Cenvat credit of freight on trnsportation

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 May 2015 if a company making manufacturing of a product then whether service tax paid on inward and outward transportation whether cenvat credit of service tax allowable or not.

CA Sandeep Kumar

CA Sandeep Kumar (Expert)
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11 May 2015 Company can take the CENVAT credit of S.Tax paid on inward transportation and for Outward transportation up to the place of removal.

Querist : Anonymous

Querist : Anonymous (Querist)

11 May 2015 what is meaning of upto place of removal.

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CA Nimesh Maheshwari

CA Nimesh Maheshwari (Expert)
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13 May 2015 Circular no. 988 dated October 20, 2014 defines the meaning of place of removal. The extract of the same is produced herein below:

The place where sale has taken place is the place where the transfer in property of goods takes place from the seller to the buyer. This can be decided as per the provisions of the Sale of Goods Act, 1930 as held by Hon’ble Tribunal in case of Associated Strips Ltd Vs Commissioner of Central Excise , New Delhi.

Therefore, we have to read the above mentioned circular along with the section 18, section 23,section 24 and section 25 of the Sales of Goods Act, 1930. The same are produced herein below:

Section 18 of the Sales of Goods Act, 1930 provides that, “Where there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are sanctioned”.

Sub section (1) of the Section 23 of the Sales of Goods Act, 1930 provides that, “Where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be expressed or implied, and may be given either before or after the appropriation is made.”

Section 24 of the Sales of Goods Act, 1930 provides that, “When goods are delivered to the buyer on approval or on sale or return or other similar terms, the property therein passes to the buyer (a) when he signifies his approval or acceptance to the seller to does not other act adopting the transaction (b) if he does not signify his approval or acceptance to the seller but retains the gods without giving notice of rejection, then, if a time has been fixed for the return of the goods, on the expiration of such time, and, if no time has been fixed, on the expiration of a reasonable time.

Sub section 1 of Section 25 of the Sales of Goods Act, 1930, “Reservation of right of disposal” states that “Where there is a contract for the sale of specific goods or where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled. In such case, notwithstanding the delivery of the goods to a buyer, or to a carrier or other bailee for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled.”

Thus, reading on all the above paras, it can be construed that the place of removal is the place where the goods are first appropriated for sales. However, we have to keep in mind the basis condition of transfer of risk and rewards for the product.