Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs H.D. Fire Protect (P) Ltd on 31 May, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. E/71/10 (Arising out of Order-in-Appeal No. YDB/125/M.III/2009 dated 4.11.2009 passed by Commissioner of Central Excise (Appeals), Mumbai-II) For approval and signature: Honble Mr. P.G. Chacko, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No 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 : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Commissioner of Central Excise, Mumbai-III Appellant Vs. H.D. Fire Protect (P) Ltd. Respondent Appearance: Shri Manish Mohan, Authorised Representative (SDR), for appellant Shri Rajiv Luthia, Chartered Accountant, for respondent CORAM: Honble Mr. P.G. Chacko, Member (Judicial) Date of Hearing: 31.5.2011 Date of Decision: 31.5.2011 ORDER NO
This appeal of the Revenue is directed against order-in-appeal No.125/2009 dated 4.11.2009 passed by the Commissioner of Central Excise (Appeals), Mumbai-II, wherein the appellate authority allowed to the assessee CENVAT credit on outward transportation of final products. In the impugned order, the Commissioner (Appeals) did not consider the admissibility of CENVAT credit on other services as he took the view that the question of admissibility of CENVAT credit on other services was beyond the scope of the Tribunals remand order dated 12.6.2009. Against this part of the order of the Commissioner (Appeals), the assessee also filed appeal No. E/9/10 which was allowed by way of remand vide order No. A/16/11/SMB/C-IV dated 15.12.2010, wherein this Tribunal correctly noted that the earlier remand order had required the appellate authority to decide on all issues afresh. I am told that, pursuant to the second remand order dated 15.12.2010 of this Tribunal, the learned Commissioner (Appeals) has passed final order which is said to have been accepted by both sides.
2. In so far as GTA service used by the assessee for outward transportation of their final products during the period of dispute is concerned, the question of admissibility of CENVAT credit was rightly kept outside the ambit of the second remand order dated 15.12.2010 inasmuch as, on this issue, the learned Commissioner (Appeals) passed order No.125/2009 dated 4.11.2009 ibid. It is this very issue which is being agitated before me in the present appeal of the Revenue.
3. The learned SDR has reiterated the grounds of this appeal. With reference to the Punjab & Haryana High Courts judgment in Ambuja Cements Ltd. vs. UOI 2009 (236) ELT 431 (P&H), the appellant submits thus:-
It is submitted that the Punjab & Haryana High Court judgment did not overturn the basic proposition that the Cenvat credit is not available on the outward freight beyond the place of removal. As in this case, the terms of delivery is ex-works and only transit insurance is taken for the entire transaction including both supply and sales on FOR destination, and the freight did not form the price of the excisable goods, the requirements of the Boards Circular having not fulfilled, the benefit allowed under Punjab & Haryana High Court is not applicable in this case. In another part of the memo of appeal, the appellant has stated thus:-
The reliance placed by the Honble Tribunal on the decision of Punjab and Haryana High Court in the case of Gujarat Ambuja Cements Vs Union of India 2009 (14) STR 3 (P&H) is not applicable to the present dispute as the facts involved are clearly distinguishable in this case. The limited issue that came up for consideration before the Honble Punjab & Haryana High Court was whether the service of transportation upto the customers door step in the case of FOR destination sales where the entire cost of freight is paid and borne by the manufacturer, would be input service within the meaning of Rule 2(1) of Cenvat Credit Rules, 2004. At no point of time, the appellant either at the stage of original proceedings before the adjudicating authority, or appeal proceedings before Commissioner of C.Ex (Appeals) or CESTAT, Bangalore had raised the issue that their terms of sales is FOR destination. On the other hand, the assessee vide their letter dated 17.09.2009 addressed to the Assistant Commissioner, LTU, Bangalore has categorically stated that the freight charges were not integral part of the price of the goods delivered to the customer. Yet another ground raised in this memo of appeal is that any decision in the present appeal will be premature inasmuch as the appeal filed by the department before the Honble Karnataka High Court against the Tribunals decision in the case of ABB Ltd. [2009 (15) STR 23 (Tri.-LB)] is yet to be disposed of by the High Court.
4. The learned consultant for the assessee refers to the written submissions which were filed on 30.5.2011. The assessee has relied on the Honble Bombay High Courts decision in CCE, Nagpur vs. Ultratech Cement Ltd. 2010-TIOL-745-HC-MUM-ST and the Tribunals decision in Modern Petrofils vs. CCE, Vadodara 2010-TIOL-429-CESTAT-AHM. They have also relied on the Tribunals Larger Bench decision in the case of ABB Ltd. vs. CCE, Bangalore 2009-TIOL-830-CESTAT-BANG-LB. Reliance has also been placed on the Honble Bombay High Courts decision in Coca Cola India Pvt. Ltd. vs. CCE, Pune-III 2009 (242) ELT 168 (Bom.). The learned consultant has claimed that the freight charges involved in the outward transportation of their final products from the factory to the customers premises were also included in the transaction value of the goods and that Central Excise duty thereon was paid and recovered from the customers. It is claimed that the place of removal of the goods was the customers premises and, therefore, in terms of the definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004, the GTA services utilised for such outward transportation qualify to be input service and, therefore, CENVAT credit of the service tax paid thereon is admissible to the assessee.
5. It appears from the grounds of the present appeal of the Revenue that the assessee, in a letter addressed to the Assistant Commissioner of Central Excise, LTU, Bangalore, said that the freight charges were not integral part of the price of the goods delivered to the customers. The consultant for the assessee has claimed that the freight charges were also part of the assessable value of the goods delivered to the customers. On the other hand, it appears from the impugned order that the question whether the freight charges were included in the assessable value of the goods was not examined by the appellate authority though that was one of the questions to be considered in terms of the Boards circular dated 23.8.2007. Two more conditions to be satisfied by a manufacturer of final product claiming CENVAT credit on GTA service used for outward transportation of the product, in terms of the said circular, remained outside the realm of decision of the Commissioner (Appeals). The relevant paragraph of the impugned order is reproduced below:-
I have gone through the case records and considered the averments made in the appeal. In view of the Honble CESTATs order dated 12.6.2009, Honble Punjab & Haryana High Courts order in Ambuja Cements V/s. Union of India 2009-TIOL-110-HC-P&H and Larger Bench order in ABB Ltd. and others V/s. CCE & Others 2009-TIOL-830-CESTAT-BANG-LB, the services availed by a manufacturer for outward transportation of final products from the place of removal have to be treated as input service under Rule 2(1)(ii) of the Cenvat Credit Rules, 2004 and the credit on such input services has to be allowed. It is clear from the above order of the Commissioner (Appeals) that there was no attempt by him to consider whether the relevant conditions stipulated by CBEC in circular dated 23.8.2007 had been satisfied by the assessee in support of their claim for CENVAT credit on GTA service used for outward transportation of final product. The order of the Commissioner (Appeals) cannot be accepted as a speaking order on the issue handled by him.
6. In the impugned order, the learned Commissioner (Appeals) has rightly relied on the High Courts decision in Ambuja Cements (supra). He has also referred to the Tribunals Larger Bench decision in the case of ABB Ltd. (supra). The departments appeal against the Tribunals decision in the case of ABB Ltd. has since been finally disposed of by the Karnataka High Court.
7. In the present appeal, the department has taken the stand that the High Courts decision in Ambuja Cements (supra) is distinguishable and inapplicable. The department is precluded from taking this stand, having accepted the Tribunals remand order dated 12.6.2009 directing the lower appellate authority to decide the case afresh in the light of the High Courts decision in Ambuja Cements (supra).
8. It appears that neither side is aware of the fact that the Honble Karnataka High Courts decision in the case of ABB Ltd. has since been published. I make this remark only for the benefit of the learned Commissioner (Appeals) who will be required to take de novo decision on the question whether the assessee can legitimately claim CENVAT credit on GTA service in terms of the Boards circular.
9. The impugned order is set aside and this appeal is allowed by way of remand with a request to the Commissioner (Appeals) to pass a speaking order on the aforesaid issue after giving the assessee a reasonable opportunity of being heard. It is made clear that it will be incumbent on the assessee to establish that they have satisfied the conditions laid down in the Boards circular. Therefore, if necessary, the assessee can be given a reasonable opportunity of adducing evidence as well. The case law cited by both sides today are also open to be considered by the Commissioner (Appeals) if found relevant.
(Dictated in Court) (P.G. Chacko) Member (Judicial) tvu 1 7