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The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that transportation of goods upto the customer’s premises would also be covered within the definition of ‘input service’.
The bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that the ownership of the goods and the property in the goods remained with the appellant till the delivery of the goods in proper condition to the customer at his premises. The freight charges has not been separately recovered from the customers either directly or indirectly and rather were an integral part of the price of the goods and excise duty paid.
Background
The appellant/assessee has challenged the order relates to admissibility of credit of service tax paid on ‘Goods Transport Agency Service’ availed by the appellant for outward transportation of goods on Free on Road destination basis from the factory gate or depot of the appellant to the premises of the customers under Rule 2 (l) of the Cenvat Credit Rules, 2004.
The appellant is engaged in the manufacturing of excisable good i.e. ‘cement & clinker‘ and have been availing the benefit of cenvat credit facility on service tax paid on freight incurred on outward transportation‘ of cement from factory to the customer’s premises and depot to the customer’s premises on ‘FOR’ basis destination sales and utilising it for payment of central excise duty on cement in terms of the Rules, 2004.
The case of the Department was that the appellant is not entitled to avail the cenvat credit of service tax paid on the freight incurred on outward movement of the finished goods, beyond the place of removal i.e. from the factory to the customer‘s premises as the GTA services for outward transportation of goods beyond the ‘place of removal’ is not covered within the ambit of the definition of ‘input service’ for the purpose of availing the cenvat credit.
Conclusion
The tribunal found that the appellant was selling their final products on FOR destination price and has paid the excise duty, which includes the freight also. The evidence placed by the appellant regarding FOR destination sales included the Marketing Circulars, Sales Contract/Agreement, Excise Invoice, Commercial Invoice, Lorry Receipts, Transporter’s Bills, Payment Details and Copies of the TR-6 Challans, etc. The invoices supported the submission that the ‘place of removal’ is customer’s premises and the same has been admitted by the Revenue in the show cause notice itself.
The tribunal while allowing the appeal held that the order is unsustainable and needs to be set aside.
Is Transportation Of Goods Upto Customer’s Premises Covered Within Definition Of ‘Input Service’?
The transportation of the goods upto the customer’s premises would also be covered within the definition of ‘input service’.
When does transportation of goods amounts to ‘inward supply’?
The ownership of the goods and the property in the goods remained with the appellant till the delivery of the goods in proper condition to the customer at his premises. The freight charges has not been separately recovered from the customers either directly or indirectly and rather were an integral part of the price of the goods and excise duty paid.
Case Title: M/s.A.C.C. Limited Versus Commissioner of Central Goods and Service Tax, Central Excise
Case No.: Excise Appeal No.50528 of 2019
Date: 01.10.2024
Counsel For Appellant: Hemant Bajaj
Counsel For Respondent: Unmesh Kumar
