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Genau Extrusions Ltd. Vs. The Commissioner of G.S.T. & Central Excise, Salem - (Customs, Excise and Service Tax Appellate Tribunal) (04 Jul 2019)

When place of removal is buyer's premises, Appellant is eligible for credit



The Appellants are engaged in the manufacturing of parts of Fuel Injection Pump/Valve Assembly and are registered with the Central Excise Department. On verification of accounts, it was seen that, the Appellants had availed input Service Tax credit on Outward Transportation of Goods up to the buyer's premises. The Department was of the view that the place of removal can only be the factory gate and therefore, the Outward Transportation beyond the factory gate is not eligible for credit.

A Show Cause Notice was issued proposing to recover the wrongly availed credit along with interest and also for imposing penalties. After due process of law, the Original Authority confirmed the demand along with interest and imposed equal penalty. In appeal, the Commissioner (Appeals) vide impugned order upheld the same. The issue is whether the Appellant is eligible for the credit of Service Tax paid on Outward Transportation of Goods up to the buyer's premises.

On perusal of records as well as the purchase orders, it is seen that the sale is on FOR basis. The authorities below have disallowed the credit holding that, there is no evidence to establish that the sale is on FOR basis. It is not necessary that there should be a separate contract for supply of goods. The parties can agree to the terms and conditions of the sale in the purchase orders itself. This becomes a concluded contract when the offer is accepted by the supplier/buyer. Therefore, when the purchase orders itself show that the condition for sale is FOR basis, the observations made by the authorities below that the Appellant has failed to produce any evidence/contract establishing that they have borne the freight charges, insurance, etc., is without any factual basis and unacceptable.

Further, in the present case, letters/certificates have been obtained by the Appellant from the purchasers of the goods showing that the purchasers have not paid any freight charges separately. This strongly implies that, the Appellants have borne the freight charges and have included it in the assessable value on which Excise Duty has been discharged by them.

The decision of the Hon'ble Apex Court in the case of M/s. Roofit Industries Ltd. will apply and the place of removal is the buyer's premises. In such circumstances, the decision of the Tribunal in the case of M/s. Ultratech Cement Ltd. squarely applies. As rightly argued by the appellant, the Hon'ble Apex Court in the case M/s. Ultratech Cement Ltd. has observed that, credit on Outward Transportation of Goods will not be eligible beyond the place of removal.

In the present case, the place of removal being the buyer's premises, the Appellant is eligible for credit. The disallowance of credit is unjustified. The impugned order is set aside. Appeal allowed.

Relevant : Commissioner, Customs and Central Excise vs. Roofit Industries Ltd. MANU/SC/0483/2015; Commissioner of Central Excise Service Tax vs. Ultra Tech Cement Ltd. MANU/SC/0065/2018


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