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2015 (7) TMI 1001 - KARNATAKA HIGH COURT

2015 (7) TMI 1001 - KARNATAKA HIGH COURT - 2015 (40) S.T.R. 645 (Kar.) - Denial of CENVAT Credit - Input service - Place of removal - Whether the Tribunal was correct in disallowing CENVAT credit of service tax paid on the GTA service which is availed by the manufacturer on outward transport from the place of removal for the period after 31.03.2008 subsequent to the amendment of definition of "input service" under Rule 2(l)(ii) of CENVAT Credit Rules - Held that:- As long as the sale of the good .....

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ce we are of the opinion that the sale had concluded only after the delivery of the goods was made at the address of the buyer, in the facts of the present case assessee would be entitled to the benefit of CENVAT credit on Service Tax paid on outward transportation of goods by the assessee even after 01.04.2008. The appellant-assessee would thus be entitled to such benefit for the period 01.04.2008 to 31.07.2008 which has been denied to it by the authorities below. - Decided in favour of assesse .....

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was made at the destination of the buyer and hence the appellant would be entitled to CENVAT credit on input service on transportation of the cement sold by the appellant-assessee. Initially, the period in dispute was from August-2006 to October-2007 and from November-2007 to July- 2008. In view of the change in definition of input service provided in Rule 2(l) of the CENVAT Credit Rules, 2004 w.e.f. 1.4.2008 although the assessing authority as well as the first appellate authority had denied th .....

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s being disposed of at the admission stage. The question of law for determination in this appeal, as has been framed in the memorandum of appeal would arise for consideration and it reads as under: "Whether the Tribunal was correct in disallowing CENVAT credit of service tax paid on the GTA service which is availed by the manufacturer on outward transport from the place of removal for the period after 31.03.2008 subsequent to the amendment of definition of "input service" under Ru .....

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………." After 01.04.2008, it stood amended as under: " i) used by a provider of taxable service for providing an output service; or ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products, from the place of removal, ……………………"" By the aforesaid amendment brought into effect from 01.04.2008 (vide Notification fro .....

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2(qa), which reads as under: "(qa) Place of removal' means - i) a factory or any other place or premises of production or manufacture of the excisable goods; ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty; iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory, from where such goods are removed .....

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Act, 1944 read with provisions of the Sale of Goods Act, 1930. Payment of transport, inclusion of transport charges in value, payment of insurance or who bears the risk are not the relevant considerations to ascertain the place of removal. The place where sale has taken place or when the property in goods passes from the seller to the buyer is the relevant consideration to determine the place of removal." (emphasis supplied) 5. The question of law which is required to be decided in this ap .....

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term clearly mentions as "FOR destination". FOR herein stands for 'Free On Road', meaning thereby that the buyer need not pay for the transportation as the goods were to be supplied by the seller at the address of the buyer at cost of the seller. 7. The assessing officer as well as the appellate authority both have considered the invoices which were submitted before them. In his order, the assessing officer has recorded "that on perusal of the invoices it is found that th .....

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sh the fact of insurance coverage by the assessee." The sale was thus considered by the assessing officer to have been finalized at the factory gate and therefore the assessee was not found eligible for Service Tax credit availed by it on outward freight. No finding on merits with regard to such benefit being denied to the petitioner, was given by the Tribunal. 8. Having heard learned counsel for the parties and considering the facts and circumstances of this case, we are of the considered .....

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goods were received by the buyer. The Circular dated 20.10.2014 issued by the Central Board of Excise and Customs also, in paragraph-6 makes it clear that 'payment of transport, inclusion of transport charges in value, payment of insurance or who bears the risk are not the relevant considerations to ascertain the place of removal.' 9. As per the said Circular, the place of removal has to be ascertained in terms of Central Excise Act, 1944 read with the provisions of the Sale of Goods Act .....

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ssee would not be entitled to the benefit merely because no documentary evidence has been adduced to establish the fact of insurance coverage by the assessee. In our view, who pays for insurance or bears the risk of goods in transit would not be a material consideration. The same has also been made clear by the Central Board of Excise and Customs, Department of Revenue, Ministry of Finance, in its Circular dated 20.10.2014. 10. Sri C.Shashikantha, learned counsel for the respondents has submitte .....

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