CESTAT allows JSW Cement's Appeal on Cenvat Credit for Outward Transport; Sets Aside Demand Citing Limitation Bar [Read Order]

The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal has allowed the appeal filed by M/s JSW Cement Ltd., setting aside the demand of Rs.3,44,228 relating to Cenvat Credit on outward transportation, on the ground that the extended period of limitation was not validly invoked.

The appellant, engaged in the manufacture and sale of cement, was issued a show cause notice dated 2 June 2016, proposing to disallow and recover Cenvat Credit availed between February 2013 and March 2016. The matter pertained specifically to service tax paid on Goods Transport Agency (GTA) services availed for delivering goods to buyers' premises. The adjudicating authority, in an earlier round, had dropped the demand for Rs.3.09 crore, confirming only the balance amount of Rs.3,44,228 on the ground that the sales from depots to buyers were not proven to be on FOR (Free on Road) destination basis.

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The Tribunal had earlier remanded the matter for de novo adjudication, directing the authority to consider the principles laid down by the Supreme Court in the case of Ultratech Cement and to provide an opportunity to produce relevant evidence. In the remanded proceedings, the appellant reiterated that the supplies made from depots were also on FOR basis and relied on various documents showing “door delivery” and “at site” terms. However, the adjudicating authority found the evidence to be insufficient and once again confirmed the demand.

In the appeal before the Tribunal, the appellant argued that the documents submitted established that the point of sale was the buyer’s premises and that freight charges formed part of the transaction value. It was further submitted that there was no intention to evade duty and that the issue revolved around interpretation of the place of removal, which had been subject to varied judicial pronouncements. The appellant also challenged the invocation of the extended period of limitation and the imposition of penalty.

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The Tribunal, while upholding the adjudication on merits, accepted the appellant’s contention regarding limitation. It noted that the show cause notice did not allege fraud, suppression or willful misstatement and that the extended period was invoked without substantive justification. The Tribunal observed that the dispute pertained to interpretational issues on the definition of ‘place of removal’, and that such ambiguity, coupled with departmental circulars and judicial decisions, negated the justification for extended limitation.

The appeal was allowed, setting aside the demand and penalty solely on the ground of limitation.

To Read the full text of the Order CLICK HERE

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