Fcc Clutch India Pvt Ltd vs Commissioner Central Goods And ... on 3 June, 2024

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Custom, Excise & Service Tax Tribunal

Fcc Clutch India Pvt Ltd vs Commissioner Central Goods And ... on 3 June, 2024

       CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
                            MUMBAI

                        Excise Appeal No. 85446 of 2021

(Arising out of Order-in-Appeal No. PUN-EXCUS-001-APP-0151/2021-21                dated
29.09.2020 passed by Commissioner (Appeals-I), Central Tax, Pune)


FCC Clutch India Private Limited                                     .....Appellant
Chakan Unit, Shed No. 203-204,
88/3, Gate No. 201, Mahalunge
Chakan-Talegaon Road, Chakan,
Pune- 410501.

                             VERSUS

Commissioner of Central Goods and Service Tax                     .....Respondent

Pune-I Commissionerate, GST Bhavan, ICE House, Opposite to Wadia College, Pune - 411004.

Appearance:

Shri Rajesh Ostwal, Advocate for the Appellants Shri P.K. Acharya, Authorized Representative for the Respondent CORAM:

HON'BLE MR. M.M. PARTHIBAN, MEMBER (TECHNICAL) FINAL ORDER NO. A/85542/2024 Date of Hearing: 30.01.2024 Date of Decision: 03.06.2024 PER : M.M. PARTHIBAN This appeal has been filed by M/s FCC Clutch India Private Limited, Chakan, Pune (herein after referred to as 'the appellant', for short), assailing the Orders-in-Appeal No. PUN-EXCUS-001-APP-0151/2021-21 dated 29.09.2020 (referred to as 'the impugned order') passed by Commissioner (Appeals-I), Central Tax, Pune.

2.1 The brief facts of the case are that the appellant is a manufacturer of automotive components and have been clearing these goods on payment of central excise duty, as applicable. In the manufacture of such final products, the appellant had received various inputs and input services which are used 2 E/85446/2021 in or in relation to manufacture and sale of such final products. The appellant had availed various input services including Goods Transport Agency (GTA) service for transportation of finished goods from the factory. The appellant have cleared a portion of the finished goods to M/s Bajaj Auto Limited (BAL) on FOR basis. In terms of the purchase order placed by Bajaj Auto Limited, the appellant is required to transport the finished goods on FOR basis at the customer's site. Therefore, the cost of transportation is to be borne by the appellant and the property and risk in the goods vests with the appellant till the delivery of the goods up to the customer's premises. The freight charges/GTA service charges is included in the price charged to the customer-BAL and the same is not shown separately in the invoices raised by the appellants in sale of finished goods. The appellant has availed Cenvat credit in respect of service tax paid, under reverse charge mechanism on GTA service for transportation of goods from its factory/depot to the premises of the customer-BAL. The Department had interpreted that the aforesaid Cenvat credit on GTA services has been availed for transportation of finished goods beyond the place of removal and thus did not qualify as 'input service' within the meaning of Rule 2 (l) of Cenvat Credit Rules, 2004 (CCR) inasmuch as the place of removal for clearances of finished goods can only be factory gate and not the customer's premises. Accordingly show cause proceedings were initiated for recovery of Cenvat credit wrongly utilized by the appellant in terms of Section 11A(1) of the Central Excise Act, 1944 read with Rule 14 of Cenvat Credit Rules, 2004. The show cause notice initially issued for the recovery of Cenvat credit of service tax availed during April, 2010 to December, 2014 was adjudicated by the original authority in confirmation of the proposed demands, which on preferring an appeal by the appellant before the Commissioner (Appeals-I), resulted in setting aside the original order in the proceedings initiated in the SCN vide Order-in-Appeal dated 25.10.2016. However, in the meantime, Statement of Demands for subsequent periods were issued. The present appeal relates to the impugned order dated 29.09.2020 upholding the original order dated 24.07.2019, which confirmed demands for recovery of total Cenvat credit of Rs.3,04,418/- covering the period January to June, 2015 (Rs.15,796); July 2015 to March, 2017 (Rs. 1,39,437/-) and April to June, 2017 (1,49,185/-) along with interest and for imposition of penalty under Rule 15(1) of CCR, 2004 for wrongly availed Cenvat credit, during the aforesaid period. Feeling aggrieved with the impugned order, the appellant had preferred this appeal before the Tribunal.

E/85446/2021 3.1 Learned Advocate for the appellant arguing on merits of the case stated that in the definition of 'inputs service' in terms of Rule 2(l) of the Cenvat Credit Rules, 2004 (CCR), outward transportation of final products upto the place of removal has been expressly provided. The said definition has in it three categories of services, such as (a) 'means' part of the definition, generally covering services which are used directly or indirectly, in or in relation to manufacture; (b) 'inclusion' part of the definition, specifically stating certain services used in relation to various activities which is used in relation to the manufacture. The input services, such as GTA services has been specifically covered to the extent they are used in clearance of final products up to the place of removal, both under category (a) and (b) above, which he stated is their case. The definition also provide for another category, i.e., (c) 'exclusion' part of the definition, which specifically provide for certain services or portion of such services, which are not included in the above definition. He further stated that their case does not fall under the exclusion category under

3.2 He further stated that customer's premises is the 'place of removal' as envisaged in CBEC's circular No. 1065/4/2018-CX dated 08.06.2018; as in their case, the appellant has contracted with customer-BAL for sale of finished goods on FOR basis, where the ownership, risk and transit remained with the appellant-seller until the buyer-BAL accepted the goods on delivery and inasmuch as the appellant being the seller alone remained as the owner of the goods retaining the right of disposal. Hence, learned Advocate pleaded that the place of removal would be the buyer's/customer's premises in their case.

3.3 Learned Advocate also stated that it is fact accepted by the Commissioner (Appeals) in the impugned Order that the appellant sold their finished goods to the customer-BAL on FOR basis. Therefore, he stated that their case is covered by paragraph 4 of the CBEC circular dated 08.06.2018 and hence GTA service available for transportation of goods from factory gate to the customer's premises would be considered as output transportation up to the place of removal. Hence, he submitted that the credit on GTA service is admissible and has been rightly taken as Cenvat credit by the appellant.

3.4 Learned Advocate also stated that the issue of allowing Cenvat credit in respect of GTA services is no more res integra, in view of the decisions of the Hon'ble Supreme Court in the case of CCE Vs. Roofit Industries Ltd. - 2015 4 E/85446/2021 (319) E.L.T. 221 (S.C.) and CCE & ST Vs. Ultra Tech Cement Ltd. - 2018 (2) TMI 117 (S.C.) and various other case laws cited below, which are relied upon by them in support of their case.

(i) Bharat Fritz Werner Ltd. Vs. CCE - 2022 (66) GSTL 434 (Kar.)

(ii) CEAT Ltd. Vs. CCE - Final Order No. A/86173/2022 dated 19.10.2022

(iii) M/s. Hindustan Zine Ltd. Vs. CCE. -2023-VIL-1171-CESTAT-ALH-CE

(iv) UltraTech Cement Ltd. Vs. CCE-2019 (2) TMI 1487- CESTAT Affirmed by Hon'ble HC at 2020 (3) TMI 1206-Gujarat High Court Admitted in SC at 2021-TIOL-227-SC-CX-LB It is also submitted by learned Advocate that in the appellant's own case, on identical issue, for the earlier period commencing from April, 2010 to December, 2014, the adjudged demands confirmed by the original authority, when appealed by the appellant before the Commissioner (Appeals), he had decided the case in allowing the Cenvat credit on GTA service availed for transportation of finished goods from factory to customer's premises by issue of Order-in-Appeal dated 25.10.2016. The said order of the appellate authority is in favour of the appellant and has not been challenged by the Revenue and hence has attained finality. In such a situation, he pleaded that the Department cannot take a contrary view against the CBEC circular on the decision of the first appellate authority.

3.5 Learned Advocate also argued vehemently that the issue involved in dispute was not free from doubt right from the introduction of Cenvat credit scheme under CCR, 2004, as the issue of availing Cenvat credit on GTA service was a matter under litigation and for that reason, the Government had come out with the clarification. In parallel, the matter was also subject to various litigations before the Tribunal, Hon'ble High Court and Hon'ble Supreme Court. In view of this, learned Advocate submitted that the extended period of limitation is not invokable and penalty cannot be imposed in respect of the issue which is in the nature of interpretation of law. For the above reasons, he pleaded that on merits, interest is also not recoverable from the appellant.

4.1 Learned Authorised Representative (AR) stated that the issue of admissibility of Cenvat credit in respect of GTA service on outward transportation of finished goods up to the place of delivery, was referred to the Larger Bench of the Tribunal, and in the Interim order No. 40020/2023 dated 21.12.2023, it has been held that where clearance of finished goods are against FOR contract basis, the ascertainment of 'place of removal' would depend upon facts of the case and the decision of the Hon'ble Supreme Court 5 E/85446/2021 in the judgements delivered in the case of Emco and Roofit industries. Further, the ratio decidendi of the following judgements of the Hon'ble Supreme Court in the case of Escorts JCB Ltd. Vs. Commissioner of Central Excise, Delhi-II [2002 (146) E.L.T. 31 (S.C.)] and Commissioner of Customs & Central Excise, Nagpur Vs. Ispat Industries Ltd. [2015 (324) E.L.T. 670 (S.C.)] also apply to the present case. As it has been held that the customer's premises can never be considered as 'place of removal', he claimed that the Cenvat credit has been rightly disallowed by the Department.

4.2 He further stated that in the case of Ultra Tech Cement Ltd. (supra) it has been held GTA service used for the purpose of outward transportation of goods is not covered within the ambit of Rule 2(l) of CCR, 2004. In the case of Ultra Tech Cement Ltd. the party was manufacturer of cement, and they were clearing the finished goods from the factory gate direct to customers and their place on FOR basis and the transportation cost has been included in the assessable value of the finished goods. Further, in the case of Roofit industries (supra) the facts are also distinguishable as Roofit received work orders from various government authorities & private contractors and the agreement entered into were for designing, manufacturing, providing PSC pipes at the site. In this regard, he stated that the appellant has not submitted any evidence that the clearance was on FOR basis, and hence the appeal cannot be entertained on the basis of above judgments.

4.3 Learned AR also submitted that the definition of 'inputs service' under Rule 2(l) of CCR, 2004 should be read as such without any import of new words such as Free/Freight on Road (FOR) in the definition. He further stated that in the present case, appellant has taken Cenvat credit without satisfying the conditions set out in a violation of CCR, 2004, and hence the impugned order holding the confirmation of adjudged demands including imposition of penalty is sustainable.

4.4 In support of the Revenue's stand, learned AR relied upon the following case laws:

(i) Commissioner of Central Excise and S.T. Vs. Ultra Tech Cement Ltd.

- 2018 (9) G.S.T.L. 337 (S.C.)

(ii) Commr. Of Cus. & C. Ex., Aurangabad Vs. Roofit Industries Ltd. -

2015 (319) E.L.T. 221 (S.C.)

(iii) Commissioner of C.Ex., Mumbai-III Vs. Emco Ltd., 2015 (322) E.L.T. 394 (S.C.) 6 E/85446/2021

5. Heard both sides and perused the records of the case. I have examined the submissions advanced by the learned Advocate appearing for the appellant and the learned Authorized Representative of the Department. Further, I have also perused the additional written submissions in the form of paper books submitted by both sides along with citation of case laws which both sides have mentioned in support of their case.

6. The short point for determination before me is whether availing of Cenvat credit by the appellant in respect of Goods Transport Agency (GTA) service used for transportation of finished goods in the present factual matrix of the case is permissible in terms of Cenvat Credit Rules, 2004 or not? and whether such Cenvat credit is recoverable treating it as wrongly availed credit, along with interest and penalty under Rule 15(1) of CCR, 2004.

7.1 The relevant portion of the impugned order providing the findings of the learned Commissioner (Appeals) and his order rejecting the appeal of the appellant and upholding the confirmation of adjudged demands by the original authority, on the issue are as follows:

"7.1The issue in hand is for the period from January 2015 to June 2017. Recently, the Hon'ble Supreme Court in the case of CCE & ST Vs. Ultra Tech Cement Ltd. - 2018 (9) G.S.T.L. 337 (S.C.) has held that no Cenvat credit will be allowed to the manufacturer in respect of GTA services availed on outward transportation of goods from the place of removal to buyer's premises post April 1, 2008 (Changes brought in definition of input service vide Notification No. 10/2008-CE (NT) dated March 1, 2008)...I observe that the definition of 'input service' under Rule 2(l) of the CENVAT Credit Rules, 2004 was amended on 01.03.2008 by replacing the words 'outward transportation from the place of removal' with the words 'outward transportation upto place of removal' and by virtue of said amendment, input service has been restricted upto the place of removal and the Board's Circular No. 97/8/2007, dated 23.08.2007 which was used in context of earlier definition, cannot be applied in view of change in the legal position. Further the appellant say that they have cleared the goods on FOR basis, does not necessarily lead to admissibility of Cenvat credit on all the services which are received till a place located outside the 'place of removal'. The admissibility of Cenvat credit is governed by the provisions of CCR, 2004 alone. Accordingly, I hold that the respondent has rightly confirmed the demand in this regard.

7.3 I find that all the arguments by the appellant by relying upon judgements of different courts falls short of convincing the precedent set by the judgement of the Hon'ble Apex court in the case of Ultratech (supra), hence I hold that the Cenvat credit availed by the appellant on outward transport from the factory gate (i.e. Up to the place of removal) to a customer's premises would be inadmissible as said credit is in respect of transportation to a place, beyond the place of removal.

E/85446/2021

8. ...The above circular at para 3 and 4 clarifies the issue of valuation of goods sold up to the place of removal and goods sold on FOR basis and cannot be relied upon in the present case. Whereas para 5 of the circular specifies that the Cenvat credit up to the place of removal is only eligible. Thus, the credit of the services used in or in relation to the clearances of final products from the place of removal of the appellant up to the doorstep of customers of the appellant would not be available to the appellant."

Thus, the impugned order relied upon the amendment brought in through Notification No.10/2008-CE(NT) dated 01.03.2008, judgement of the Hon'ble Supreme Court in Ultratech (Supra) and clarification issued by CBEC's circular dated 08.06.2008 at paragraph 5.

7.2 In order to examine the admissibility of Cenvat credit in the context of factual matrix of the present case, firstly I would like to be guided by the order of the Larger Bench of the Tribunal in the case of The Ramco Cements Limited Vs. The Commissioner of Central Excise in deciding about the issue of admissibility of Cenvat credit in respect of GTA service, for outward transportation of finished goods up to the place of delivery in the relevant Interim order No. 40020/2023 dated 21.12.2023; then I would like to proceed to examine the notification, judgement of Hon'ble Apex Court and CBEC's circular which have been relied upon in the impugned order to arrive at a conclusion, the relevant portion of which are extracted and given below:

Extract of relevant portion of Interim Order No. 40020/2023 dated 21.12.2023 8 E/85446/2021 9 E/85446/2021 10 E/85446/2021 7.3 From plain reading of the above order of the Tribunal, it is clear that the facts of each case has to be carefully examined with respect to the judgements delivered by the Hon'ble Supreme Court in Emco and Roofit Industries cases, as well as the decision of Karnataka High Court in Bharat 11 E/85446/2021 Fritz Werner, and the clarification provided by CBEC in its circular dated 08.06.2018, to determine the admissibility of Cenvat credit on the GTA service involved up to the place of removal:

Extract of the judgement in Commissioner of Customs & C. Ex., Aurangabad Vs. Roofit Industries Ltd.

Civil Appeal No. 5541 of 2004, decided on 23-4-2015 "2. It is the case of the Revenue that on the basis of general intelligence collected, respondent/assessee was indulging in evasion of Central Excise duty by not computing the assessable value of finished goods properly to the extent that it was deducting the amount of freight, insurance and unloading charges from the price of excisable goods though the place of removal of finished goods was different from the factory gate.

xx xx xx xx xx

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 of 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 with the respondent assessee were by the various Government authorities. One such order, i.e., order dated 24-6-1996 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 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.

E/85446/2021 (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."

Extract of the judgement in Commissioner of C. Ex., Mumbai-III Vs. EMCO Ltd.

Civil Appeal No. 3418 of 2004 with Civil Appeal No. 8966 of 2011, decided on 31-7-2015 "2. Since the assessee was not including the transportation and transit insurance cost, a show cause notice was issued on 24-7-2001 proposing to recover a sum of Rs. 1,17,36,766/- on account of short excise duty paid for the period 28-9-1996 to 31-12-2000. In this show cause notice, it was, inter alia, alleged that the transit insurance policies reveal that the assessee had been keeping the custody of the goods with it during the transit. Further, the agreement with various customers nowhere suggested that the transporter was to take the delivery of goods on behalf of the customers. The transit insurance from the assessee's works upto the stores sites where the goods were to be delivered at the buyer's premises under the contract, was on assessee's account. On that basis, the show cause notice contended that the transaction value would include the amount charged on account of transportation and transit insurance as it was covered by the definition of 'transaction value' contained in Section 4(3)(d) of the Act. The assessee refuted the aforesaid averments in the show cause notice with the plea that sale of goods to the customers took place at the factory gate of the assessee which was the 'place of removal' of the goods. Merely because the assessee arranged for transportation as well as transit insurance at the request and instance of the customers, there was no reason to include the cost thereof as transaction value had to be calculated upto the 'place of removal' and the expenses incurred thereafter were not to be included.

10. It is significant to point out that the definition of 'place of removal' virtually remains the same, except that clause (3) was inserted in the year 2003. The issue as to whether the cost of freight and transit insurance is to be included or not depends upon the place of removal.

11. 'Place of removal' is the place or premises from where the excisable goods are to be sold after their clearance from the factory and from where such goods are removed. Thus, 'place of removal', in a given case becomes a crucial determinative factor for the purpose of valuation. In the present context, if it is found that transportation charges and transit insurance charges were incurred after the 'place of removal', then they are not to be included. On the other hand, if these charges are incurred before the 'place of removal' then they are to be included while arriving at the transaction value. Again, in the context of the present case, what is to be determined is as to whether the 'place of removal' was the factory gate of the respondent or it was the premises of the purchaser at the time of delivery of these goods.

E/85446/2021

12. If the goods are cleared at the factory gate, then the excise duty has to be charged on the valuation of the goods to be arrived at the factory gate as that would be the place of removal of goods. It would mean that the expenses which are incurred after the removal of goods from the factory gate namely freight, insurance and unloading charges, etc., are not to be included in the valuation of the goods for the purposes of excise duty. The reason is that the sale of goods to the buyer is at the factory gate when the property passes to the buyer and the aforesaid expenditure are thereafter incurred by the buyer. It is this aspect which was gone into by this Court in the case of Escorts JCB Ltd. (supra). That was a case where question of including insurance charges came up for consideration. It was found as a fact that the goods were cleared at the factory gate. On these facts, this Court held that insurance charges, or for that matter, transport charges would not be included even if the assessee had arranged for the transit insurance. The Court found that the terms and conditions of sale clearly stipulated that it was ex-works at the factory gate of the assessee. The payment was to be made before discharge of the goods from the factory premises. In the opinion of the Court, the machinery which was handed over to the career/transporter on receiving the payment was as good as delivery to the buyer in terms of Section 39 of the Sale of Goods Act and, therefore, possession of the sold goods was handed over to the buyer at the factory gate. In this manner, the transaction was full and complete and nothing remained to be done after the goods left the factory premises. On these facts, provisions of Section 4 of the Act, which deals with valuation of excisable goods for the purposes of charging of duty of excise was taken note of and analysed, holding that the aforesaid charges could not be included for the purpose of arriving at valuation of excisable goods. The Court found fault with the orders passed by the authorities as well as CEGAT in the following manner :

"A perusal of the orders passed by the authorities and the CEGAT show that since transit insurance was arranged by the assessee, therefore, it was inferred and held that the ownership of the goods was retained by the assessee until it was delivered to the buyer on the reasoning that otherwise there would be no occasion for the seller namely, the assessee to take risk of any kind of damage to the goods during transportation. To us, the whole reasoning seems to be untenable. The two aspects have been mixed up - one relating to the transaction of sale of the goods and the other arranging for the transit insurance for the buyer and charging the amount expended for the purpose from him separately. In connection with the proposition that insurance can be taken by a third person on behalf of another, reliance has been placed by the assessee on "Chitty on Contracts" Twenty-Eight Edition Vol. 2 Special Contracts P.978 Chap. 41 Note 007 under the heading "Insurance of Another's interest". It is indicated that in varied facts and circumstances and subject to the statutory provisions of contract, it is possible to ensure the interest of another. Referring to a decision reported in (1947) K.B. 685 - Prudential Staff Union v. Hall, it is observed that a seller in possession of the goods when the property and risks have passed may insure his buyer's interest. Referring to a decision reported in Hepburn v. A. Tomlinson (Hauliers) Ltd. - H.L. (E) 1966 451, it has been submitted on behalf of the assessee that a bailee apart from its interest may also insure the interest of the owner of the property. There may be floating insurance policy covering not only the limited interest but the whole interest of the ownership of the customers in the normal course.

To substantiate the point further, a reference to Para 5-012 at Page 184 of Benjamin's Sale of Goods Fourth Edition has been made which is to the following effect :

E/85446/2021 "Insurance. The passing of property is rarely of relevance to insurance. A person can insure goods to their full value against any loss on behalf of anyone who may be entitled to an interest in the goods at the time the loss occurs, provided that it appears from the terms of the policy that it was intended to cover their interest. Also a buyer will have an insurable interest in goods if they are at his risk, whether or not the property has passed to him".

From the above passage it is clear that ownership in the property may not have any relevance in so far insurance of goods sold during transit is concerned. It would therefore not be lawful to draw an inference of retention of ownership in the property sold by the seller merely by reason of the fact that the seller had insured such goods during transit to buyer. It is not necessary that insurance of the goods and the ownership of the property insured must always go together. It may be depending upon various facts and circumstances of a particular transaction and terms and conditions of sale. A reference has also been made to Colinvauz's Law of Insurance, Sixth Edition by Robert Merkin to indicate that there may be insurance to cover the interest of others that is to say not necessarily the person insuring the interest must be the owner of the property.

In one of the cases referred to and reported in 1983 (14) E.L.T. 1896 (S.C.) - Union of India and Others etc. etc. v. Bombay Tyre International Ltd. etc. etc. the question involved was regarding deduction of transportation charges along with cost of insurance. It was held as follows :

"Therefore, the expenses incurred on account of the several factors which have contributed to its value upto the date of sale, which apparently would be the date of delivery, are liable to be included. Consequently, where the sale is effected at the factory gate, expenses incurred by the assessee upto the date of delivery on account of storage charges, outward handling charges, interest on inventories (stocks carried by the manufacturer after clearance), charges for other services after delivery to the buyer, namely after-sales service and marketing and selling organization expenses including advertisement expenses cannot be deducted. It will be noted that advertisement expenses, marketing and selling organization expenses and after sale service promote the marketability of the article and enter into its value in the trade. Where the sale in the course of wholesale trade is effected by the assessee through its sales organisation at a place or places outside the factory gate, the expenses incurred by the assessee upto the date of delivery under the aforesaid heads cannot on the same grounds be deducted. But the assessee will be entitled to a deduction on account of the cost of transportation of the excisable article from the factory gate to the place or places where it is sold. The cost of transportation will include the cost of insurance on the freight for transportation of the goods from the factory gate to the place or places of delivery".

13. We have extensively discussed the judgment in Escorts JCB Ltd. because of the reason that the Tribunal has allowed the appeal of the respondent herein with the observations that case of the respondent is covered by this judgment. We would like to point out at this stage that in Commissioner of Central Excise, Noida v. Accurate Meters Ltd. - (2009) 6 SCC 52 = 2009 (235) E.L.T. 581 (S.C.), the Court took note of few more decisions, including the case of Escorts JCB Ltd., and reiterated the aforesaid principles but at the same time also emphasising that the place of removal depends on the facts of each case.

14. In a recent decision of this Court in Commissioner, Customs and Central Excise, Aurangabad v. M/s. Roofit Industries Ltd. - (2015) 5 SCALE 470 = 2015 (319) E.L.T. 221 (S.C.), the position in law was summarized in the following manner :

E/85446/2021 "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 of 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."

15. Having stated the legal position, we now revert to the facts of the present case.

16. The Commissioner, Central Excise while deciding that the transportation charges as well as transit insurance charges are to be included for fixing the transaction value. The order reveals that the Commissioner had scanned through the agreements entered into between the assessee and with various customers and other documents on the basis of which the Commissioner concluded that the property in goods was passed on to the customers only at the destination. According to him, there was a specific condition in the contracts that the goods will be dispatched from freight pre-paid by road and up to the destination of the customers. It was also stated that material should be dispatched duly insured by the assessee up to the customers' destination and the cost towards obtaining insurance was included in the price. These contracts further contain a clear stipulation that in case of any damage to the goods during transit, the supplier will lodge the claim and obtain compensation from the insurance company. So much so, one Deputy Manager of the assessee, viz. Shri D.K. Bhattacharya in his statement, recorded under Section 14 of the Act, had specifically stated that "the responsibility of the goods lies on M/s. Emco till the delivery of the said goods to the customer's premises and, therefore, freight incurred and transit insurance charges were recovered from the customers......for covering the transit risk they had taken out transit insurance policy and whenever there was a loss or damage to goods M/s. Emco claims the same from the insurance company.....the possession of the goods is transferred only at the premises of the buyers/customers". The Commissioner also noted that the aforesaid statement was even confirmed by the General Manager of the assessee.

17. The Tribunal did not bother to look into any of the aforesaid aspects and/or discussed the same. In a cryptic non-reasoned order, the Tribunal allowed the appeal. To be precise, the following order is passed :

"Appellants were issued a notice proposing to levy duty in the value of amount of freight and transit insurance recovered by them but the same suppressed from the department as it appears from page 10 of the show cause notice.

2. It was confirmed after hearing both sides, it is found that the issue is well settled in favouring the assessee by the decision in the case of Associated Strips Ltd. [2002 (143) E.L.T. 131 (Tri.)] which has been approved by the Apex Court in the case of Escorts JCB Ltd. v. Collector of Central Excise [2002 (146) E.L.T. 31 (S.C.)]. Being bound by the same, this order impugned cannot be restrained and is to be set aside and appeal allowed."

E/85446/2021

18. The perfunctory manner in which the appeal of the assessee is allowed, cannot be countenanced. If the Tribunal was confirming the decision of the authority below, may be detailed discussion was not required as the reasons given in detail could be found in the order appealed against, though even in such a case brief reasons are to be given by the Tribunal, in particular, to meet the arguments which are advanced by the appellant while challenging such an order. However, in the instant case, we find that there is a detailed discussion in the order of the Commissioner on the facts of the case. Those facts are not adverted to or dealt with. The decision of the Commissioner is overruled with single observation that the case is covered by the judgment in Escorts JCB Ltd., without discussing as to how it was so covered. This is notwithstanding the fact that the decision as to which is the 'place of removal' depends upon the facts of each case.

19. The consequence of the aforesaid discussion would be to set aside the order of the Tribunal and remit the case to it for fresh consideration after looking into the facts of the present case, namely, the terms and conditions of the sale with the buyer and determination on that basis as to which was the place of removal, that is whether it was the factory gate of the assessee or the place of delivery. We may record that as per the Commissioner, place of removal was the place of delivery at the buyer's premises. However, since no documents are produced before us, we are not in a position to comment as to whether the aforesaid view taken by the Commissioner is proper or not.

20. Accordingly, the appeals are allowed in the aforesaid terms by remitting the cases to the Tribunal for fresh consideration."

7.4 The above judgements of the Hon'ble Supreme Court have laid down the clear legal position in interpretation of the term 'transportation charges upto the place of removal' in the context of valuation of excisable goods for the purpose of valuation of such goods under Section 4 of the Central Excise Act, 1944. Further, these judgements have also laid down that 'Place of removal' in a given case becomes a crucial determinative factor for the purpose of valuation. The transportation charges which are to be added in value have to be up to the stage of the transfer of the ownership of goods 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. Thus, the principle of law, is in determining 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 of the goods is effected to the buyer at his premises, which can be seen in the light of provisions of the Sale of Goods Act, 1930 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. In the present context of the case before me, the GTA services upto the place of removal has to be determined 17 E/85446/2021 in terms of the above principles laid down in the above judgements of the Hon'ble Supreme Court.

Extract of the judgement of Hon'ble Karnataka High Court in Bharat Fritz Werner Ltd.

Vs. Commissioner of Central Excise, Bangalore C.E.A. No. 56 of 2019 c/w 71 of 2019, decided on 30-6-2022 "6. Appellant is a Private Limited Company engaged in manufacture of Special Boring Bars and Tools Holding Systems. As per the purchase orders, it has delivered the final product at buyer's place.

7. It availed Cenvat credit of service tax paid on Outward Goods Transport Agency (GTA) service used for transporting final product to customer's place. A show cause notice was issued calling upon the appellant as to why the credit availed should not be demanded under Section 11A of the Central Excise Act read with Rule 14 of Cenvat Credit Rules; and interest and penalty should not be imposed. Appellant contested the show cause notice and the adjudicating authority passed the Order- in-Original C. No. V/84/15/82/2015/ Adjn.BII, dated 29-2-2016 confirming the demand of Rs. 20,48,961/-, interest of Rs. 20,48,961/- and penalty of Rs. 1,50,000/-....

xx xx xx xx xx

13. The CESTAT, in the case of Bharat Fritz Werner Ltd. v. C.C., C.E. & S.T- Commissioner of Central Tax [CEA 56/2019], has recorded in paragraph No. 5 that as per the purchase orders, appellant was required to supply the goods at the buyer's premises and the price of goods would include 'outward freight'. Similarly, in the case of MAPAL India Pvt. Ltd. [CEA 71/2019], the CESTAT has recorded a similar finding.

14. It is clear that as per Section 4(3)(c)(iii) of Central Excise Act, 1944, the definition of 'Place of Removal' means the premises from where the excisable goods are to be sold after their clearance form the Factory.

15. The 'Input Service' defined in Rule 2(1) of Cenvat Credit Rules, 2004, includes any service in relation to 'Outward Transportation' up to the 'Place of Removal'.

16. This Court in the case of Madras Cements Ltd., has held as follows :

"11. From the facts of the present case, it is clear from the invoices that title of the goods had passed on from seller to buyer only at the place of destination, which is the address of the buyer. As such, the buyer had no right over the goods till delivered to it. The Tribunal has not considered this aspect and has only relied on the amendment made to the definition of "input service" with effect from 1-4- 2008 and rejected the claim of the appellant-assessee after that date. No further reason has been given by the Tribunal nor any finding has been recorded with regard to place of completion of sale of the goods.

12. Since we are of the opinion that the sale had concluded only after the delivery of the goods was made at the address of the buyer, in the facts of the present case the appellant-assessee would be entitled to the benefit of Cenvat credit on Service Tax paid on outward transportation of goods by the assessee even after 1-4-2008. The appellant-assessee would thus be entitled to such benefit for the period 1-4-2008 to 31-7-2008 which has been denied to it by the authorities below.

13. For the forgoing reasons, this appeal stands allowed. The question of law is answered in favour of the assessee and against the Revenue. The order of the Tribunal to the extent of disallowing Cenvat credit to the appellant for the period after 31-3-2008 is quashed."

17. The Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs, New Delhi, has issued Circular dated 8-6-2018 and clarified the definition, 'Place of Removal'. In Para 5 of the Circular, the Ministry has referred to the judgment in the case of CCE & ST v. Ultra Tech Cement Ltd. [Civil Appeal No. 11261 of 2016, dated 1-2-2018] [2018 (9) G.S.T.L. 337 (S.C.)] and stated that, in 18 E/85446/2021 that case, the Apex Court has held that Cenvat credit on GTA Service from the place of removal to the buyer's premises is not admissible.

18. In the instant cases, the place of removal is buyer's premises. Therefore, the authority in the case of Madras Cements Ltd., is applicable to the facts of this case and these appeals merit consideration. ..."

7.5 The above judgement of the Hon'ble Karnataka High Court have distinguished the facts of this case with that of Ultra tech Cement case, and having determined that the place of removal is the buyer's premises and had allowed the appeal seeking the benefit of Cenvat credit of service tax paid on GTA service as eligible input credit.

Extract of Notification No. 10/2008-Central Excise (N.T.) dated 01.03.2008 In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the CENVAT Credit Rules, 2004, namely :-

1. (1) These rules may be called the CENVAT Credit (Amendment) Rules, 2008.

(2) Save as otherwise provided in these rules, they shall come into force on the 1st day of April, 2008

2. In the CENVAT Credit Rules, 2004 (hereinafter referred to as the said rules), in rule 2,

(i) in clause (l), for the words "clearance of final products from the place of removal", the words "clearance of final products, upto the place of removal," shall be substituted;....".

And "Circular No. 1065/4/2018-CX., dated 8-6-2018 F. No. 116/23/2018-CX-3 Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes & Customs New Delhi Subject : 'Place of Removal' under Section 4 of the Central Excise Act, 1944, the CENVAT Credit Rules, 2004 and the CENVAT Credit Rules, 2017 - Regarding.

Attention is invited to Boards Circular No. 97/8/2007-CX., dated 23-8-2007 [2007 (215) E.L.T. (T24)], 988/12/2014-CX., dated 20-10-2014 [2014 (309) E.L.T. (T3)] and 999/6/2015-CX., dated 28-2-2015 [2015 (317) E.L.T. (T7)]. Attention is also invited to the judgment of Hon'ble Supreme Court in the case of CCE v. M/s. Roofit Industries Ltd. - 2015 (319) E.L.T. 221 (S.C.), CCE v. Ispat Industries Ltd. - 2015 (324) E.L.T. 670 (S.C.), CCE, Mumbai-III v. Emco Ltd. - 2015 (322) E.L.T. 394 (S.C.) and CCE & ST v. Ultra Tech Cement Ltd. dated 1- 2-2018 in Civil Appeal No. 11261 of 2016 [2018 (9) G.S.T.L. 337 (S.C.)]. In this regard, references have been received from field formations seeking clarification on implementation of aforesaid circulars of the Board in view of judgments of Hon'ble Supreme Court.

E/85446/2021

2. In order to bring clarity on the issue it has been decided that Circular No. 988/12/2014-CX., dated 20-10-2014 shall stand rescinded from the date of issue of this circular. Further, clause (c) of para 8.1 and para 8.2 of the Circular No. 97/8/2007-CX., dated 23-8-2007 are also omitted from the date of issue of this circular.

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 v. Ispat Industries Ltd. - 2015 (324) E.L.T. 670 (S.C.) 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 Hon'ble Court 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. Sub-clause (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 manufacturer's 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 sub-section. The place or premises from where excisable goods are to be sold can only be manufacturer's premises or premises referable to 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."

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, Mumbai-III v. Emco Ltd. - 2015 (322) E.L.T. 394 (S.C.) and CCE v. M/s. Roofit Industries Ltd. 2015 (319) E.L.T. 221 (S.C.).

To summarise, in the case of FOR destination sale such as M/s. Emco Ltd. and M/s. Roofit 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.

(ii) Clearance for export of goods by a manufacturer shall continue to be dealt in terms of Circular No. 999/6/2015-CX., dated 28-2-2015 as the judgments cited above did not deal with issue of export of goods. In these cases otherwise also the buyer is located outside India.

5. CENVAT Credit on GTA Services etc. : The other issue decided by Hon'ble Supreme Court in relation to place of removal is in case of CCE & ST v. Ultra Tech Cement Ltd., dated 1-2-2018 in Civil Appeal No. 11261 of 2016 on the issue of CENVAT Credit on Goods Transport Agency Service availed for transport of goods from the 'place of removal' to the buyer's premises. The Apex Court has allowed the appeal filed by the Revenue and held that CENVAT Credit on Goods Transport Agency service availed for transport of goods from the place of removal to buyer's premises was not admissible for the relevant period. The Apex Court has observed that after amendment of in the definition of 'input service' under Rule 2(l) of the CENVAT Credit Rules, 2004, effective from 1-3- 2008, the service is treated as input service only 'up to the place of removal'.

6. Facts to be verified : This circular only bring to the notice of the field the various judgments of Hon'ble Supreme Court which may be referred for further guidance in individual cases based on facts and circumstances of each of the case. Past cases should accordingly be decided.

E/85446/2021

7. No extended period : Any new show cause notice issued on the basis of this circular should not invoke extended period of limitation in cases where an alternate interpretation was taken by the assessee before the date of the Supreme Court judgment as the issue is in the nature of interpretation of law.

8. Hindi version of the circular will follow."

Extract of Central Excise Act, 1944 "Valuation of excisable goods for purposes of charging of duty of excise.

4. (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall--

(a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value;

(b) in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed.

Explanation.--For the removal of doubts, it is hereby declared that the price-cum- duty of the excisable goods sold by the assessee shall be the price actually paid to him for the goods sold and the money value of the additional consideration, if any, flowing directly or indirectly from the buyer to the assessee in connection with the sale of such goods, and such price-cum-duty, excluding sales tax and other taxes, if any, actually paid, shall be deemed to include the duty payable on such goods.

(2) The provisions of this section shall not apply in respect of any excisable goods for which a tariff value has been fixed under sub-section (2) of section 3.

(3) For the purposes of this section,--

(a) "assessee" means the person who is liable to pay the duty of excise under this Act and includes his agent;

(b) persons shall be deemed to be "related" if--

(i) they are inter-connected undertakings;

(ii) they are relatives;

(iii) amongst them the buyer is a relative and a distributor of the assessee, or a sub-distributor of such distributor; or

(iv) they are so associated that they have interest, directly or indirectly, in the business of each other.

(i) a factory or any other place or premises of production or manufacture of the 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 clearance from the factory, from where such goods are removed;"

(cc) "time of removal", in respect of the excisable goods removed from the place of removal referred to in sub-clause (iii) of clause (c), shall be deemed to be the time at which such goods are cleared from the factory;

E/85446/2021

(d) "transaction value" means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods."

Extract of CENVAT Credit Rules, 2004.

"Definitions.

2. In these rules, unless the context otherwise requires,--

(l) "input service" means,--

(i) services provided or agreed to be provided by a person located in non-

taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India where service tax is paid by the manufacturer or the provider of output service being importer of goods as the person liable for paying service tax for the said taxable services and the said imported goods are his inputs or capital goods; or

(ii) any service used by a provider of output service for providing an output service; or

(iii) any service used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products up to the place of removal;

and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation up to the place of removal;

but excludes --

(A)service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for--

(a) construction or execution of works contract of a building or a civil structure or a part thereof; or

(b) laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services; or] (B)services provided by way of renting of a motor vehicle], in so far as they relate to a motor vehicle which is not a capital goods; or (C) service of general insurance business, servicing, repair and maintenance , in so far as they relate to a motor vehicle which is not a capital goods, except 22 E/85446/2021 when used by--

(a) a manufacturer of a motor vehicle in respect of a motor vehicle manufactured by such person; or

(b) an insurance company in respect of a motor vehicle insured or reinsured by such person; or

(c) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee.

Explanation.--For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis."

8.1 Plain reading of the above legal provisions under Section 4 of the Central Excise Act, 1944 state that for the purpose of valuation of excisable goods, for determining the levy of central excise duty if chargeable on ad valorem basis, it shall be the transaction value. Where the goods are sold by the assessee, for delivery at the time and place of removal, and where the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, then the same shall be the transaction value. Thus, it is clear that the value shall be determined with reference to goods delivered at the time and at the place of removal. In this context, the explanation provided in Section 4 ibid, state that it could be anyone of the following:

(i) factory or other place where the goods are produced or manufactured;

(ii) warehouse or other premises were goods are permitted to be stored without payment of excise duty;

(iii) depot of the factory or premises of consignment agent or any other premises, were the goods are normally kept after the same has been cleared from the factory, for the purpose of sale from that place.

8.2 Further, on careful reading of the definition of 'input service' under Rule 2 (l) of CCR, 2004, I find that it provides for three categories of services, out of which (a) 'means' part of the definition, generally covering services which are used directly or indirectly, in or in relation to manufacture of final goods or for providing of output services; and (b) 'inclusion' part of the definition, specifically stating certain services used in relation to various activities which is used in relation to the manufacture, both of which are covered under the scope of 'input services'. However, the third category, (c) 'exclusion' part of the 23 E/85446/2021 definition, specifically provide for certain services or portion of such services, which are not included in the above definition of 'input service'. In order to examine whether a particular service is covered as 'inputs service', either it could be covered under category (a) or (b) and should not fall under the exclusion category under (c) above. I find that GTA services has been specifically covered by the words 'services used for outward transportation up to the place of removal' in category (b) inclusion clause as well as under the category (a) 'means' clause, in terms of the words 'any service used for clearance of final products up to the place of removal'. The only issue in dispute is in determining 'the place of removal' in each case after examining the facts of the case and to decide whether they fall under the above category

(a) or (b) as above.

8.3 From the factual matrix of the case, I find that the Purchase Order placed by the customer-BAL with the appellant specifically provide for delivery as follows:- "Delivery Term: FREE DELIVERY AT OUR WORKS". Further, the payment terms for the sale of goods is 45 days from the date of goods being received at the customer's factory works. Thus, I find that the sale of goods in the present case takes place when the goods are delivered by the appellant and the factory works of the customer-BAL. I also find that the impugned order did not discuss the facts of the case to arrive at a decision on 'place of removal' and further assumed that the customer's premises to be the place of removal, without any basis and without examination of the facts of the case. Thus, the impugned order cannot be sustained in law.

8.4 I also find that the Chartered Accountant M/s Agarwal Anoop & Associates, M. No. 086931 vide their certificate dated 26.02.2021 had stated that on the basis of verification of relevant documents, accounting records and other details/ information provided by the appellant, it is found by them that the appellant have not recovered outward freight charges from its buyer/customer M/s Bajaj Auto Limited, towards clearance of the final products to the buyer's premises. Such certificate has been issued for the period covering January, 2015 to June, 2017. It is further certified by the said Chartered Accountant that the freight charges found as an integral part of the price of the final products cleared up to the premises of the buyer, on which central excise duty has been discharged by the appellant.

E/85446/2021 8.5 The above facts of the case brings out clearly that the sale of goods to the customer-BAL were effected, when the finished goods/final products reached the works/factory of BAL; and the freight charges, insurance etc. were incurred by the appellant for ensuring that the final products reach the customer, in a condition that would enable the sale to be completed, by acceptance of the final products by the customer. Further, all the costs incurred up to the factory works of the customer-BAL has been included in the transaction value for the purpose of discharging the appropriate central excise duty in compliance with Section 4 ibid.

8.6 I also find that CBEC circular dated 08.06.2008, had explained the scope of the term 'of place of removal' in various context, and the general principle to be adopted, exceptions to the above and the eligibility of Cenvat credit on GTA services. The said circular only brings the various judgments of Hon'ble Supreme Court to the notice of the field formations, so that these may be referred for further guidance in individual cases based on facts and circumstances of each of the case. It also comes out clearly from the amendment made vide Notification No. 10/2008-Central Excise (N.T.) dated 01.03.2008, that it had shifted the goal post for qualifying 'any service' under category (a) and specified 'inclusive part of services' in the context of manufacture of final products from "from the place of removal", to "upto the place of removal". In other words, prior to the amendment, inputs service was to be determined with reference to services provided from the 'starting point of clearance' i.e., place of removal such as factory, warehouse, depot or premises of consignment agent but did not specify to which extent that service is allowable. After amendment, the inputs service is to be determined with reference to 'end point where sale is effected' i.e., service provided upto the place of removal. Since the reference point for determination of the nature of input service changed from 'starting place by the term "from" ' to 'end place by the term "upto" ' in the use of words preceding to 'place of removal', the determination of sale to the customer has become the criteria for deciding the admissibility of inputs service credit in the case of GTA services. In the present factual matrix of the case, I find that the sale is effected when the final products are delivered at the premises of the works/factory of the customer- BAL, and hence the outward transportation costs for sale on FOR basis becomes eligible for input service credit in terms of CCR, 2004.

E/85446/2021 8.7 Further, as clarified by the CBEC and as has been held in the number of decisions of the higher judicial forum, in respect of issues concerning interpretation of law and ongoing disputes before the judicial forms, which necessitated issue of a circular by CBEC, extended period of limitation cannot be invoked and penalty for evasion or for violation of law cannot be imposed. Therefore, in the present case which is an issue of interpretation of law, the adjudged demands against the appellant including penalty imposed on them is not legally sustainable.

8.8 In view of the foregoing discussions, I do not find any substance in the impugned order dated 29.09.2020, in denying the Cenvat credit on input services without proper examination, in the context of various decisions passed by the Hon'ble High Court of Bombay and Hon'ble Supreme Court. Therefore, the impugned order is set aside by allowing the appeal filed by the appellant.

9. In view of the above findings, I hold that the appellant is eligible for the credit of service tax paid on outward freight charges, where the sale is on FOR basis or delivery at works on FOR, in terms of Rule 2(l) of the Cenvat Credit Rules, 2004 read with Section 4 of the Central Excise Act, 1944.

10. In the result, by setting aside the impugned order dated 29.09.2020, the appeal filed by the appellant is allowed with consequential relief, if any.

(Order pronounced in open court on 03.06.2024) (M.M. Parthiban) Member (Technical) Sinha

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