The Customs, Excise And Service Tax Appellate Tribunal ( CESTAT ), Chennai granted relief to RAMCO Cements in a case surrounding eligibility to avail Central Value Added Tax ( CENVAT ) Credit. The matter was remanded for ‘determination of place of removal’ on outward Goods Transport Agency ( GTA ) services.
Two Excise Appeals pertaining to identical issues were filed by The Ramco Cements Limited (RAMCO), one of India’s oldest and most prominent Cement manufacturers against the Order passed by Commissioner of GST & Central Excise (Appeals) depriving RAMCO from availing CENVAT Credit on the outward GTA Services.
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The factum follows the Appellant’s availment of CENVAT Credit on service tax paid on outward GTA Services where the cement was sold on FOR destination basis; the Appellant deemed the place of delivery as the dealer’s premises hence empowering them to avail CENVAT credit of Service Tax on GTA Services under Reverse Charge Mechanism (RCM).
Statements of Demand (SOD) were issued against the Appellant, which were subsequently adjudicated resulting in the disallowance of the entire credit of Rs.45,95,157/- and Rs.38,43,060/-. Being aggrieved by the Orders-in-Appeal pertaining to such disallowance, the present Excise Tax Appeals have been instituted.
Counsel for the Appellant, R. Parthasarathy laid reference to the decision of the Supreme Court in Commissioner of Central Excise & Service Tax Vs. Ultra Tech Cement Limited (2018) wherein it was held that GTA credit would not be eligible beyond the factory gate but the main issue as to what would be the place of removal in the case of goods sold on FOR destination basis was not discussed therein.
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The Chennai Bench of CESTAT, presided over by Vasa Seshagiri Rao, Technical Member observed that the issue at hand is no more res integra, and laid reference to Circular No. 1065/4/2018-CX issued by the Central Board of Indirect Taxes & Customs (CBIC) which mandated that the ‘place of removal’ of goods when supplied on a FOR contract basis is to be determined on the basis of the Decision of the Supreme Court in Commissioner of Central Excise, Mumbai-III Vs. Emco Ltd. (2015) and M/s. Commissioner of Customs and Central Excise, Aurangabad Vs. Roofit Industries Ltd. (2015) along with the decision of the Karnataka High Court in Bharat Fritz Werner Ltd. Vs. Commissioner of Central Excise, Bangalore (2022).
In a prior case of the same Appellant with an identical issue, the CESTAT, Chennai held that place of removal would be the buyer’s premises when the sale is conducted on FOR basis, making the appellant eligible for CENVAT credit of service tax paid upto the place of removal for the disputed period.
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Given the lack of clarity in the ‘place of removal’, CESTAT remanded the matter to the lower adjudicating authority to verify the contractual terms, affirming that the Appellant would be eligible for CENVAT Credit if the Buyer’s place is indeed the place of removal.
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