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Alkraft Thermotechnologies Pvt. Ltd. Vs. Commissioner of GST & Central Excise, Chennai North Commissionerate - (Customs, Excise and Service Tax Appellate Tribunal) (09 Jul 2018)

CENVAT credit on GTA service is not eligible from factory to buyer's premises and eligible only upto place of removal which is factory gate



The Appellants are manufacturers of radiators and parts and are availing the facility of CENVAT credit of duty paid on inputs and service tax paid for input services. On verification of records, it was noticed that during the periods September 2009 to February, 2010 and October 2014 to April 2015, May 2015 to February 2016, the Appellant had availed CENVAT credit on outward transportation of goods for the goods cleared from their factory gate to their own units at Jamshedpur and Uttarakhand on stock transfer basis. Show cause notices were issued proposing to disallow the credit and for recovery of the CENVAT credit along with interest and for imposing penalties. After due process of law, the original authority confirmed the duty demands and imposed penalties. In appeal, Commissioner (Appeals) upheld the same. Aggrieved, the Appellants are now before this Tribunal.

The Hon'ble Apex Court in the case of Commissioner of Central Excise Service Tax vs. Ultratech Ltd. had laid the law that, after 1st April, 2008 CENVAT credit on GTA service is not eligible from the factory to buyer's premises and eligible only upto the place of removal which is the factory gate.

The original definition of 'input service' contained in Rule 2(l) of the Rules, 2004 used the expression 'from the place of removal'. As per the said definition, service used by the manufacturer of clearance of final products 'from the place of removal' to the warehouse or customer's place etc., was exigible for Cenvat Credit. This stands finally decided in Civil Appeal No. 11710 of 2016 (Commissioner of Central Excise Belgaum v. M/s. Vasavadatta Cements Ltd.) vide judgment dated January 17, 2018. However, vide amendment carried out in the aforesaid Rules in the year 2008, which became effective from March 1, 2008, the word 'from' is replaced by the word 'upto'. Thus, it is only 'upto the place of removal' that service is treated as input service. This amendment has changed the entire scenario. The benefit which was admissible even beyond the place of removal now gets terminated at the place of removal and doors to the Cenvat credit of input tax paid gets closed at that place. This credit cannot travel therefrom. It becomes clear from the bare reading of this amended Rule, which applies to the period in question that, the Goods Transport Agency service used for the purpose of outward transportation of goods, i.e. from the factory to customer's premises, is not covered within the ambit of Rule 2(l)(i) of Rules, 2004. Whereas the word 'from' is the indicator of starting point, the expression 'upto' signifies the terminating point, putting an end to the transport journey.

The decisions relied by the Appellant were rendered prior to the judgment in the case of Ultratech Ltd.. Following the judgment of the Hon'ble Supreme Court, Present Tribunal is of view that, the credit is not eligible. The impugned orders do not call for any interference. The appeals are dismissed.


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