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Cenvat Credit on GTA outward - SC applies the brake


Mysterious place of removal

Great Article Sir,

Literal interpretation of the term ‘place of removal’ shows that it is the place FROM WHERE THE GOODS ARE REMOVED FOR SALE. Whereas, in many Circulars and Case law, it was held to the effect that the ‘place of removal’ means the place AT WHICH THE GOODS HAVE BEEN SOLD.

It is unfortunate that the Department and Courts could not properly interpret the core term like ‘place of removal’ for many years.

On one hand, the Department wanted to levy Central Excise duty by including all expenses incurred upto the place of removal, which was interpreted as place of sale in many Circulars and Orders/Judgments. On other hand, Cenvat credit of service tax paid on outward freight towards clearances from factory/depot upto the buyer’s place (at which sale was made) would not be available after rejection of review petition 2018-TIOL-163-SC-CX against the decision in the case of Ultra Tech Cement Ltd., as discussed by learned author.

The only solution is the retrospective amendment allowing such credit, as suggested by the author.

Following Circulars and case law on this issue may also be referred on this issue:
Commissioner vs. Vesuvious India Ltd. – 2013-TIOL-1038-HC-KOL-ST
Circular No. 999/6/2015-CX dated 28.02.2015
CCE, Aurangabad Vs. Roofit Industries Ltd. 2015-TIOL-87-SC-CX
CCE, Nagpur Vs. Ispat Industries Ltd. 2015-TIOL-238-SC-CX

The views expressed are personal views.

S B Parikh 28/04/2018

 

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