Custom, Excise & Service Tax Tribunal
M/S Triveni Conductors Ltd vs Cce & St, Indore on 24 August, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing: 16.8.2016
Date of Pronouncement: 24.8.16
Appeal No. ST/52005/2016-ST(SM)
(Arising out of Order-in-Appeal No. BHO-EXCUS-001-046-16-17 dated 3.5.2016 passed by the Commissioner, Customs & Central Excise, Indore)
For Approval & Signature :
Honble Mr. Ashok K. Arya, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it would 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 Department Authorities?
Yes
M/s Triveni Conductors Ltd. Appellant
Vs.
CCE & ST, Indore Respondent
Appearance Shri Rohit Choudhary, Advocate & - for the appellant Ms. Preeti Khiwani, Advocate Shri M.R. Sharma & - for the respondent Shri R.K. Mishra, ARs CORAM: Honble Mr. Ashok K. Arya, Member (Technical) Final Order No. 53188/2016 Per Ashok K. Arya :
Both sides have been heard.
2. The matter concerns with disallowing the Cenvat credit for the service tax paid on input service of outward freight (GTA Service).
3. The appellant has been represented by the ld. Advocates Shri Rohit Choudhary amd Ms. Preeti Khiwani. They have, inter alia submitted as follows.:
(i) Sale involved is depot sale except in a very few cases where delivery is on FOR basis from factory itself.
(ii) The definition of input service in Rule 2(l) (ii) of CCR (Cenvat Credit Rules), 2004 includes the services of outward transportation from the place of removal.
(iii) In support appellant relies upon following case laws:
(a) M/s Gujarat Ambuja Cement Ltd. Vs. CCE, Ludhiana 2007 (6) STR 249 (Tri.-Del.)
(b) M/s Ultratech Cements Ltd. Vs. CCE, Bhavnagar 2007 (6) STR 364 (Tri.)
(iv) With effect from 1.4.2008 wordings from the place of removal has been changed to up to the place of removal in definition of input service.
3.1 The appellant further submits as under:
(i) The net effect of all the above events is that, for deciding the eligibility of credit of service tax paid on outward transportation, the definition of place of removal as defined under Section 4(3)(c) of Central Excise Act, 1944 is of paramount importance. As per the said section;
Place of removal means-
(a) a factory or any other place or premises of production or manufacture of the excisable goods;
(b) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without [payment of duty];
(c) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory;] from where such goods are removed.
(ii) From the above, the legal position is that if the sales takes place from a premises after its removal from the factory, then such place will be treated as place of removal and Rule 2(l)(ii) of Cenvat Credit Rules, 2004 provides that input service credit on the outward transportation is admissible up to the place of removal. Thus, when the Rule 2(l)(i) of CCR 2004 is read with Section 4(3) of Central Excise Act, 1944, the only conclusion that can be drawn is that credit of service tax on the outward transportation is admissible up to the place of removal, from where the sale of goods took place.
(iii) From the above it is crystal clear that the place of removal as defined in Central Excise Act itself recognizes depot also and if sales takes place from a depot, then it should be treated as the place of removal of the excisable goods.
(iv) There is no dispute to the fact that majority of the sales of the appellant takes place from Depot and the cost of transportation from the factory to the Depot is borne and also included in the part of assessable value on which Central Excise duty is paid by the appellant. The assessable value determined by including the transportation up to the place of removal, that is, the depot in this case, is as per the relevant provisions of valuation and Section 4 of the Act. In such cases, the credit of service tax paid on outward transportation is allowable as clarified in the Circular No. 97/8/207 dated 23.8.2007.
(v) The sales are effected either through depot or consignment agent and the appellant bears the cost of transportation and insurance up to these places. These costs are integral part of the assessable value on which duty is paid. The very fact that duty is being paid on these cost element buttress the argument that the credit is available of service tax paid on such transportation cost included in the assessable value.
3.2 The appellant further relies on the following case laws:
(a) CCE Vs. ABB Ltd. 2011 (23) STR 97 (Kar.)
(b) Ambuja Cements Ltd. Vs. UOI 2009 (236) ELT 431 (P&H).
4. The Revenue represented by the ld. ARs. Shri M.R. Sharma and Shri R.K. Mishra reiterated the findings given in the orders of lower authorities.
5. I have carefully considered full facts of the case and the submissions of both sides along with the case laws cited.
6. As per definition of Input Service given in Rule 2(l)(ii) of Cenvat Credit Rules, 2004 (CCR) the service tax paid on the value of input service of outward freight can be availed as credit by the appellant manufacturer. The total period involved is January 2011 to April, 2013 for which five separate SCNs (Show Cause Notices) were issued for respective periods. These SCNs were decided by single O-I-O, and thereafter by the impugned order in appeal upholding the O-I-O saying that Cenvat credit of outward transportation was rightly been denied.
6.1 From the facts on record and the submissions of both the sides, I have arrived to the considered view that for the present appellant sale of the goods took place from Depot only except in a few cases where delivery has been taken by the buyer from the factory itself and where issue of claiming Cenvat credit on outward freight has not arisen. When the ownership of the goods was passed over to the buyer only after the sale had been made and it is over / completed at the depot; then the place of removal in terms of definition of input service given in Rule 2(l) of CCR, 2004 would be depot of the appellant only. The Revenue has failed to provide any evidence to disprove the submission of the appellant that sale of the goods took place from Depot only. The appellant also produced sample copies of purchase orders and invoices issued by them as an evidence to indicate that they made the sales from Depot only in the case under consideration. The Revenue has not controverted these facts and the evidences produced by the appellant in any manner.
6.2 Further the assessee-appellant has included the outward freight changes in the value of the goods being sold to their buyers for the purpose of payment of duty of Central Excise.
7. Considering all the facts discussed above and the definition of input service given in Rule 2 (l) of CCR, 2004 and the Honble High Court of P&H in the case of M/s Ambuja Cements Ltd. (supra) and Honble Karnataka High Courts decision in the case of M/s ABB Ltd. (supra), the appellant is entitled to the Cenvat credit on the input service of outward transportation. The appeal is, therefore, allowed with consequential relief.
(Pronounced in Court on 24.8.2016) (Ashok K. Arya) Member (Technical) RM 6