Custom, Excise & Service Tax Tribunal
Cce, Dehradun vs M/S.Forace Polymers Pvt. Ltd on 1 July, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/decision:01.07.2016
Excise Appeal No.E/51340/2016-EX(SM)
[Arising out of Order-in-Appeal No.DDN/EXCUS/000/APPL-I/465/2015-16 dated 28.01.2016 passed by the Commissioner of Central Excise, Dehradun]
For Approval and Signature:
Honble Shri B. Ravichandran, Member (Technical)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
CCE, Dehradun Appellants
Vs.
M/s.Forace Polymers Pvt. Ltd. Respondent
Appearance:
Rep. by Shri Dharam Singh, AR for the appellant.
Rep. by Shri Rajesh Gupta, CA for the respondent.
Coram: Honble Shri B. Ravichandran, Member (Technical) Final Order No.52448/2016 Dated:01.07.2016 Per B. Ravichandran:
The appeal is by Revenue against order dated 28.01.2016 of Commissioner (Appeals-I), Meerut. The respondents are engaged in the manufacture of Resin, Catalyst, thinner, varnish, etc. liable to central excise duty. The dispute relates to eligibility of the respondent for cenvat credit of service tax paid on GTA services for outward transport of finished goods from the factory to the buyers premises. The revenue denied the credit on conclusion of the proceedings initiated by show cause notice dated 2.5.2014. The order of the Original Authority was set aside by the ld. Commissioner (Appeals) by allowing the respondents appeal. The ld. Commissioner (Appeals) held that in terms of purchase order 100% payment for the finished goods will be made on receipt of goods; delivery was FOR destination basis and the insurance was also done by the respondent. There is clear evidence that the property of the goods passed on from the respondent to the buyer at buyers end only. He relied on the various decided cases on the subject.
2. The Revenue preferred this appeal mainly on the ground that the respondents are not eligible for such credit on the basis of Honble Supreme Courts decision in the case of Ispat Industries Ltd. 2015 (10) LCX 0008. It is the case of the Revenue that based on the definition of place of removal appearing under Section 4 of the Central Excise Act, 1944, outward transportation upto the place of removal can only be considered for credit. When the place of removal is factory gate, there could be no credit on transportation of goods upto the buyers premises.
3. Ld. Counsel for the respondent countered the appeal by the Revenue stating that an attempt is being made to apply the interpretation of place of removal decided by the Honble Supreme Court in Ispat Industries Ltd. (supra) for the purpose of denial of cenvat credit to the respondent. He submitted that the amended definition of input services under Rule 2 (l) of Cenvat Credit Rules, 2004 clearly stipulates that outward transportation upto the place of removal is eligible for credit. In the respondents case, it an admitted fact that the goods were cleared on FOR basis and the money consideration is paid only on the delivery of goods to the buyers and upto such delivery, the risk of the goods is with the respondent. He further submitted the various documents including the purchase order from the buyers and invoice to reiterate that the sale in effect is happening only upon delivery of the goods in the buyers premises. The impugned order by the Commissioner (Appeals) is legally correct and there is no ground to interfere with the same.
4. Heard both the sides and examined the appeal records.
5. In the impugned order, the Commissioner (Appeals) concluded as below:-
I find that the Honble High Court of Karnataka has affirmed the decision of the Larger Bench of the Tribunal in the case of ABB Ltd. & Ors. Vs. CCE, Bangalore 2009 (15) STR 23 (Tribunal-LB). In para 32 of the decision, the Honble High Court has also made reference to the above decision of the Honble High Court of Punjab & Haryana in the case of M/s. Ambuja Cement Vs. Union of India reported in 2009 (236) ELT 431 (P&H) . A careful study of these judgements read with CBEC Circular No.97/6/2007-S.T. dated 23.08.2007 and Circular no.988/12/2014-CX dated 20.10.2014 clarifying the impugned issue, reveals that the CENVAT credit in respect of the service tax paid on the outward transportation of the goods upto the place of removal in cases of supply of goods on F.O.R. basis is available. In a recent judgement by Honble High Court of Andhra Pradesh in the case of CCE & Cus, Hyderabad-III Vs. Grey Gold Cements Ltd. [2014 (34) STR 809 (A.P.), the Honble Court concurred with the view of the CESTAT (Bangalore) [2009 (15) STR 23 (Tribunal-LB)] wherein the latter relied on a judgement in the case of All India Federation of Tax Practitioners Vs. Union of India [2007 (7) STR 625 (S.C.)] wherein Honble Supreme Court observed that service tax and excise duty are consumption taxes to be borne by the consumer and therefore if credit is denied on transportation service the levy of service tax on transportation will become a tax on business rather than being a consumption tax. Honble High Court also agreed with the Tribunals view in order dated 18.05.2009 wherein the Honble Tribunal has held that the submission of the Revenue that the CENVAT credit cannot be allowed for service if the value thereof does not form part of the value subjected to excise duty runs counter to the fundamental concept of service tax laid down in All India Federation of Tax Practitionerss case (supra).
Applying the ratio of the judgements as discussed, hereinabove, I hold that the CENVAT credit of the service tax paid in respect of outward transportation of the goods up to the customers premises on F.O.R. basis is available to the appellant. Once there is no demand, question of interest and penalty does not arise.
6. The main thrust in the Revenues appeal is the finding of the Honble Supreme Court in Ispat Industries Ltd. (supra) regarding place of removal. The Honble Supreme Court was examining the question of valuation of excisable goods with reference to inclusion or otherwise, the freight charges from the factory gate to the buyers premises. In the said case, admittedly, the goods were sold ex factory. The Revenue intended to include the freight element in the assessable value. The Honble Supreme Court, after examining, the relevant provisions under Section 4 as existing during the period 28.09.1996 to 1.7.2000 and from 1.7.2000 to 31.03.2003 held that under no circumstances, can buyers premises be the place of removal for the purpose of Section 4 on the facts of the present case. As is evident from the analysis and conclusion of the Honble Supreme Court the matter under examination was clearly valuation of excisable goods with specific reference to the transport charges from the factory. The issue involved in the present appeal is availability of cenvat credit on the outward transportation of finished goods. Admittedly, during the relevant period, there is no definition of place of removal under Cenvat Credit Rules, 2004. The definition available under Section 4 has been taken to interpret the same for credit purposes. Here, in the present case, the respondent is clearly selling their goods on the basis of purchase order, which clearly stipulates that 100% payment will be only on receipt of goods delivered at the premises of the buyer. Upto that the insurance and transport of the goods is at the vendors cost. In these factual circumstances, the respondent have undertaken the transportation and the value of such transportation is apparently included for the purpose of discharging central excise duty on the finished goods. The freight was integral part of the value in the present case has been admitted by the Original Authority. Such being the case, it is not open to Revenue to rely on the decision of the Honble Supreme Court as stated above to hold that the respondent are not eligible for cenvat credit on freight element though admittedly, such freight forms part of the assessable value. Such assertion will result in self-contradiction.
7. I find that a very same issue in respect of the same respondent has been a subject matter of decision by the Tribunal in Final Order No.51918/2016 dated 24.05.2016. The Tribunal, after examining the various decided cases on the subject, held that the respondent are eligible for cenvat credit on such outward tranporation.
8. Considering the above discussion, I find that the impugned order does not require any interference and accordingly, the appeal by the Revenue is rejected.
[Operative portion of the order already pronounced in the open court] ( B. Ravichandran ) Member (Technical) Ckp.
1