Custom, Excise & Service Tax Tribunal
Digvijay Cement Co Ltd vs Rajkot on 25 November, 2024
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench at Ahmedabad
REGIONAL BENCH-COURT NO. 3
Excise Appeal No. 10303 of 2015- DB
(Arising out of OIO-RAJ-EXCUS-000-COM-54-60-14-15 dated 18/12/2014 passed by
Commissioner of Central Excise-RAJKOT)
Digvijay Cement Co Ltd ........Appellant
Digvijaygram Sikka
Jamnagar, Gujarat
VERSUS
Commissioner of C.E. & S.T.-Rajkot ......Respondent
Central Excise Bhavan, Race Course Ring Road...Income Tax Office, Rajkot, Gujarat- 360001 WITH
(i) Excise Appeal No. 10304 of 2015- DB (Digvijay Cement Co Ltd)
(ii) Excise Appeal No. 10305 of 2015- DB (Digvijay Cement Co Ltd)
(iii) Excise Appeal No. 10306 of 2015- DB ((Digvijay Cement Co Ltd)
(iv) Excise Appeal No. 10307 of 2015- DB (Digvijay Cement Co Ltd)
(v) Excise Appeal No. 10308 of 2015- DB (Digvijay Cement Co Ltd)
(vi) Excise Appeal No. 10309 of 2015- DB (Digvijay Cement Co Ltd)
(vii) Excise Appeal No. 11840 of 2015- DB (Shree Digvijay Cement Co Ltd)
(viii) Excise Appeal No. 10834 of 2016- DB (Shree Digvijay Cement Co Ltd) [(Arising out of OIO-RAJ-EXCUS-000-PRCOM-01-15-16 dated 30/09/2015 passed by Commissioner of Central Excise, Customs and Service Tax-RAJKOT),(Arising out of OIO- RAJ-EXCUS-000-PRCOM-25-15-16 dated 14/03/2016 passed by Commissioner of Central Excise, Customs and Service Tax-RAJKOT)] APPEARANCE:
Shri Vikas Mehta, Consultant for the Appellant Shri Rajesh R Kurup, Superintendent (AR) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. C L AMAHR Final Order No. 12808-12816/2024 DATE OF HEARING: 26.09.2024 DATE OF DECISION: 25.11.2024
2|Page E/10303-10309/2015-DB E/11840/2015, E/10834/2016 RAMESH NAIR The issue involved in the present case is that whether the appellant is entitled for Cenvat credit on outward GTA service used in connection with clearance of excisable goods namely cement from their factory premise to buyer premise, in the fact that the cost of transportation was included in the assessable value on which central excise duty was discharged.
2. Shri Vikas Mehta, Learned Counsel appearing on behalf of the appellant at the outset submits that in the identical fact the issue has been decided by this tribunal in the following cases:-
• Sanghi Industries - 2019 (369) ELT 1424 (Tri.Ahmd) • Panoli International (India) Pvt Ltd - 2015 (40) STR 328 (Tri.- Ahmd) • Palco Metals Ltd - 2012(280) ELT 299 (Tri.Ahmd)
3. Shri R.R Kurup, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order.
4. We have carefully considered the submission made by both sides and perused the records. We find that the fact is not under dispute that the appellant have undertaken to deliver the goods at the customer's premises. The freight charges of GTA on which Cenvat credit was taken is included in the assessable value of the excisable goods. This is evident from the excise invoice raised by the appellant. One of the sample invoice is reproduced below:-
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4.1 From the perusal of the above invoice, it is observed that the
freight charges was not separately collected by the appellant, therefore, the same is deemed to be included in the assessable value on which the excise duty was paid. In this identical fact the issue in hand is covered by this Tribunal's judgment in the case of Ultratech Cement Ltd- 2019 (2) TMI 1487 CESTAT Ahmedabad which was upheld by the Hon'ble Gujarat High Court reported at the Commissioner, Central Goods and Service Tax versus M/s. Ultratech Cement Ltd.- 2020 (3) TMI 1206. The said judgment is reproduced below:-
"1.These Tax Appeals are filed under Section 35G of the Central Excise Act, 1944 by the Revenue and are directed against the order No.A/10373/2019 dated 25th February 2019 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zone Bench, Ahmedabad in Appeals Nos.E/11098/2015, E/10271/2015DB and E/11326/2017DB respectively.
2 The Revenue has proposed the following question as substantial question of law:
"(i) Whether in the facts and circumstances of the case, was the Tribunal right in law in allowing the appeal of the respondent to avail Cenvat credit of service tax on outward transportation for the period 200910 to 2013-14?"
3. The short controversy, which arises in these appeals, is with regard to denial of Cenvat Credit for the period from 200910 to 201314 of service tax paid on outward transportation of goods by the respondents.
4. The show cause notice was issued for denial of said Cenvat Credit which was confirmed by the adjudicating authority holding that the credit of GTA (Goods Transport Agency) is available on input service upto the place of removal after 1st April 2008 in terms of Rule 2(l) of Cenvat Credit Rules, 2004. According to the adjudicating authority, in terms of Section 4(3)(c) of the Central Excise Act, 1944, "place of removal" means a factory or any other place or premises of production or manufacture of the excisable goods; a warehouse or any other place or premises wherein the excisable goods have been permitted to be stored without payment of duty.
5. However, Commissioner, Central Excise, Kutch (Gandhidham) by order dated 20th March 2015 disallowed Cenvat Credit of ₹ 16,67,51,317/ and levied interest and penalty.
6. Being aggrieved by the order passed by the adjudicating authority, the appeals were preferred before the Customs, Excise and Service Tax Appellate Tribunal (for short, 'the Tribunal') and the Tribunal, after hearing both the sides, has held as under:
5|Page E/10303-10309/2015-DB E/11840/2015, E/10834/2016 "4 Heard both the sides and perused the records of the case. We find that the Appellant are clearing their goods on MRP basis in case of clearance from their depot/ stockists or to their customers and in case of sale to institutional consumers the goods are being cleared by them by adopting the valuation of the goods in terms of Section 4. The Appellants have annexed copies of excise invoice cum gate pass which shows that the prices are inclusive of freight and insurance and nothing extra has been charged. The goods are being cleared on FOR basis and all liabilities in respect of transportation of goods or damage to goods were on account of Appellants. They were liable for safe delivery of goods upto their customers doorstep. In such case when the sale of the goods is completed at the doorstep of the Customer or depot/ stockist as the case may be the point of sale shall be such doorstep. We find that the Circular No. 1065/4/2018 CX dt. 08.06.2018 issued by the CBEC in this context clarifies as under :
3. General Principle: As regards determination of 'place of removal', in general the principle laid by Hon'ble Supreme Court in the case of CCE vs Ispat Industries Ltd 2015 (324) ELT 670 (SC) may be applied. Apex Court, in this case has upheld the principle laid down in M/s Escorts JCB (Supra) to the extent that 'place of removal' is required to be determined With reference to point of sale' with the condition that place of removal (premises) is to be referred with reference to the premises of the manufacturer. The observation of Honb'le Count in para 16 in this regard is significant as reproduced below:
16. It will thus be seen where the price at which goods are ordinarily sold by the assessee is different for different places of removal, then each such price shall be deemed to be normal value thereof, Subclause (b)
(iii) is very important and makes it clear that a depot, the 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 are all places of removal. What is important to note is that each of the premises is referable only the manufacturer and not to the buyer of excisable goods. The depot or the premises of the consignment agent of the manufacturer are obviously places which are referable to the manufacturer. Even the expression "any other place of premises" refers only to a manufacturers place or premises because such place or premises is to be stated to be where excisable goods "are to be sold". These are key words of the subsection. The place or premises from where excisable ˙goods are to be sold can only be manufacturer's premises or premises referable te the manufacturer. If we were to accept contention of the revenue, then these words will have to be substituted by the words "have been sold" which would then possibly have reference to buyer's premises."
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4. Exceptions:
(i) The principle referred to in para 3 above would apply to all situations except where the contract for sale is FOR contract in the circumstances identical to the judgment in the case of CCE, MumbaiIII vs Emco Ltd 2015(322) ELT 394(SC) and CCE vs M/s Roofit Industries Ltd 2015(319) ELT 221(SC). To summarise, in the case of destination sale such as M/s Emco Ltd.
and M/s Rootfit Industries where the ownership, risk in transit, remained with the seller till goods are accepted by buyer on delivery and till such time of delivery, seller alone remained the owner of goods retaining right of disposal, benefit has been extended by the Apex Court on the basis of facts of the cases.
5. We find that the Chartered/ Cost Accountant has certified that the goods were sold on FOR basis by the Appellant and the freight/ damages in transit was responsibility of Appellant till the goods reaches the doorstep of the Customers. Also we find that the consignment notes were raised upon the Appellant and they did not charge any amount except price of the goods from the customers. Thus in the light of above Circular we find that as the ownership of the goods remained with the Appellants till the goods reached to the customer's doorstep and the freight charges as well as damage (insurance) to the goods till destination were borne by the Appellant, they are eligible for the credit of service tax paid by them on outward freight. In case of CCE & CU Vs. Rooflt Industries Ltd. 2015 (319) ELT 221 (SC) the Hon'ble Apex Court held as under :
12. The principle of law, thus, is crystal clear. It is to be seen as to whether as to at what point of time sale is effected namely whether it is on factory gate or at a later point of time, i.e. when the delivery òf the goods is effected to the buyer at his premises. This aspect is to be seen in the light of provisions of the Sale of Goods Act by applying the same to the facts of each case to determine as to when the ownership in the goods is transferred from the seller to the buyer. The charges Which are to be added have put up to the stage of the transfer of that ownership inasmuch as once the ownership in goods stands transferred to the buyer, any expenditure incurred thereafter has to be on buyer's account and cannot be a component which would be included while ascertaining the valuation of the goods manufactured by the buyer. That is the plain meaning Which has to be assigned to Section 4 read with Valuation Rules.
13. In the present case, we find that most of the orders placed Withthe respondent assessee were by the various Government authorities. One such order, I.e., order dated 2461996 placed by Kerala Water Authority is on record. On going through the terms and conditions of the said order, it becomes clear that the goods were to be delivered at the place of the buyer and it is only at that place where the acceptance of supplies was to be effected. Price of the goods was inclusive of cost of
7|Page E/10303-10309/2015-DB E/11840/2015, E/10834/2016 material, Central Excise duty, loading, transportation, transit risk and unloading charges, etc. Even transit damage/breakage on the assessee account Which would clearly imply that till the goods reach the destination, ownership in the goods remain With the supplier namely the assessee. As per the 'terms of payment' clause contained in the procurement order, 100% payment for the supplies was to be made by the purchaser after the receipt and verification of material. Thus, there was no money given earlier by the buyer to the assessee and the consideration was to pass on only after the receipt of the goods Which was at the premises of the buyer. From the aforesaid, it would be manifest that the sale of goods did not take place at the factory gate of the assessee but at the place of the buyer on the delivery of the goods in question.
14. The clear intent of the aforesaid purchase order was to transfer the property in goods to the buyer at the premises of the buyer when the goods are delivered and by virtue of Section 19 of Sale of Goods Act, the property in goods was transferred at that time only˙ Section 19 reads as under:
"19. Property passed when intended to pass. (1) Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. (2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case.
(3) Unless a different intention appears, the rules contained in Sections 20 to 24 are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer."
15. These are clear finding of facts on the aforesaid lines recorded by the Adjudicating Authority. However, the CESTAT did not take into consideration all these aspects and allowed the appeal of the assessee by merely referring to the judgment in the case of Escorts JCB Ltd. Obviously the exact principle laid down in the judgment has not been appreciated by the CESTAT.
16. As a result, order of the CESTAT is set aside and present appeal is allowed restoring the order passed by the Adjudicating Authority. From the above judgment it is clear that till the goods are handed over to the buyer, the cost is borne by the assessee or in other words where the goods are cleared on FOR basis the freight paid on outward transportation would qualify as "Input Service". As regard reliance placed upon by the revenue on the judgment of the Apex Court, we find that the Hon'ble Supreme Court was concerned only with the "place of removal" but did not go into the aspect of "Point of sale" or the FOR price destination issue. Hence the said judgment is not applicable in the facts of the present case.
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6. As regards other judgments cited by rivals, though we have considered the same, but since, we have discussed above the most relevant apex court judgments, we need not to discuss each and every judgment.
7. As regard the issue raised by the appellant that the excise duty paid on the element of freight being more than the element of cenvat credit on the outward GTA, therefore, there should not be any demand. We find force in the argument of the appellant however, since we are deciding the issue on merit, the admissibility of the Cenvat Credit on outward GTA on the basis of provision under Cenvat Credit Rules itself, we need not to deal this aspect hence, the issue related to this fact left open. As regard the submission made by Ld. Counsel that they have been operating as per the guideline given in the Circular dated 22.12.2014 and 23.08.2007 which was operative at the relevant time, therefore, even though the same were withdrawn w.e.f. 08.06.2018, but at the relevant time the benefit of said Circular shall be available. We find force in the argument of the Ld. Counsel as the law on this issue has been settled time and again by the Hon'ble Supreme Court as per the judgment cited by the Ld. Counsel and on various other judgments that beneficial Circular cannot be withdrawn retrospectively. Consequently, the benefit of the said Circulars shall be available to the appellant during the material period of this case. As regard limitation, we find that the issue was not free from doubt and right from introduction of Cenvat Scheme under Cenvat Credit Rules, the outward GTA was the matter under litigation and for that reason the Government has to come out with clarification thereafter the matter was subject to various litigation before Tribunal, Hon'ble High Courts and Hon'ble Supreme Court, therefore no malafide intention can be attributed to the appellant, therefore, wherever the demand is for extended period, the same will also not be sustainable on the ground of time bar also.
8. In view of our above findings we hold that the Appellants are eligible for the cenvat credit of service tax paid on outward freight. We therefore, set aside the impugned order and allow the appeal with consequential reliefs, if any. MA (ORS) also stand disposed of."
7. In view of the aforesaid findings of facts given by the Tribunal relying upon the Board Circular No.1065/2018CX dated 8th June 2018 as well as the decision of the Supreme Court in the case of Ultratech Cement Ltd vs. Commissioner reported in 2015(37) STR 364(T) and in the case of Commissioner of Cus. & C. Ex. Aurangabad vs. Roofit Industries reported in 2015(319) ELT 221(SC), no question of law much less of any substantial question of law arises out of the impugned order passed by the Tribunal.
The appeals, therefore, stand dismissed. No order as to costs."
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5. In view of the above judgment, the issue involved in the present
case is no longer res-integra and accordingly the appellant are entitled for Cenvat credit on outward GTA in the facts of the present case. Hence, the impugned orders are set aside. Appeals are allowed.
(Pronounced in the open court on 25.11.2024) RAMESH NAIR MEMBER (JUDICIAL) C L MAHAR MEMBER (TECHNICAL) Raksha