Custom, Excise & Service Tax Tribunal
M/S Lumax Automotives Systems Ltd vs Cce, Delhi Iv, Faridabad on 11 January, 2013
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. IV Excise Appeal No. 14 of 2011 (SM) [Arising out of the Order-in-Appeal No. 153/CE/Appl/DLH-IV/ 2010 dated 13/09/2010 passed by The Commissioner (Appeals), Central Excise, Faridabad.] For Approval and signature : Honble Shri Rakesh Kumar, Member (Technical) 1. Whether Press Reporters 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 Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? M/s Lumax Automotives Systems Ltd. Appellant Versus CCE, Delhi IV, Faridabad Respondent
Appearance Shri Vivek Agarwal, Advocate for the appellant.
Shri B.B. Sharma, Authorized Representative (DR) - for the Respondent.
CORAM : Honble Shri Rakesh Kumar, Member (Technical) DATE OF HEARING : 11/01/2013.
Final Order No. 55202/2013 Dated : 11/01/2013 Per. Rakesh Kumar :-
The appellant are manufacturers of automobile parts. The dispute in this case is as to whether during 2006-2007 they would be eligible for Cenvat credit of service tax paid on godown rental and on outward freight for transportation of the finished goods upto the customers premises. The appellant had rented a godown outside the factory for storing the inputs as well as the finished goods and availed Cenvat credit of Rs. 22,860/- of service tax paid on godown rent. The Cenvat credit availed in respect of outward freight upto the customers premises is Rs. 9,47,550/-. The appellants stand has been that all their sales are on FOR destination basis satisfying the criteria prescribed in this regard in the Boards Circular No. 97/8/2007-ST dated 23/08/2007 and, hence, it is the customers premises which is the place of removal and, hence, all the services availed upto the place of removal would be eligible for Cenvat credit. The department being of the view that the appellants sales are not on FOR destination basis and the customers premises cannot be treated as the place of removal, as they do not satisfy the criteria prescribed in this regard in the Boards Circular dated 23/08/2007, issued a show cause notice dated 5/4/2009 for denying the above-mentioned Cenvat credit, its recovery alongwith interest and also imposition of penalty. The above show cause notice was adjudicated by the Additional Commissioner vide order-in-original dated 3/2/10 by which the Additional Commissioner confirmed the above-mentioned Cenvat credit demand invoking extended period under proviso to Section 11A (1), alongwith interest and beside this, imposed penalty of equal amount on the appellant. On appeal to Commissioner (Appeals), this order of the Additional Commissioner was upheld vide order-in-appeal dated 30/9/10, against which this appeal has been filed.
2. Heard both the sides.
3. Shri Vivek Agarwal, Advocate, the learned Counsel for the appellant, pleaded that all the sales of the appellant during the period of dispute were on FOR destination basis satisfying the criteria prescribed in this regard under Board Circular dated 23/8/07, that this is clear from the fact that the invoices themselves show that the sales are on FOR destination basis, that the delivery was at the customers premises and the price includes the freight charges, the appellant had paid excise duty on FOR price which includes freight, that just because the appellant did not insure the goods during transit and, as such, there are no insurance charges, it cannot be inferred that the appellant have not borne the risk of damage to the goods or loss of goods during transit, that when customers premises is to be treated as the place of removal, not only the outward freight upto the customers premises, but also the service of renting of godown would be covered by the definition of input service, that the godown had been used for storage of inputs as well as finished goods prior to their sale, that in any case the demand is time barred as the show cause notice has been issued after expiry of the normal limitation period and show cause notice does not even invoke the proviso to Section 11A (1) and that in view of the above, the impugned order is not correct.
4. Shri B.B. Sharma, the learned Departmental Representative, defended the impugned order by reiterating the findings of the Commissioner (Appeals) in it.
5. I have considered the submissions from both the sides and perused the records.
6. The godown had admittedly been rented for storage of raw material as well as finished goods and, as such, the renting of godown would be eligible for Cenvat credit, if it is the customer premises, which is the place of removal. The appellants plea is that all their sales during the period of dispute were on FOR destination basis, satisfying the criteria in this regard prescribed and the Board Circular dated 23/8/07, in as much as the freight was integral part of the price of the goods and excise duty had been paid on this price which included the freight.
7. The criteria for treating sale as FOR destination sale, as prescribed in the Board Circular dated 23/08/07 is that -
(a) The ownership of the goods during transit remains with the supplier manufacturer,
(b) During transit the risk of loss of goods or damage to the goods is of the supplier manufacturer ; and
(c) Element of freight upto the customers premises is integral part of the price of the goods.
7.1 If the above conditions are satisfied, the sales are to be treated as on FOR destination basis, taking place at customers premises and it is the customers premises, which would be the place of removal.
8. In this case, from the findings of the Commissioner (Appeals) in para 6 of the order, it is seen that the department accepts that the appellant has paid central excise duty on the FOR destination price i.e. the factory gate price plus freight charges. According to the department the sales are not on FOR destination basis as in the invoices, there is no reference to the insurance charges. In my view just because the appellant did not insure the goods during transit, it cannot be inferred that the risk of loss of goods, or damage to the goods during transit was not of the appellant, when the invoices mentions that the sales are on FOR destination basis and duty had been paid on the price which includes the freight charges. In view of these facts, I am of the view that it is the customers premises which has to be treated as the place of removal and the appellant would be eligible for Cenvat credit of the service tax paid on outward freight and as such this Cenvat credit has been wrongly denied.
9. As regards, the Cenvat credit in respect of godown rental, since this service had been availed prior to removal of the goods in as much as the place of removal is the customers premises, the appellant would be eligible for Cenvat credit for this service, more so, when this service has also been availed for storage of the raw material. In view of this, the impugned order is not correct. The same is set aside. The appeal is allowed.
(Pronounced in the open court.) (Rakesh Kumar) Member (Technical) PK ??
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