Sale of Excisable Goods on FOR Basis: CESTAT allows Cenvat Credit to Ambuja Cements In respect of Service Tax Paid on Outward Transportation under RCM [Read Order]

In  a ruling in favour of Ambuja Cement Limited, the Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that cenvat credit allowable in respect of service tax paid on outward transportation under Reverse Charge Mechanism ( RCM ) when the sale of excisable goods is on FOR Basis.

The issue involved in the present case is that whether the appellant are entitled for Cenvat Credit in respect of service tax paid on outward transportation under reverse charge mechanism in the admitted fact that the sale of excisable goods is on FOR basis.

Become a PF & ESIC expert with our comprehensive course - Enroll Now

Shri Jigar Shah, Counsel appearing on behalf of the appellant at the outset submitted that in the identical set of facts and the question of law involved this Tribunal in the case of Ultra Tech Cement Ltd 2019 allowed the Cenvat Credit in the case where the sale is on FOR basis. 

Shri Mihir G Rayka, Additional Commissioner ( AR ) appearing on behalf of the revenue, reiterates the findings of the impugned order.

It was admitted fact even by the adjudicating authority in the impugned order that the sale of excisable goods is on FOR basis and in respect of supply of such excisable goods the appellant have availed the service of transportation on which the appellant have paid the service tax which has been availed as Cenvat Credit.

In the case of Ultra Tech Cement Ltd 2019, it was held that in the case of sale of goods on FOR basis,whenthe freight is integral part of the assessable value on which excise duty was paid, in this condition the assessee is eligible for the Cenvat Credit on outward transportation.

The show cause notice was issued for denial of said Cenvat Credit which was confirmed by the adjudicating authority holding that the credit of GTA ( Goods Transport Agency ) is available on input service upto the place of removal after 1st April 2008 in terms of Rule 2(l) of Cenvat Credit Rules, 2004. According to the adjudicating authority, in terms of Section 4(3)(c) of the Central Excise Act, 1944, “place of removal” means a factory or any other place or premises of production or manufacture of the excisable goods; a warehouse or any other place or premises wherein the excisable goods have been permitted to be stored without payment of duty.

However, Commissioner, Central Excise, Kutch ( Gandhidham ) by order dated 20th March 2015 disallowed Cenvat Credit of ₹ 16,67,51,317/- and levied interest and penalty.

Become a PF & ESIC expert with our comprehensive course - Enroll Now

As regard the issue raised by the appellant that the excise duty paid on the element of freight being more than the element of cenvat credit on the outward GTA, therefore, there should not be any demand. As regard the submission made by Counsel that they have been operating as per the guideline given in the Circular dated 22.12.2014 and 23.08.2007 which was operative at the relevant time, therefore, even though the same were withdrawn w.e.f. 08.06.2018, but at the relevant time the benefit of said Circular shall be available. The bench held that the benefit of the said Circulars shall be available to the appellant during the material period of the case.

 Shri Jigar Shah, Advocate, Appeared for the Appellant and Shri Mihir G Rayka, Additional Commissioner ( AR ) Appeared for the Respondent

In light of observation, the two member bench of Mr. Ramesh Nair , Member ( Judicial ) and Mr. C L Mahar, Member ( Technical ) held that  the appellant is eligible for Cenvat Credit on outward GTA service.  The Tribunal set aside the impugned order and allowed the appeal.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates