Custom, Excise & Service Tax Tribunal
Lucas Tvs Ltd vs Commissioner Of Central Excise, ... on 8 November, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNALSOUTH ZONAL BENCH CHENNAI Appeal No.E/41800/2017 [Arising out of Order-in-Appeal No.199/2017(CXA-II) dt.21.4.2017passed by the Commissioner ofCentral Excise (Appeals-II),Chennai] Lucas TVS Ltd. Appellant Versus Commissioner of Central Excise, Chennai-II Respondent
Appearance:
ShriRaghavanRamabadran, Advocate For the Appellant ShriA Cletus,AC (AR) For the Respondent CORAM :
HonbleMs.SulekhaBeevi C.S. Member (Judicial) Date of hearing : 24.10.2017 Date of Pronouncement :08.11.2017 FINAL ORDER No. 42828 / 2017 The appellants are manufacturers of Motor Vehicle parts and accessories and are registered with the Central Excise Department. They availed Cenvat credit on outward transportation of finished products for clearances within India as well as for export. Department was of the view that as per the definition of input services in Cenvat Credit Rules, 2004, the credit is admissible for outward transportation of finished goods only upto the place of removal. That the place of removal for Central Excise law being the factory gate, the appellants are not eligible for credit beyond the factory gate upto the buyers premises on the service tax paid on outward transportation. Show Cause Notices were issued for the period 8/2007 to 5/2008 and after due process of law, the original authority disallowed the credit, confirmed the demand and imposed penalties. The appellant filed appeal before the Commissioner (Appeals) who vide order dated 1.2.2011 had allowed the credit. Against this department filed appeal before the Tribunal and vide order dated 31.8.2015, the Tribunal remanded the matter to the Commissioner (Appeals) who vide order impugned herein disallowed the credit on outward transportation for domestic sales and upheld the demand pertaining to such services and imposed penalty. However, the demand in respect of credit availed on outward transportation for clearances of export was allowed and the demand pertaining to this was set aside. Again, the credit of service tax paid on inward transportation was found eligible and allowed. The appellants are now before the Tribunal aggrieved by the disallowance of credit of service tax paid on outward transportation for domestic clearances uptothe buyers premises.
2. The Ld.Counsel, Shri Raghavan Ramabadran appeared on behalf of the appellant and submitted that the purchase order and such other documents would show that the domestic sale is on FOR basis. The Tribunal while remanding the matter had given specific direction to the Commissioner (Appeals) to examine the evidence andto verify whether the documents would satisfy the conditions laid in the Circular No.97/8/2007-ST dt.23.8.2007.In the said Circular the Board had clarified that credit is eligible on outward transportation upto the buyers premises, if sale is on FOR basis. That Commissioner (Appeals) failed to give any observation in this regard eventhough appellant had furnished all documents. The service tax on outward transportation on export clearances was allowed but the Commissioner (Appeals) has disallowed the credit on domestic clearances. He submitted that the Commissioner (Appeals)has wrongly placed reliance on the case of CCE, Nagpur Vs Ispat Industries Ltd 2015 (324) ELT 670 S.C. The Ld.Counsel submitted that in their own case vide decision reported in 2016 (43) STR 418 (Tri-Chennai) the Tribunal had held the issue in favour of appellant. The Ld.Counsel relied on the following judgements in which the issue is held in favour of assesse.
The Commissioner of Central Excise, Coimbatore Vs M/s.Aqua Flow, Coimbatore 2015-TIOL-2531-HC-MAD-CX Commissioner of C.EX.& S.T., LTU, Bangalore Vs ABB Limited 2011 (23) S.T.R. 97 (Kar.) Commr.Of Cus.&C.EX., Hyderabad-III Vs Grey Gold Cements Ltd 2014 (34) S.T.R. 809 (A.P.) Commissioner of C.Ex., Nagpur VsUltratech Cement Ltd. 2010 (20) S.T.R. 577 (Bom.) M/s.Madras Cements Ltd Vs 1) The Additional Commissioner of Central Excise, Bangalore, 2) The Commissioner of Central Excise (Appeals-I), Bangalore 2015-TIOL-1682-HC-KAR-CX Commissioner VsEllora Time Ltd. 2014 (34) S.T.R.801 (Guj.) RamalaSahkariChini Mills Ltd. Vs. Commissioner of Central Excise, Meerut-I 2016 (334) E.L.T. 3 (S.C.) Commissioner of C.Ex., Dehradun VsForace Polymers Pvt. Ltd. 2016 (45) S.T.R. 198 (Tri.- Del.)
3. Against this the Ld.AR, Shri A.Cletus reiterated the findings in the impugned order. He relied upon the decision in the case of Vesuvious Ltd.
4. Heard both sides.
5. The issue for consideration is whether the appellant is eligible for credit on service tax paid on outward transportation services availed for domestic clearances of finished products upto the buyers premises. The Commissioner (Appeals) has disallowed the credit holding that as per the definition of input services, the credit is admissible only upto the place of removal. Since the place of removal is factory gate, the appellant is not eligible for credit for clearances of goods beyond the place of removal/factory gate. The Board vide Circular No.97/8/2007-ST dt.23.8.2007 has clarified that credit is admissible for outward transportation upto buyers premises if the sale is on FOR basis. In para 8.2 the Board clarifies as under :
It is therefore, clear that for a manufacturer/consignor, the eligibility to avail credit of the service tax paid on the transportation during removal of excisable goods would depend upon the place of removal as per the definition. In case of a factory gate sale, sale from a non-duty paid warehouse, or from a duty paid depot (from where the excisable goods are sold after their clearance from the factory), the determination of the place of removal does not pose much problem. However, there may be situations where the manufacturer/consignor may claim that the sale has taken place at the destination point because in terms of the sale contract / agreement (i) the ownership of goods and the property in the goods remained with the seller of the goods till the delivery of the goods in acceptable condition to the purchaser at his door step; (ii) the seller bore the risk of loss of or damage to the goods during transit to the destination and (iii) the freight charges were an integral part of the price of goods. In such cases, the credit of the service tax paid on the transportation up to such place of sale would be admissible if it can be established by the claimant of such credit that the sale and the transfer of property in goods (in terms of the definition as under Section 2 of the Central Excise Act, 1944 as also in terms of the provisions under the Sale of Goods Act, 1930) occurred at the said place.
6. The Ld.Counsel has stressed that the sale is on FOR basis and the ownership of the goods rests with appellant till the goods are delivered at the buyers premises. However, the Commissioner (Appeals) has not made any observation in this regard with respect to the documents, in spite of the direction given while remanding the matter. Instead the Commissioner (Appeals) has relied upon the decision in the case of Ispat Industries Ltd (supra) to hold that factory being the place of removal, the appellant is not eligible for credit for the outward transportation upto buyers premises. The decision laid by the Honble Apex Court in the above case was on the issue of valuation and not with regard to definition of input services or the eligibility of credit. The Tribunal in the case of Forace Polymers Ltd (supra) has distinguished the same. Moreover, the Honble jurisdictional High Court in the case of Aqua Flow (supra) has held that in terms of the Board Circular credit is admissible on outward transportation upto the buyers premises. Similar view is taken by various High Courts of Karnataka, Andhra Pradesh, Bombay, Gujarat. Following the said decisions, I am able to safely conclude that credit would be admissible upto the buyers premises, if the condition in the Circular No.97/8/2007-ST dt.23.8.2007 is satisfied or sale is on FOR basis or the ownership rests with the manufacturer till the goods are delivered to the buyers premises. However, the evidences in this regard having not dealt with in the impugned order, I am of the view, that the matter requires to be remanded to the Commissioner (Appeals) who shall look into the evidence / documents furnished by the appellant and consider the eligibility of credit based on the above discussions as well the decisions on this issue. In the result, the impugned order to the extent of disallowing the credit on service tax paid on outward transportation on domestic clearances is set aside and this issue alone is remanded to the Commissioner (Appeals) for looking into the evidence who shall decide the eligibility of credit on the basis of observations made in this order. Appeal is allowed by remand to Commissioner (Appeals).
(Order pronounced in open court on 08.11.2017) (Sulekha Beevi C.S) Member (Judicial) vsr 2 1