Excise Dept Denied CENVAT Credit On Outward GTA Ignoring Hindustan Coca-Cola’s FOR Delivery Evidence: CESTAT Remands Matter [Read Order]

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside an order denying CENVAT credit on outward GTA services to Hindustan Coca-Cola Beverages Pvt. Ltd. and sent the matter back for fresh consideration.

The appellant had availed CENVAT credit of Rs. 4,41,453 on outward transportation used for delivering goods from its factories and depots to customers’ premises for the period from September 2014 to June 2017.

The credit was distributed by its Input Service Distributor (ISD) in Mumbai. The Excise Department denied the credit on the ground that outward freight beyond the place of removal was not eligible as input service, relying on CBIC Circular No. 1065/4/2018-CX.

The appellant’s counsel argued that its goods were sold on an FOR basis, that it bore the transportation cost, and that its responsibility continued until the goods reached the customer. The counsel explained that sample invoices clearly mentioned that the goods were sold for delivery on an FOR basis and that responsibility continued until the goods were handed over to the customer.

They also relied on two earlier CESTAT decisions in their own cases involving the same issue. The appellant further argued that the credit in question had been availed through the ISD mechanism and not directly.

The revenue counsel argued that outward GTA services beyond the factory gate could not be treated as input services and argued that the place of removal was the factory. The revenue relied on Supreme Court decisions including Ispat Industries Ltd. and UltraTech Cement Ltd. and on a Tribunal ruling in Clariant Chemicals (I) Ltd., and submitted that the appeal deserved to be dismissed.

The single-member bench comprising Ajay Sharma (Judicial Member) observed that the sample invoices submitted by the appellant clearly stated that delivery was on an FOR basis and that responsibility continued until the goods were delivered to the customer.

The bench pointed out that both lower authorities had recorded a finding contrary to the documents on record and had failed to properly examine the evidence and earlier Tribunal decisions in the appellant’s favour.

The tribunal explained that the matter required fresh evaluation by the Commissioner (Appeals). The tribunal directed the Commissioner to re-examine all documents and case laws and to give the appellant an opportunity of hearing. The tribunal also directed the Commissioner to decide the matter expeditiously, preferably within six months. The impugned order was set aside and the appeal was allowed by way of remand.

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