Custom, Excise & Service Tax Tribunal
M/S. Tata Motors Ltd vs Commissioner Of Central Excise Customs ... on 9 November, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/21040/2014-SM [Arising out of Order-in-Appeal No. 713/2013 dated 27/12/2013 passed by Commissioner of Central Excise and Service Tax , BANGALORE-I( Appeal) ] M/s. Tata Motors Ltd Regional Warehouse No. 33, Survey No. 32/1, Biritena Agrahara Nh-7, Hosur Road, Electronic City Post BANGALORE - 560100 KARNATAKA Appellant(s) Versus Commissioner of Central Excise Customs and Service Tax Bangalore-I POST BOX NO 5400, CR BUILDINGS, BANGALORE 560 001. KARNATAKA Respondent(s)
Appearance:
Shri Anirudh.C, Advocate For the Respondent Shri Mohammed Yousuf, AR Date of Hearing: 09/11/2016 Date of Decision: 09/11/2016 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 21212 / 2016 Per : S.S GARG The present appeal is directed against the impugned order dated 27.12.2013 passed by the Commissioner (A) whereby he rejected the appeal of the appellant and upheld the Order-in-Original.
2. Briefly the facts of the case are that the appellant carry on the business inter alia as manufacturers of commercial motor vehicles / chassis, cars and parts thereof and are having factories at different places in the state of Maharashtra, Uttar Pradesh, Karnataka, Jharkand, Uttarakhand and Gujarat. The appellant also sells spare parts throughout the country. The present issue relates to the spare part division of Bangalore unit. The appellant procured various spare parts from approved vendors or received them from the appellants works/other SPDs. In both the cases, the vendors are paying excise duty and the appellants are availing CENVAT credit of duty paid by the vendors. Appellant also import various spare parts and are availing CENVAT credit of duty paid of CVD paid on the same. Appellant sells spare parts on door delivery basis with freight to be billed to the appellant i.e., the transportation charges for spare parts up to customers premises is borne by the appellant. The appellant do not charge any transportation charges to their customers separately and the price charged includes transportation cost also. Further, the appellant insure the parts with the insurance company under marine policy. The transportation and insurance charges are included in the MRP and they do not charge any extra amount towards freight and insurance to the customers and are providing door-step delivery. The Department issued show-cause notice dated 25.4.2012 proposing to recover CENVAT credit of service tax paid amounting to Rs.11,23,451/- on outward transportation of spare parts during the period April 2011 to January 2012 on the ground that the services of outward transportation does not qualify as an input service in terms of Rule 2(l)(ii) of CCR, 2004 as the same is not used directly or indirectly in or in relation to the manufacture of final products. The Additional Commissioner vide his Order-in-Original dated 18.2.2013 confirmed the demand towards CENVAT credit of service tax paid on outward freight and also imposed penalty. Aggrieved by the said order, appellant filed appeal before the Commissioner (A) and the Commissioner (A) upheld the Order-in-Original and rejected the appeal of the appellant. Aggrieved by the said order, the present appeal has been field by the appellant.
3. Heard both the parties and perused the records.
4. The learned counsel for the appellants submitted that Cenvat credit on outward transportation has been rightly availed by the appellants in terms of Boards Circular No. 97/8/2007-S.T. dated 23.8.2007 vide which the following three conditions have to be fulfilled :
(i) The supplies made by the appellants to the customers is on FOR destination basis and ownership of goods remain with them till it safely reaches the customers doorstep (Refers Internal Circular dated 10.4.2011);
(ii) The appellants have an open insurance policy with the Tata AIG General Insurance Company Ltd. where it is clearly mentioned that the coverage of all risks is from appellants premises to the customers premises; and
(iii) The price terms with the customer is on MRP value minus abatement as per Section 4A of Central Excise Act, 1944, the appellants are not collecting any extra amount from the customer over and above the MRP. Reference can be made to definition of Retail Sale Price under explanation to Section 4A of the Central Excise Act, 1944. 4.1. The learned advocate further submitted that it has been held in plethora of cases that once the conditions in the aforesaid Circular are satisfied, credit on outward transportation is to be allowed. Reliance is placed on the following decisions :
(i) Hyndai Motor India Ltd. vs. Commissioner of Central Excise, Chennai [2016-TIOL-767-CESTAT-MAD]
(ii) Commissioner of C.Ex., Rohtak vs. Haryana Sheet Glass Ltd. [2015 (39) S.T.R. 392 (P&H]
(iii) Commissioner vs. Thiru Arooran Sugars Ltd. [2015 (39) S.T.R. J304 (Mad.)]
(iv) Commissioner of C. Ex., Meerut-II vs. Bajaj Hindustan [2015 (40) S.T.R. 281 (Tri.-Del.)]
(v) Ultratech Cement Ltd. vs. Commissioner [2015 (37) S.T.R. 364 (Tri.-Del.)] 4.2. He also submitted that the lower authorities have allowed credit on outward transportation undertaken by other units of the appellants located at Hosur and Hinjewadi, Pune. It was observed by the lower authorities that all conditions stipulated in the Boards Circular dated 23.08.2007 was fulfilled in those transactions and copies of the orders have also been enclosed with the present appeal. He also submitted that in this case, as per the Circular issued by the appellant, freight charges will be borne by the appellants and the supplies are on FOR destination basis and supply would be door delivery. He also submitted that the expression activities relating to business under Rule 2(l) of Cenvat Credit Rules, 2004 admittedly covers transportation upto the place of removal and, therefore, credit cannot be denied in view of specific coverage of outward transportation in the inclusive part of definition of input services. In support of this submission, he relied upon the following case laws :
(i) Placo Metals Ltd. vs. CCE, Ahm [2012 (280) ELT 299 (Tri.-Ahm)]
(ii) Hydro S & S Industries Ltd. Vs. CCE, Trichirapalli [2013 TIOL-1089-CESTAT-MAD]
(iii) Jammu Auto Industries Ltd. vs. CCE, Panchkula [2013 (31) STR 587 (Tri.-Del.)]
(iv) Menon Pistons Ltd. vs. Commissioner of C.Ex., Kolhapur [2015 (40) STR 283 (Tri.-Mum.)]
(v) Madras Cements Ltd. vs. Additional Commissioner of Cus. & C. Ex., Bangalore [2015 (40) STR 645 (Kar.)]
(vi) Ultratech Cement Ltd. vs. CCE, Raipur [2014 (35) STR 641 (Chattisgarh)]
5. On the other hand, the learned A.R. for the Revenue submitted that the appellants have availed credit on GTA services utilized for transportation of finished goods beyond their factory gate which is their place of clearance during the impugned period. He further submitted that the phrase clearance of final products from the place of removal was substituted by clearance of final products upto the place of removal in the main portion of the definition of input service under Rule 2(l) of Cenvat Credit Rules, 2004 with effect from 1.4.2008. He also submitted that the services of outward transportation does not qualify as input service in terms of Rule 2(l) (iii) of the Cenvat Credit Rules, 2004 inasmuch as the same is not used directly or indirectly, in or in relation to the manufacture of the final products but used in or in relation to the sales activities.
6. After considering the submissions by both the parties, I find that the issue involved in the present case is denial of Cenvat credit on outward transportation of the goods to the customers premises and this issue is no longer res-integra and is squarely covered in favour of the appellants in view of plethora of judgments cited supra. Following ratio of the cited judgments, I am of the opinion that the impugned order is not sustainable in law and, therefore, I set aside the impugned order by allowing the appeal of the appellant with consequential relief, if any.
(Operative portion of the Order was pronounced in Open Court on 09/11/2016.) S.S GARG JUDICIAL MEMBER rv 7