Custom, Excise & Service Tax Tribunal
M/S Prism Cement Limited vs Cce & St, Bhopal on 28 October, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. I DATE OF HEARING : 19/10/2016. DATE OF DECISION : 28/10/2016. Excise Appeal No. 56449 of 2013 [Arising out of the Order-in-Original No. 60-63/Commr/CEX/2012 dated 27/11/2012 passed by The Commissioner, Customs, Central Excise & Service Tax, Bhopal.] M/s Prism Cement Limited Appellant Versus CCE & ST, Bhopal Respondent
Appearance Shri B.L. Narsimhan, Advocate for the appellant.
Shri Amresh Jain, Authorized Representative (DR) for the Respondent.
CORAM : Honble Shri Justice Dr. Satish Chandra, President Honble Shri B. Ravichandran, Member (Technical) Final Order No. 54598/2016 Dated : 28/10/2016 Per. B. Ravichandran :-
The present appeal is against order dated 27/11/2012 of Commissioner, Bhopal. The appellants are engaged in the manufacture of cement and clinker liable to Central Excise duty. The cement is cleared either directly to the customers like industrial or institutional consumers or dealers from the factory or to the depots, thereafter to the customers. The dispute in the present appeal is relating to eligibility of the appellant for Cenvat credit of service tax paid for GTA services for outward movement of cement up to the premises of the buyers. The Department entertained a view that place of removal is the factory gate of the appellant and, hence, the service tax paid on transportation from the factory gate to the customers premises is not available as a credit to the appellant in terms of Cenvat Credit Rules, 2004. The Original Authority vide his impugned order dated 27/11/12 disallowed total service tax credit of Rs. 3,14,66,838/- covering the period January 2005 to December 2011 as demanded in 4 different show cause notices.
2. We have heard the learned Counsel for the appellant and the learned AR for the Revenue and also perused the appeal records including written submissions and case laws. We note that the entire dispute in the present case resolves around the fact whether the place of removal is the factory of the appellant or the customers premises. We note that the appellants have submitted the purchase orders placed by industrial/institutional customers indicating that the sale of cement is on FOR basis. Similarly, illustrative copy of dealership agreement is also submitted. It is seen that at the time of dispatch of cement, the appellant issued invoice-cum-delivery challan to the customers with details of transaction. The excise invoice indicated Free On Board (FOB) instead of FOR. This, the appellant explained, is due to limitation in the SAP software. Otherwise the common understanding is FOB stands for delivery at the destination. The commercial invoices issued by the appellant show segregation of value of goods under transportation value for the purpose of VAT, as the excise duty is discharged on MRP basis inclusive of all taxes and transportation. No extra amount is recovered from the customers. The transport is arranged by the appellant and the charges are paid by them including service tax on reverse charge basis. In case of any transit loss credit notes were issued to the customers, which would be recovered later from the transporter.
3. In these backgrounds we have examined the impugned order. The Original Authority relied on dealers agreement which stated that purchase of the goods by dealers will be on ex-works/ex-dump/ FOR basis. It is further stated in agreement that the company shall not be liable for any loss/damage to the goods after the same have been collected for forwarded from the company dump/works. Further, if the freight is on to pay basis, value of damage/shortage will be deducted. On these terms and wordings appearing in the transaction documents, the Original Authority proceeded to examine the terms sale and delivery in terms of Sale of Goods Act, 1930. The Original Authority held that ownership of the goods by the appellant during transit till delivery to the buyer has not been categorically established. It was also mentioned that the date of delivery of goods in the factory is considered as relevant date for pricing of the goods. The sale to third person through dealer is also examined in the original order. It was held that the sale in such situation cannot be held to be at the destination of the dealer. It was recorded that the allegation made in the show cause notice has not been rebutted properly by the appellant. Further, relying on the definition of place of removal, the Original Authority held that in the cases of FOR sales, the law does not recognize place of delivery to be a place of removal merely on the basis of delivery. It was concluded that the appellants sold the goods ex-factory and the place of removal during the relevant period was only factory gate. The Original Authority arrived at the conclusion stating that the appellants failed to demonstrate with cogent evidence that the conditions that are essential for treating outward transportation as input service are satisfied to sustain their claim.
4. We find that the appellants have submitted categorical supporting evidences to the effect that place of removal is the customers premises only. As already noted they heavily relied on the terms of purchase orders, freight payment by the appellants, risk and insurance, inclusion of freight in the value for excise duty in support of their case. We find that substantial evidence in the form of various documents have been submitted by the appellant to legally support their case relating to place of removal. The Original Authority has not examined all the evidences submitted by the appellant. Instead, he observed that the appellants failed to furnished cogent evidence regarding place of removal. Place of removal is a question of fact to be examined with reference to the definition, as mentioned in Section 4 and with the scope as clarified in Board Circular No. 97/8/2007-ST dated 23/08/2007 and decision of Honble Punjab & Haryana High Court in the case of Ambuja Cements Ltd. vs. Union of India reported in 2009 (14) S.T.R. 3 (P&H). We note that the dealers agreement referred to by the Original Authority did mention all modes of transaction mainly ex-works/ex-dump/FOR. It is the claim of the appellant that wherever clearances are on ex-works basis they have not taken any credit. Simply because the dealers agreement covered all contingencies the same will not lead to a conclusion that all clearances by the appellants to the customers are on ex-works basis. We find such assertion is devoid of merit and are contrary to the documentary evidences submitted by the appellant. Since, large number of purchase orders covering the period of demand are to be examined for factual verification, we find it a fit case for remanding the matter back to the Original Authority for re-verification of the facts and to record his finding thereafter. All issues are kept open. The appellants shall be given adequate opportunity to present their side of the case before a decision is taken by the Original Authority. Accordingly, the impugned order is set aside. The appeal is allowed by way of remand.
(Order pronounced in the open court on 28/10/2016.) (Justice Dr. Satish Chandra) President (B. Ravichandran) Member (Technical) PK ??
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5EX/56449 of 2013