Custom, Excise & Service Tax Tribunal
M/S Tata Motors Ltd vs The Commissioner Of Central Excise, ... on 21 September, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE E/20344/2014-SM [Arising out of Order-in-Appeal No. 539/2013-CE dated 23/10/2013 passed by Commissioner of Central Excise (Appeals), Bangalore] For approval and signature: HON'BLE SHRI S. S. GARG, JUDICIAL MEMBER 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 Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes M/s Tata Motors Ltd. Appellant(s) Regional Warehouse No. 33, Sy. No. 32/1, Biritena Ahrahara, NH 7, Hosur Road, Electronic City Post, Bangalore-5600100. Versus The Commissioner of Central Excise, Bangalore-I Respondent(s)
C.R. Building, Queens Road, Bangalore 560001.
Appearance:
Mr. Karthikeyan, Advocate For the Appellant Mr. Jagdish, A.R. For the Respondent Date of Hearing: 21/09/2016 Date of Decision: 21/09/2016 CORAM :
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER FINAL ORDER No. 20816/2016 The present appeal is directed against the Order-in-Appeal No. 539/2013-CE dated 23.10.2013 passed by the Commissioner of Central Excise (Appeals), Bangalore vide which he has rejected the appeal of the appellant and upheld the Order-in-Original dated 20/04/2012 passed by the Additional Commissioner of Central Excise, Bangalore-I Commissionerate.
2. The brief facts of the present case are that the appellants carry on the business inter-alia as manufacturer of commercial motor vehicles / chassis, cars and parts thereof and are having factories at different places in the States of Maharashtra, U.P., Karnataka, Jharkhand, Uttarakhand and Gujarat. The appellants also sell spare parts throughout the country. They sell the spare parts on door delivery basis with freight to be billed to the appellants i.e. transportation charges for spare parts upto customers premises is borne by the appellants and they do not charge any transportation charges to their customers separately and the price charged includes transportation cost also. The Department issued a show-cause notice dated 26.07.2011 proposing to recover Cenvat credit of service tax amounting to Rs. 7,66,314/- on outward transportation of spare parts during the period July 2010 to March 2011 on the ground that the service of outward transportation does not qualify as an input service in terms of Rule 2(l) (ii) of Cenvat Credit Rules, 2004, inasmuch as the same is not used, whether directly or indirectly in or in relation to the manufacture of final products and the clearance of final products from the place of removal. Thereafter, vide Orderin-Original dated 20.4.2012, the Additional Commissioner of Central Excise, Bangalore-I Commissionerate confirmed the demand towards Cenvat credit of service tax on outward freight and also imposed penalty. Aggrieved by the same, the appellants filed appeal before the Commissioner (Appeals) who upheld the order of the original authority. Aggrieved by the impugned Order-in-Appeal, the appellant has filed the present appeal.
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)
(iv) (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 has been pronounced in the open court on conclusion of hearing) ( (S. S. GARG) JUDICIAL MEMBER /vc/