.07.2008.
Law Points
- Interpretation of 'place of removal'
- CENVAT credit on input services
- outward transportation
- GTA service
- FOR destination sales
- Rule 2(l) of CENVAT Credit Rules
- 2004
