Custom, Excise & Service Tax Tribunal
M/S.Fiamm Minda Automotive Ltd vs Cce, Delhi-Iii on 7 January, 2011
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
SINGLE MEMBER BENCH
Excise Appeal No.E/1121/2009-SM
Date of Hearing: 07.01.2011
Date of Decision: 07.01.2011
(Arising out of Order-in-Appeal No.44/ANS/GGN/2009 dated 13.02.2009 passed by the CCE(A), Delhi-III, Gurgaon)
For approval and signature:
Honble Mr.M.Veeraiyan 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 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 of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s.Fiamm Minda Automotive Ltd. Appellant
Vs.
CCE, Delhi-III Respondent
Excise Appeal No.E/1325/2009-SM CCE, Delhi-III Appellant Vs. M/s.Fiamm Minda Automotive Ltd. Respondent Present for the Appellant: Shri Mahabir Sharma, GM and vice versa Present for the Respondent: Shri S.K.Bhaskar, SDR and vice versa Coram: Honble Mr.M.Veeraiyan, Member (Technical) ORDER NO._______________ PER: M.VEERAIYAN The appeal No.E/1121/09 is filed by M/s.Fiamm Minda Automotive Ltd. against the order of the Commissioner (Appeals) No.44/ANS/GGN/2009 dated 13.02.2009. The Appeal No.E/1325/09 is filed by the department against the very same order in respect of certain aspects, which has been decided against the department.
2. Heard both sides extensively.
3. On each of the disputed items, the submissions of both sides and the findings are recorded as follows:-
(a)Group insurance/mediclaim policy
(i). The party is aggrieved that the credit of the service tax paid on mediclaim insurance and group insurance policy taken for their employees/staffs who are not covered by the ESI has been disallowed. This has been disallowed on the ground that the same cannot be considered as input service in terms of the activities relating to business.
(ii). Learned Authorised Representative for the company submits that in respect of category of employees and officials who are not covered by the ESI, they are required to make compensation in the event of illness/accident. As a prudent business proposition, they incurred expenses by taking mediclaim insurance and personal accident insurance and these expenditures are clearly in the course of business activities covering possible risks involved which may result in payment of huge sum. Such an approach is part of business activities and therefore this should be treated as input service. He relies on the decision of the Tribunal in the case of Stanzen Toyotetsu India Pvt.Ltd. vs. CCE, Bangalore reported in 2009 (14) STR 316 wherein the credit of service tax paid on group insurance and health policy for the employees and the workers have been allowed.
(iii). Learned SDR submits that it is not mandatory for the appellants to take mediclaim policy and accident policy for their employees and the same is only a welfare measure and therefore cannot be treated as having nexus with the business activities and held to be input service. He relied on the decision of the Tribunal in the case of H.E.G. Ltd. vs. CCE, Raipur reported in 2010 (223) ELT 212.
(iv). I have carefully considered the submissions from both the sides and perused the records. I find that the division bench of the Tribunal in the case of Stanzen Toyotetsu India Pvt.Ltd. has allowed the credit in respect of the service tax paid on group insurance and health policy for the employees and workers. Therefore, I hold that there is a merit in the appeal filed by the appellant. The appeal on this issue is, therefore, allowed.
(b) CHA services
(i). The department is challenging the allowing of credit on service tax paid on CHA services.
(ii) The Commissioner (Appeals) has relied upon the decision of the Tribunal in the case of Adani Pharmachem Pvt.Ltd. reported in 2008 (12) STR 593 and the Service Tax Circular No.97/8/2007 dated 23.8.07 and held that the supply of the goods for export was on FOB basis and, therefore, ownership, possession associated with obligation relating to loss or damage of the goods till they are delivered on board the ship rest with the party and therefore CHA services should be treated as input service.
(iii) Para 8.2 of the Boards Circular No.97/8/2007 dated 23.8.07 reads as follows:
8.2. In this connection, the phrase place of removal needs determination taking into account the facts of an individual case and the applicable provisions. The phrase place of removal has not been defined in Cenvat Credit Rules. In terms of sub-rule (1) of rule 2 of the said rules, if any words or expressions are used in the Cenvat Credit Rules, 2004 and are not defined therein but are defined in the Central Excise Act, 1944 or the Finance Act, 1994, they shall have the same meaning for the Cenvat Credit Rules as assigned to them in those Acts. The phrase place of removal is defined under Section 4 of the Central Excise Act, 1944. It states that, - place of removal means -
(i) a factory or any other place ---------------------------
(ii) -------removed. It is, therefore, clear that for a manufacturer/consignor, the eligibility to avail credit of the service tax paid on the transportation during removal of excisable goods would depend upon the place of removal as per definition. In case of a factory gate sale, sale from a non-duty paid warehouse, or from a duty paid depot (from where the excisable goods are sold, after their clearance from the factory), the determination of place of removal does not pose much problem. However, there may be situation where the manufacturer/consignor may claim that the sale has taken place at the destination point because in terms of the sale contract/agreement (i) the ownership of the goods and the property in the goods remained with the seller of the goods till the delivery of the goods in acceptable condition to the purchaser at his doorstep; (ii) the seller bore the risk of loss or damage to the goods during transit to the destination; and (iii) the freight charges were an integral part of the price of goods. In such cases, the credit of service tax paid on the transportation upto such place of sale would be admissible if it can be established by the claimant of such credit that the sale and the transfer of property in goods (in terms of definition as under Section 2 of the Central Excise Act, 1944 as also in terms of the provisions under Sale Goods Act, 1944 as also in terms of the provisions under the Sale of Goods Act, 1930) occurred at the said place. From the circular, it is quite clear that in case where the sale is on FOB/CIF basis, the place of removal has to be the load part only. Further, the definition of input services also has been defined to mean any service rendered in relation to outward transportation upto the place of removal. Since, input service includes services rendered for outward transportation upto the place of removal, all the service tax paid to facilitate goods to reach the place of removal i.e. the load port, has to be eligible for the benefit of Cenvat Credit.
(iv). In the facts and circumstances of given case, clearly the party has shown that the goods have been exported on FOB basis and that the ownership is retained till the delivery of the goods on board the vessel until receipt of bill of lading.
(v). In view of the above, the order of the Commissioner (Appeals) in allowing the credit calls for no interference. The above decision is supported by the decision of the Tribunal in the case of Datafield India Pvt.Ltd. vs. CCE, Coimbatore reported in 2009-TIOL-33-CESTAT-MAD.
(c) Rent-a-Cab.
(i). The credit has been allowed by the Commissioner (Appeals).
(ii). The department is challenging the allowance of credit on the ground that part of service has been utilized (in respect of Rent-a-Cab) for transporting vendors and clients from the guest house to factory and vice versa. It is contended that the decision of the Tribunal relied upon by the party is in respect of transporting employees to and fro to the residence.
(iii). From the facts of the case, it is noticed that the vendors and clients have been transported from the guest house to the factory and vice versa and these activities can be legitimately considered as business activities in relation to the clearance of final products from the respondents factory. The vendors are suppliers of raw materials/components and they are concerned with the activities of the respondents relating to the procurement of those materials which go into the manufacture of the final products. The transportation facility given to the clients are to enable to sell their products and naturally part of the business activities. Therefore, I do not find any valid reason for interfere with the order of the Commissioner (Appeals) in so far as the same relates to the extending the benefit of credit on the service tax involved in the Rent-a-Car even when the cars are used for transporting vendors and clients.
(d) General insurance for exporting the goods.
(i). The Commissioner (Appeals) has allowed the credit of Rs.54,300/- of service tax paid on insurance relating the insurance of export goods treating the same as part of business activity.
(ii). The department in the grounds of appeal claimed that such activities should be treated only as additional business activities. According to the learned SDR, this activity has no nexus with the manufacture or clearance of the export of goods and therefore should not be treated as input service. Inasmuch as the export of goods are on FOB basis and since the insurance is for goods exported and since CHA services associated with the handling of the goods at the port or station has been treated input service, I do not find any justification for not treating such transit insurance upto the port areas as not input service.
(iii) There is no valid ground to interfere with the decision of the Commissioner (Appeals).
4. In view of the above, the appeal of the department is rejected and the appeal of the party is allowed.
(Pronounced in the open court) (M.VEERAIYAN) MEMBER (TECHNICAL) mk 6 3