Custom, Excise & Service Tax Tribunal
Cadbury India Ltd vs Commissioner Of Central Excise, ... on 25 June, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/161/11 [Arising out of Order-in-Appeal No. PKS/367/BEL/2010 dtd. 7/10/2010 passed by the Commissioner of Central Excise(Appeals), Mumbai-III] For approval and signature: Honble Mr Ramesh Nair, Member (Judicial) =======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should 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 : seen
of the Order?
4. Whether Order is to be circulated to the Departmental: Yes
authorities?
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Cadbury India Ltd.
:
Appellants
VS
Commissioner of Central Excise, Mumbai-III
:
Respondent
Appearance
Shri. M.P. Baxi, Advocate for the Appellants
Shri. Sanjay Hasija, Superintendent (A.R.) for the Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 25/6/2015
Date of decision: /2015
ORDER NO.
Per : Ramesh Nair
This appeal is directed against Order-in-Appeal No. PKS/367/BEL/2010 dtd. 7/10/2010 passed by the Commissioner of Central Excise (Appeals), Mumbai-III, wherein Ld. Commissioner (Appeals) upheld the order-in-original rejecting the appeal of the appellant.
2. The fact of the case is that the appellant availed Cenvat Credit in respect of outward GTA used for removal of intermediate goods either to job worker or to their own other units. Show cause notice was issued for denial of credit amount of Rs. 4,21,099/- for the period June 2005, December, 2008 and also proposed demand of interest under Section 11AB, penalty under Section 11AC. Show cause notice was adjudicated by the adjudicating authority wherein demand was confirmed vide order in original dated 29/1/2010, apart from demand, levy of interest under Section 11AB and penalty of Rs. 4,30,977/- was imposed under Section 11AC. Aggrieved by the original order, the appellant filed appeal before the Commissioner (Appeals), who upheld the order-in-original and rejected the appeal of the appellant, therefore appellant is before me.
3. Shri M.P. Baxi, Ld. Counsel for the appellant submits that the appellant has availed Cenvat credit in respect of service tax paid for the transportation of intermediate goods either to job worker or to the other unit. This intermediate goods, from the job worker, after processing returned back to the appellants factory, thereafter final product is cleared on payment of duty. In case of intermediate goods cleared to their other factory the same is used for manufacture of other final product and the final product is cleared on payment of duty. It is his submission that the clearances to job worker and their own factory is before the place of removal for the reason that when the goods are cleared to the job worker though the excise duty is paid but goods is not sold. After job work it comes back to the appellant factory and thereafter it is use in the further manufacture of the final product and there after final product is cleared for sale. Therefore sale takes place only after return of the job work goods and further use in the manufacture. Similarly in case of removal of goods to their own factory, there is no sale for very simple reason that within the same company, it is only stock transfer and not sale. Actual sale takes place only from the their other factory from where the goods are sold, therefore in both cases whatsoever transportation services are used, it is before the stage of sale of the goods and therefore services are clearly covered under the input service which is used in or in relation to the manufacture of final product and also before the place of removal. He submits that both the lower authorities denied the Cenvat Credit only on the ground that since the intermediate goods for which transportation services were used have been cleared on payment of duty, therefore appellant factory is place of removal. He submits that as per the definition of place of removal in term of Section 4(3)(c) of Central Excise Act, 1944, the place of removal includes a place from where the excisable goods are to be sold after their clearance from the factory. In the present case, in both the cases, while clearing the goods it is not sold therefore factory of the appellant is not place of removal, the goods are finally sold after returned back from the job worker or from their other unit. Therefore both the lower authorities have misinterpreted the place of removal and hence the denial of credit is also not correct.
4. On the other hand, Shri. Sanjay Hasija, Ld. Superintendent (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that the goods cleared from the appellant factory is on payment of duty either in the case of clearance to the job worker or their own other unit. Once the goods is cleared on payment of duty thereafter it cannot be said that it is not a sale in from the place of removal. Therefore it cannot be said that factory of the appellant is not place of removal. Since the factory gate of the appellant is place of removal in the present case GTA use for removal of goods from the factory either to the job worker or to their own unit is beyond the place of removal therefore Cenvat credit of service tax paid in respect of said GTA is not admissible.
5. I have carefully considered the submissions made by both sides.
6. I find that both lower authorities have confirmed demand of Cenvat credit on GTA only on the ground that clearances to the job worker and their own unit made on payment of duty, for this reason it was contended that factory of the appellant is place of removal and credit cannot be allowed beyond the place of removal. I find that though the goods were cleared on payment of duty but it is admittedly not clearance for sale of the goods. In terms of Section 4(3)(c)of Central Excise Act, 1944, definition of place of removal is as under:
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 their clearances from their factory.
From where such goods are removed.
From the above definition, it is clear that where the goods is cleared from factory, but place of removal is determined only a place, where the goods is sold. In case goods is sold from factory, the factory gate is considered as place of removal but though the clearances is made from the factory but goods is not sold from factory, but sold at any other place after removal of goods from the factory, the said place from where the goods is sold shall be the place of removal. In the instant case though the goods were cleared on payment of duty from the factory of the appellant but not sold from the factory. In case of job work goods the sale of the finished goods took place from the appellant factory and in case of removal of goods to their own other unit the sale took place from that other unit. Therefore in the present case transportation (GTA) service is used up to the place of removal and hence qualified as input service. As per this clear position in law, I am of the view GTA in the present case being used up to the place of removal covered under the definition of input service and hence admissible for Cenvat Credit. I therefore set aside the impugned order and allow the appeal with consequential relief, if any, in accordance with law.
(Order pronounced in court on___________) Ramesh Nair Member (Judicial) sk 6