CENVAT Credit on outward transport after 01.04.2008 - Credit is admissible in case of FOR destination sale - Amendment to CCRs, 2004 with effect from 01.04.2008 does not alter admissibility - HC sets aside order of Tribunal

BANGALORE : THE appellant is manufacturer of Cement. The dispute is with regard to admissibility of CENVAT Credit on outward transport of finished goods. The Tribunal allowed the credit up to the period 31.03.2008, but disallowed for the period from 01.04.2008 = 2012-TIOL-1298-CESTAT-BANG in the light of amendment made to Rule 2(l) of the CENVAT Credit Rules,

2004 by substituting the words “clearance of final products from the place of removal”, with “clearance of final products, upto the place of removal,”

It is the contention of the appellant that the sale of goods is FOR destination basis and hence, they are entitled for credit.

After hearing both sides, the High Court held:

As long as the sale of the goods is finalized at the destination, which is at the door step of the buyer, the change in definition of 'input service' which came into effect from 01.04.2008 would not make any difference. A perusal of invoices makes it clear that the goods were to be delivered and sale completed at the address of the buyer and no additional charge was levied by the assessee for such delivery. From these facts it is clear that the sale was completed only when the 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.'

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, 1930 which has been dealt with in detail in the said Circular. According to the provisions of the Sale of Goods Act, 1930, the intention of the parties as to the time when the property in goods has to pass to the buyer is of material consideration. The record clearly shows that the intention of the parties was that the sale would be complete only after goods are delivered by the seller at the address of the buyer.

From the facts of the present case, it is clear from the invoices that title of the goods had passed on from seller to buyer only at the place of destination, which is the address of the buyer. As such, the buyer had no right over the goods till delivered to it. The Tribunal has not considered this aspect and has only relied on the amendment made to the definition of "input service" with effect from 01.04.2008 and rejected the claim of the appellant-assesee after that date. No further reason has been given by the Tribunal nor any finding has been recorded with regard to place of completion of sale of the goods.

Accordingly, the High Court allowed the appeal by holding that credit is admissible.