Custom, Excise & Service Tax Tribunal
The Ramco Cements Ltd vs Commissioner Of Central Excise on 22 July, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal Nos.E/41768/2015 & E/41769/2015
[Arising out of Order-in-Appeal No.145 & 146/2015-CXA-II dt. 12.6.2015 passed by the Commissioner of Central Excise (Appeals-II), Chennai]
The Ramco Cements Ltd.
[formerly Madras Cements Ltd.]
Appellant
Versus
Commissioner of Central Excise,
Chennai-IV Respondent
Appearance:
Shri R. Parthasarathy, Consultant For the Appellant Shri A.Celtus, ADC (A.R) For the Respondent CORAM:
Honble Shri P.K.Choudhary, Judicial Member Date of hearing :30.06.2016 Date of pronouncement : 22.07.2016 FINAL ORDER No.41247-41248/2016 Both the appeals are arising out of a common order-in-appeal dt. 12.6.2015 passed by Commissioner of Central Excise (Appeals-I), Chennai and therefore they are taken up together for disposal.
3. M/s. Ramco Cements, the appellant herein are manufacturers of Dry Mix Plasters and are availing cenvat credit on various inputs, capital goods and input services. The Appellant sell their product directly from their factory and also through various depots. In the State of Karnataka, the appellants have appointed a clearing and forwarding agent Viz.M/s.Ankur Enterprises, Bangalore and the services of M/s. TR Viswamavaharam, Cochin to carry out all the activities relating to the sale of the appellant's products. Proceedings were initiated against the appellants for two periods, March 2008 to September 2012 and December 2011 to September 2012, alleging that the appellant had availed cenvat credit on service tax paid on 'loading charges' for loading the goods from their godown into their customer's vehicles in the first show cause dated 08/04/2013 and availment of credit on service tax paid on delivery charges from godown to their customer's place in the second show cause dated 28/12/2012 for an amount of Rs.1,64,526/- and Rs.97,485/- respectively. The Department's contention is that the delivery charges and loading charges are not eligible for availment of credit as they had occurred beyond the place of removal.
4. The Appellant had filed their replies to the show cause notice on 03/12/2013 and 15/05/2013 respectively, inter alia contending that they are eligible for the credit and that the eligibility of CENVAT credit is based on a broader perspective and the yardstick which is applied for extending the CENVAT credit for input and capital goods cannot be applied for input services; that the definition of input services as given in Rule 2(l) of the CENVAT credit Rules 2004 seeks to include various services which may not have nexus to manufacture of final products by the manufacturer and there are some specific services which are rendered at a place which is different from the place of manufacture; that penalty under Rule 15 is unsustainable as they were eligible for the credit.
5. After taking into account the submissions of the appellant, the credits were disallowed and mandatory penalties were imposed. On a further appeal to the First Appellate authority, the plea of the appellant was negatived and their appeal was rejected and the disallowance of credit was upheld. As regards penalty imposed for the issue pertaining to delivery charges the same was set aside but with regard to the penalty imposed for the dispute pertaining to loading charges the same was upheld. This appeal is against the common Order-in-Appeal No.145-146/2015 dt.12/06/2015.
6. The Appellant was represented by Shri R. Parthasarathy, Consultant and the Revenue was represented by Shri A. Celtus, ADC, (A.R).
7. Heard both sides in the matter and perused the records. The learned Commissioner (Appeals) has denied the credit for the reason that with effect from 01/04/2008, the words 'Clearance of final products from the 'Place of Removal', were substituted by the words, 'Clearance of Final Products upto the 'Place of Removal' and the expression "place of removal" in so far as the appellant's case, are the godowns situated in the State of Karnataka. The charges paid after the place of removal are not to be construed as eligible for credit.
8. Further, the learned Commissioner (Appeals) has relied on the ruling of the Madras High Court in the case of India Japan Lighting Pvt. Ltd. Vs CCE Chennai - 2013 (288) ELT A23 (Mad.) and held that the case laws relied upon by the appellant are not relevant for the case on hand as they dealt with different situations. The learned Commissioner (Appeals) has erred in interpreting that the delivery charges and loading charges are relating to outward transportation which is beyond the place of removal and has also wrongly interpreted that the reference in the input service definition is related to transportation of goods beyond place of removal.
9. I find that this wrong finding is based on taking into account the inclusive portion alone of the definition of "Input Service". The Learned Commissioner (Appeals) has failed to take note of the main portion of definition of 'input service' which reads as under:
"Any service used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal".
A reading of the above definition makes it clear that as long as the services are related to the clearance of final product upto the place of removal, credit is eligible. It is relevant to state that the 'place for removal' has been defined under Clause (C) of sub-section (3) of Section 4 of the Central Excise Act,1944 which has been extracted in Para 7 of the impugned order which reads as under:
"(C) Place of removal means -
(i) a factory or any other place or premises of production or manufacture of excisable goods.
(ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty;
(iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after the clearance from the factory;
from where such goods are removed."
It was also brought to my notice that this definition of "place of removal" was also incorporated in CENVAT Credit Rules 2004 with effect from 01 July 2014. Further, I also find that based on the above definition, the premises of C&F agent would be treated as 'place of removal' and hence the goods which are being sold from C&F Agent's premises, would be the 'place of removal'. Therefore, the availment of credit of both loading as well as delivery charges are in order and therefore the impugned order is liable to be set aside. The consequential penalty also gets set aside.
Accordingly, both the Appeals are allowed.
(Order pronounced in open court on 22.07.2016) (P.K.CHOUDHARY) JUDICIAL MEMBER gs 5