Custom, Excise & Service Tax Tribunal
M/S National Steel & Agro Industries Ltd vs Cce, Indore on 2 June, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing/Decision : 2.6.2014
No. E/Misc./53037/2014, E/Stay/52463/2014 and E/51970/2014-EX
[Arising out of Order-in-Original No. 05-09/COMMR/CEX/IND/2014 dated 17.1.2014 passed by the Commissioner of Customs, Central Excise & Service Tax, Indore]
For Approval & Signature :
Honble Mr. Justice G. Raghuram, President
Honble Mr. R.K. Singh, 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?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
M/s National Steel & Agro Industries Ltd. Appellant
Vs.
CCE, Indore Respondent
Appearance:
Shri Amit Jain, Advocate - for the appellant
Shri Amresh Jain, D.R. - for the respondent
Coram : Honble Mr. Justice G. Raghuram, President
Honble Mr. R.K. Singh, Member (Technical)
F. Order No. 52409/2014
Per R.K. Singh :
M/s National Steel & Agro Industries Ltd. (hereinafter referred to as the Appellant) have filed a Misc. application for interim stay pending hearing of their stay application No. E/Stay/52463/2014-Ex. filed along with their appeal against Order-in-Original No. 05-09/COMMR/CEX/IND/2014 dated 17.1.2014. The Appellant has stated that while their stay application is pending, the department is pressing hard for recovery and the Supdt. concerned has issued them letters demanding payment relying on the Boards Circular No. 967/01/2013-CX dated 1.1.2013. The applicant had contended that the said circular has been held to be invalid by various judicial pronouncements and cited several judgements of the various High Courts holding that coercive recovery action cannot be initiated during the pendency of the stay application.
2. The Appellant inter alia prayed that the Revenue should be directed not to take any coercive action for recovery and take up their stay application out to turn.
3. The matter was heard in detail on 2.6.2014 and as both sides agreed, we proceed to dispose of the appeal itself.
4. The basic issue involved in the main Show Cause Notice followed by the periodical Show Cause Notices for subsequent periods is whether Cenvat credit is admissible for the port services and CHA services utilised by the Appellant in respect of their exported goods. In their submissions and also during the hearing the ld. Advocate for the Appellant pointed out that the place of removal in respect of their exported goods is the port of loading because up to the port, ownership of the goods remains with the exporter. The Appellant stated that they have been regularly filing ER-1 returns where the disputed Cenvat credit has been shown to have been taken and therefore there has been no suppression or wilfull mis-statement on their part. It was also contended that as per the definition of input service the services used by the manufacturer whether directly or indirectly in or in relation to the clearance of final product from the place of removal (upto 31.03.2008) and upto the place of removal (w.e.f. 01.04,2008) are eligible for credit. Ld. Advocate for the Appellant took us through the definition of place of removal as given in Section 4 as well as the definition of sale given in Section 2 (h) of the Central Excise Act 1944 to argue that as the ownership of the exported goods remained with the exporter up to the port, the port is the place of removal. He also took us through a series of judgments on the issue wherein it has been held that in case of exported goods the place of removal is the port of shipment and that the Service Tax paid on the services used up to the port of loading would be eligible for Cenvat credit.
5. The ld. Advocate also stated that in the Order-in-Original the adjudicating authority has not discussed the arguments and judgements put forth by them in support of their claim that the place of removal in their case for their exported goods is the port. It was also argued that the ER-1 returns have been regularly filed showing the impugned credit and these is no wilfull mis-statement or suppression of facts and so the demand is time-barred.
6. Ld. DR reiterated the contentions contained the impugned order-in-original and fairly admitted that the adjudicating authority has not adequately discussed as to how, in spite of the Appellants submissions and judicial pronouncement cited by the Appellant, the place of removal in respect of impugned exported goods is held to be the factory gate and not the port of shipment as claimed by the Appellant. He also admitted that this is a matter of fact which requires verification and agreed that the case should be remanded to the adjudicating authority for re-determination of the place of removal for the exported goods taking into accounts the arguments/contentions put forth by the Appellants and the judicial pronouncements cited by them.
7. We have perused the order in original. The adjudicating authority has observed that the Boards Circular dated 23.8.2007 is a clarification only with respect to the eligibility of Service Tax paid on GTA services and is not applicable in respect of the Custom House Agent and port service. The adjudicating authority also referred to a letter No. NSAL/2009-10/87 dated 30.9.2009 wherein the Appellant has stated that the place of removal is the factory gate. The adjudicating authority further held that in their monthly returns they have simply mentioned the gross amount of Service Tax credit taken and never disclosed the input services on which it is taken and therefore they are guilty of suppression and wilful mis-statement.
8. We observe that the issue as to what is the place of removal has been touched upon by the adjudicating authority in para 15.3 which contains the following observation:-
Quote The noticee has also referred a large number of cases in their defence reply and claimed that in all these cases it is held that the place of removal in the case of export of goods is the port from where the goods are exported. I observe that the noticee has exported their final product and availed the credit of service tax paid on Customs House Agent and Port Services in export of goods. The final product during the course of journey before reaching the foreign buyer, goes through the local transporter and get unloaded at the port area and gets loaded into the ship and thereafter gets cleared from the port of destination and further gets transported to the place of the buyer. Thus, the contract between the buyer and the noticee may be for delivery at any place like their factory gate of the noticee, port area in India, i.e. FOB, port area in the foreign country or even the premises of the buyer abroad i.e. CIF. When the goods are handed over to the buyer, at the factory gate, the factory gate is treated as place of removal. The noticee claimed that when the goods are handed over at the load port in India, the said port is place of removal. Similarly, the noticee claimed that when the goods are handed over at the foreign port, the port of import in the foreign country or delivered at the premises of the foreign buyer, the same is place of removal. We observe that this interpretation is highly farfetched. End-quote.
9. We find that the adjudicating authority has not discussed the contentions of the Appellant made in their submissions and have not recorded any definitive finding as to what is the place of delivery of the exported goods is the present case and yet has concluded that the place of removal for the exported goods is factory gate and not the port of shipment. The Appellants letter dated 30.09.2009 stating that the place of removal is factory gate is with reference to the departments queries which did not refer to exported goods. It can be nobodys case that an assessee necessarily has to have only one place of removal for all their clearances. It does come out from the adjudication order that the adjudicating authority may not be averse to allowing the credit of service tax paid on port services and GTA services if the place of removal is determined to be the port of loading.
10. The adjudicating authority has also not brought out as to how the Appellant is guilty of wilful mis-statement or the suppression of facts. The adjudicating authority has merely stated that in their ER-1 returns they did not declare as to on which input services the credit was taken. He has not discussed whether the Appellant was required under any provision of law to declare in ER-1 returns or otherwise the names/details of services in respect of which the Appellant had taken the Cenvat Credit. It is settled law that mere not telling is not suppression when there is no legal requirement to tell.
11. The learned DR and the learned Advocate for the Appellant in all fairness agree that the case needs to be remanded for re-determination of the place of removal in respect of the exported goods involved after properly taking into account the submissions of the Appellant and the judicial pronouncements cited by them as that is germane to the issue of admissibility of credit of Service Tax paid on the CHA services & port services.
12. In view of the foregoing we set aside the impugned order and remand the case to the adjudicating authority with the following directions :-
(i) The contentions of the Appellant regarding the place of removal being the port of shipment in respect of their exported goods should be taken into consideration before arriving at the decision regarding the place of removal and then to make a determination whether the CHA Service and the Port Services would qualify to be called input service.
(ii) To elaborate and bring out clearly as to how the assessee is guilty of wilfull mis-statement or suppression of facts.
13. The adjudicating authority will grant an opportunity to the Appellant for being heard. We make it clear that we have not expressed any opinion in this order on the issues involved (i.e. admissibility or otherwise of the Cenvat credit of the Service Tax paid on CHA Services and port Services).
14. In view of the above, appeal is allowed by way of remand.
(Justice G. Raghuram) President (R.K. Singh) Member (Technical) RM ??
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