The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that goods transportation upto customer’s premises as it is covered under ‘input service’ and cenvat credit is available on the same.
A.C.C. Limited , the appellant is engaged in the manufacturing of excisable good namely 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 utilizing it for payment of central excise duty on cement in terms of the Rules, 2004.
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The Appellant engages transporters for outward transportation of goods and paying freight charges to the transporters. The Appellant also bore the risk of loss/damage during transit till the goods reached the doorstep of the customers. In this regard, the appellant also took transit insurance policy. The appellant also paid service tax under reverse charge mechanism on payment made to transporters and availing credit of the same.
The Department was of view 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.
The tribunal found that the transportation of the goods upto the customer’s premises would also be covered within the definition of ‘input service’.
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The two member bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that the price charged to customers for goods on which central excise duty is paid is inclusive of freight.
The bench found that the said order of the Tribunal was passed when the Circular dated 23.08.2007 was in vogue and the definition of input service‖ had been subsequently amended w.e.f. 1.3.2008. However, the final conclusion would remain the same in the present appeal in the light of the subsequent Circular No.1065/4/2018-CX dated 08.06.2018 and the interpretation placed by the decisions referred above.
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