Transportation of Goods to Customers’ Premises is ‘Input Service’: CESTAT Allows CENVAT Credit on GTA Services [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai Bench, allowed an appeal wherein it was decided that transportation of goods to customers’ premises is an ‘input service’.

The main issue was whether the appellant, Gnat Foundry Pvt. Ltd., was eligible to avail CENVAT Credit of Service Tax paid on Goods Transport Agency (GTA) service used for outward transportation of goods up to the customer’s premises.

The Explanation to Section 4 of the Central Excise Act, 1944 clarifies what could be the ‘place of removal’ and Rule 2(1) of CENVAT Credit Rules, 2004 defines ‘input service’.

The Commissioner had relied on the Supreme Court’s decision in CCE v. Ultratech Cement Ltd (2018) to reject the appeal. CESTAT took note and referred to M/s Ramco Cements Ltd. v. CCE, Puducherry (2023) wherein the Larger Bench of the Apex Court held that the place of removal is the buyer’s premises.

The Revenue put forth their case, submitting that no documentary evidence such as contract/purchase order has been produced to establish FOR destination sale. This has been viewed as baseless as the appellant has produced a paper book and several purchase orders along with tax invoices from time to time establishing that the order has been placed for ‘FOR-door delivery’.

CESTAT took note of the purchase orders which stipulate the delivery term as “FDD (FOR Door Delivery/BEML KGF”, and BEML is the name of one of the customers of the appellant.

Ajay Sharma (Judicial Member) accordingly held that the GTA service availed for outward transportation of finished goods up to the customer’s premises qualifies as input service under Rule 2(1) of CENVAT Credit Rules, 2004 and the appellant has rightly availed the CENVAT Credit. The previous order was set aside and the appeal was allowed.

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