Custom, Excise & Service Tax Tribunal
M/S. Parasakti Cement Industries Ltd vs Cc,Ce&St, Guntur on 18 March, 2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench Division Bench
Court I
Date of Hearing:18/03/2013
Date of decision:18/03/2013
Application No.ST/Stay/2070/2012
Appeal No.ST/2869/2012
(Arising out of Order-in-original No.62/2012.C.Ex. dt. 19/07/2012 passed by CCE,C&ST, Guntur)
For approval and signature:
Honble Mr. P.G. Chacko, Member(Judicial)
Honble Mr. B.S.V. Murthy, 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?
No
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3.
Whether their Lordship wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Parasakti Cement Industries Ltd.
..Appellant(s)
Vs.
CC,CE&ST, Guntur
..Respondent(s)
Appearance Mr. V. Venkateswara Rao, Consultant for the appellant.
Mr. S. Teli, Deputy Commissioner(AR) for the respondent.
Coram:
Honble Mr. P.G. Chacko, Member(Judicial) Honble Mr. B.S.V. Murthy, Member(Technical) FINAL ORDER No._______________________ [Order per: P.G. Chacko] This application filed by the appellant seeks waiver and stay in respect of the adjudged dues including CENVAT credit of Rs.1,68,19,064/- denied to them on Goods Transport Agents(GTA) service for the period from November 2009 to September 2010. After perusing the records and hearing both sides, we are of the view that the appeal itself requires to be finally disposed of at this stage. Accordingly, after dispensing with predeposit, we take up the appeal.
2. During the aforesaid period, the appellant took CENVAT credit on GTA service which was used for outward transportation of their final products from the factory to their customers premises. The show-cause notice issued by the Department proposed to deny this credit to the appellant on the ground that the above service did not constitute input service as defined under Rule 2(l) of the CENVAT Credit Rules, 2004. The notice also proposed a penalty on the party besides proposing to levy interest on inadmissible CENVAT credit. The proposals were contested. It was in adjudication of this dispute that the impugned order was passed by the learned Commissioner confirming the demand against the assessee, demanding interest on the amount of CENVAT credit found to have been irregularly taken, and imposing a penalty equal to such CENVAT credit on the party.
3. The learned consultant for the appellant submits that they had furnished sufficient materials to substantiate their claim before the adjudicating authority that the sale and transfer of property in the final products cleared from the factory to the buyers premises had occurred at the latter premises, but such materials were not properly appreciated. It is submitted that the freight and the cost of insurance were included in the assessable value of the final products and that the goods were supplied on F.O.R. destination basis and further that the property in the goods vested in the buyer at their premises only. On this basis, it is argued that the place of removal in this case was the buyers premises and, therefore, the GTA service should be held to have been used for outward transportation of the final products from the factory to the place of removal. In other words, according to the learned consultant, the GTA service would squarely fit in the definition of input service as amended w.e.f. 01/04/2008 (the word upto substituted for the word from preceding the expression place of removal). The learned consultant relies on Ambuja Cement Ltd. Vs. UOI & ors. [2009(236) ELT 431 (P&H)] wherein the Honble Punjab & Haryana High Court upheld the Boards Circular No.97/8/2007-ST dt. 23/08/2007 and also held that a manufacturer claiming CENVAT credit on GTA service used by him for outward transportation of final products from the factory to buyers premises was required to satisfy all the three conditions stipulated in the above Circular viz. (i) the ownership of the goods and the property in the goods remaining with the seller of the goods till the delivery of the goods in acceptable condition to the buyer at his door- step, (ii) the risk of loss of the goods or damage to the goods during the transit also remaining with the seller, (iii) the freight charges being an integral part of the price of the goods. The learned consultant for the appellant has argued before us that they satisfied all these requirements and hence are entitled to claim CENVAT credit on GTA service.
4. Per contra, the learned Deputy Commissioner(AR) submits that, in the present case, the factory of the appellant was the place of removal and hence the appellant cannot claim CENVAT credit on the freight incurred for outward transportation of the goods from the factory. In this connection, the learned Deputy Commissioner(AR) points out that the word upto was substituted for the word from preceding the expression place of removal figuring in the text of the definition of input service. He also claims support from this Tribunals decision in Lafarge India Pvt. Ltd. Vs. CCE, Raipur [2011(22) STR 603) Tri. Del.)] wherein the meaning of place of removal was discussed and the case was distinguished from the case of Ambuja Cement.
5. We have given careful consideration to the submissions. From the impugned order, it appears that CENVAT credit on GTA service came to be denied to the appellant for want of evidence of sale and transfer of property in the goods having occurred at the buyers premises. The learned Commissioner, indeed, relied on the Boards Circular dt. 23/08/2007 ibid. He also appears to have followed the converse of a finding recorded by the Honble Supreme Court in the case of Escorts JCB Ltd. Vs. CCE, Delhi-II [2002(146) ELT 31(SC)]. The apex court had, in the context of examining the meaning of place of removal defined under Section 4 of the Central Excise Act, held that the goods had to be treated as delivered to the buyer and the property and possession of the goods passed on to the buyer when the goods were handed over to transporter in view of the provisions of Section 27 and 39 of the Sale of Goods Act, 1930. The apex court had also held that the place of removal continued to be the factory gate irrespective of the fact whether transit insurance and freight were arranged by the assessee but charged to the buyer for the goods delivered to their customers. Thus, from the tenor of the impugned order, it is clear that the adjudicating authority was inclined to accept the proposition that, where the sale and transfer of property in goods occurred at the buyers premises, the said premises would qualify to be place of removal of the goods. The adjudicating authority, however, found no evidence in support of the assessees claim that the sale and transfer of property in goods occurred at the buyers premises. Before us, the learned consultant for the appellant has submitted that sufficient evidence was adduced before the adjudicating authority but not considered. He has produced sample copies of purchase orders and has claimed that similar documents were produced before the adjudicating authority also. The documents produced before us are copies of purchase orders dt. 28/07/2010 and 15/06/2010 placed on the appellant by one M/s. Madhucon Projects Ltd. and one M/s. Saraiwwalla AGRR Refineries Ltd. respectively. The terms and conditions attached to these purchase orders have been perused at our end. These terms and conditions, apparently, include (i) freight inclusive upto our site, (ii) insurance inclusive upto our site, (iii) any loss due to breakage, leakage, pilferage etc. due to faulty packing will be borne by you and the like. We are not sure whether these documents were in fact produced by the appellant before the Commissioner. Nevertheless, for the ends of justice, it is necessary that a reasonable opportunity of adducing such evidence should be allowed to the appellant inasmuch as their claim of CENVAT credit was rejected solely on the ground that the sale and transfer of property in the goods were not shown to have occurred at the buyers premises. In other words, the learned Commissioner did not find evidence of the appellant having satisfied the three conditions laid down by the Board in Circular dt. 23/08/2007. Had the necessary evidence been adduced by the appellant, obviously, the learned Commissioner would have allowed the credit in terms of the Boards Circular. The adjudicating authority would not have rejected the appellants claim on the ground pressed before us today by the learned Deputy Commissioner(AR) who has argued that the buyers premises can never be the place of removal as per the amended definition of input service. In any case, we have found a fit case for remand to the adjudicating authority despite the fact that the substantive view taken by it with reference to the amended definition of input service is final. We are ordering remand of the case only to enable the party to adduce sufficient evidence to substantiate their claim before the adjudicating authority. Our order is for the ends of justice.
6. The impugned order is set aside and this appeal is allowed by way of remand with a request to the Commissioner to undertake de novo adjudication of the dispute in accordance with law after giving the party a reasonable opportunity to adduce evidence and to be personally heard. The stay application also stands disposed of.
(Pronounced and dictated in open court) (B.S.V. MURTHY) MEMBER (TECHNICAL) ( P.G. CHACKO ) MEMBER (JUDICIAL) Nr 8