The Allahabad bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that Central Value Added Tax ( CENVAT ) credit should be allowed in respect of Goods Transport Agency ( GTA ) services used for outward transportation.
The appellant was engaged in the manufacture of forged engineering products (forged flanges) falling under Chapter Sub Heading No.73079190 & 73072100 of the First Schedule to Central Excise Tariff Act, 1985.
During the course of audit of the appellant it was observed that during the period January 2016 to June 2017 appellant has availed CENVAT credit of service tax availed on freight charges for delivery of goods at the buyer’s destination considering place of removal as delivery point to buyer’s place.
The issue was of interpretation of law and hence extended periods of limitation should not be invoked. Even after such clear cut direction from the Board this demand has been made invoking extended period of limitation as per Section 11A of the Central Excise Act, 1944 and also penalty has been imposed in terms of Rule 15 of Cenvat Credit Rules, 2004 read with Section 11 AC of the Central Excise Act, 1944. The entire proceedings including the impugned order are in contempt of the authority of Board, and the circular issued by it.
Thus the single member bench of the tribunal comprising Sanjiv Srivastava (Technical member) observed that if the clearance of the goods was on for basis, the Board has clarified that CENVAT credit should have been allowed in respect of GTA services used for outward transportation.
Further the fact that this freight has been paid by the appellant is also evident from the fact that in case of GTA services service tax on reverse charge basis is required to be paid by the consignee/ consignor indicated for consignment note issued by GTA for transportation of the goods who makes the payment of the freight as per the consignment note. Undisputedly in the present cases appellant has paid service tax on reverse charge basis against the consignment note issued for which they are claiming the credit.
The fact that the appellant paid the freight is evident from the ledger they submitted. Since the freight payment is reflected in the sale documents without being charged separately on the invoice, it is clear that the value of the goods includes the freight element, indicating these sales are on an FOR basis. Accordingly, the appeal was allowed.
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