Summary
The Supreme Court dismissed Revenue’s appeals against CENVAT credit for outward transportation to customers under the input-service definition applicable before 1 April 2008. The wording covering clearance “from” the place of removal included the outbound transportation in issue. The Department had not disputed satisfaction of the Board circular’s conditions concerning ownership, transit risk and freight. The ruling concerned the unamended definition and did not decide entitlement under the later wording.
Issues
- Whether outward transportation to customers qualified for input-service credit under the pre-1 April 2008 definition.
Provisions considered
- Rule 2(l), before 1 April 2008, CENVAT Credit Rules, 2004The unamended reference to clearance from the place of removal covered the outward transportation at issue. (¶¶ 4, 7, 8)
- Section 4, definition of place of removal, Central Excise Act, 1944The definition and the circular’s destination-sale conditions informed the claim; their satisfaction was not disputed by Revenue here. (¶¶ 4, 5, 7, 8)
Held
- The dispute had to be decided under the input-service definition prevailing before 1 April 2008. Following Vasavadatta Cements, clearance of final products from the place of removal to a warehouse or customer’s premises qualified on the facts; Revenue’s restrictive construction would nullify the word “from”. (¶¶ 4, 7, 8)
- The Board’s 23 August 2007 circular addressed cases where ownership continued until delivery, the seller bore transit loss or damage risk and freight formed part of the goods’ price. The Department did not contend that those conditions were unmet. The factual and temporal setting therefore supported the credit rather than a universal allowance irrespective of the sale terms. (¶¶ 5, 7, 8)
- Finding no infirmity in the judgment sustaining credit, the Court dismissed all Revenue appeals. The decision did not adjudicate the amended rule applicable from 1 April 2008. (¶¶ 4, 7, 8, 9)
Result
Revenue appeals dismissed; CENVAT credit for the outward transportation sustained under the pre-1 April 2008 definition.