This update is to apprise you about the recent decision of the Gujarat High Court in the case of Commissioner, CGST v. Ultratech Cement Limited, 2020 (3) TMI 2016 – GUJ HC. In this case, the Court while upholding the order of Tribunal, held that the taxpayer is eligible to claim Cenvat credit on outward freight incurred on FOR sale of manufactured products. The period involved in this case is post April 2008.

The High Court relied upon CBIC Circular No. 1065/4/2018-CX dated June 8, 2018 (‘Circular dated June 8, 2018’)  and decisions of CCE v. Emco Limited, 2015 (322) ELT 394 (SC) and CCE v. Roofit Industries Limited, 2015 (319) ELT 221 (SC) while coming to its conclusion. The Court held that in case of FOR sales, place of removal will not be restricted to premises of the manufacturer and will be decided based on the fact where the ownership in the goods is transferred from the seller to the buyer.

NITYA Comments:

 The Supreme Court in the case of CCE v. Ultratech Cement Limited, 2018 (9) GSTL 337 (SC) denied Cenvat credit on outward freight in case of FOR sale. After the decision of the Supreme Court, the CBIC in its Circular dated June 8, 2018, clarified that place of removal in case of FOR sales will be customer’s premises and Cenvat credit will be available. This is the first decision by a High Court on the issue post adverse Supreme Court’s judgment. It will be interesting to see the ultimate fate of the issue before the Supreme Court.