Custom, Excise & Service Tax Tribunal
M/S. Leela Scottish Lace Pvt. Ltd vs Cc, Bangalore on 3 March, 2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench SMB
Court I
Date of Hearing:03/03/2010
Date of decision:03/03/2010
Appeal No.C/543/08
(Arising out of Order-in-Appeal No.59/2008 dt. 30/4/2008
passed by CC(Appeals), Bangalore)
For approval and signature:
Honble Mr. M.V.Ravindran, Member(Judicial)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3.
Whether their Lordship wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Leela Scottish Lace Pvt. Ltd.
..Appellant(s)
Vs.
CC, Bangalore
Respondent(s)
Appearance Mr. J.Venkatraman, Consultant for the appellant.
Ms. Sudha Koka, SDR for the Revenue.
Coram:
Honble Mr. M.V.Ravindran, Member(Judicial) FINAL ORDER No._______________________2010 Per M.V.Ravindran This appeal is filed directed against the order-in-appeal No.59/2008 dt. 30/4/2008.
2. The relevant facts that arise for consideration are that the appellants are registered as 100% EOU, issued with Public Bonded Warehouse License under Section 58 and In Bond Manufacturing sanction order under Section 65 of the Customs Act, 1962. The appellants are engaged in the manufacture and export of ready made garments under Chapter 6201 9990 of the Central Excise Tariff Act, 1985. The said manufacture had filed a refund claim under Rule 5 of Cenvat Credit Rules, 2004 of the unutilized credit on inputs and services on 15/10/2007 in a sum of Rs.7,77,145/- for the period from July, 2007 to September, 2007. The said claim was verified and after giving a personal hearing, the adjudicating authority passed an order disallowing a sum of Rs.2,89,384/- being the input service tax credit availed by the appellant on CHA services and outward transport services for transporting the goods from the factory gate to the designated port. Being aggrieved by the above order, the appellant preferred an appeal before the ld. Commissioner(Appeals). The ld. Commissioner(Appeals) after hearing the appellant came to the conclusion that the service tax credit taken on the service tax paid on CHA services is ineligible to be taken as cenvat credit on the ground that the CHA service takes place only at the port and upheld the Order-in-Original . Aggrieved by such an order, appellant is in appeal the Tribunal.
3. Ld. Consultant appearing on behalf of the appellant submits that the CHA services availed for assessment of the export of goods. It is his submission that place of removal is port. He would rely upon the decision of co-ordinate bench of this Tribunal in the case of CCE, Rajkot Vs. Adani Pharmachem P. Ltd. [2008(12) STR 593(Tri. Ahmd.)].
4. Ld. SDR on the other hand would submit that the CHA services are utilized by the appellant for the activities done at the port which is for clearance of the goods from customs and services were not used directly or indirectly, in or in relation to the manufacturing of the export goods. It is her submission that this activity is post manufacturing/removal activity, cannot considered as input service.
5. Heard both sides and perused records.
6. On perusal of the records, I find that the appellant is in appeal only against the denial of the cenvat credit on the service tax paid on the CHA service. It is undisputed that the CHA services were used for clearance of export goods. It is also undisputed that the export cargo were left the premises of the appellant and further formalities for the export of goods took place at the port.
7. I find that an identical issue has been gone into by the co-ordinate Bench of this Tribunal in the case of Adani Pharmachem P. Ltd. (supra). I may reproduce the ratio under:-
3. I have considered the submission from both the sides. There is no dispute that the goods have been sold on FOB/CIF basis. There is also no dispute that the service tax had been paid for the CHA services rendered. There are only two questions to be decided. The first is what would be the place of removal in such cases. I find that the clarification issued by the CBEC in the circular cited above is very relevant and therefore para 8.2 of the circular is reproduced below :-
In this connection, the phrase place of removal needs?8.2 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 (t) 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 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 stored 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. 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 the 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 the place of removal does not pose much problem. However, there may be situations 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 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 door step; (ii) the seller bore the risk of loss of 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 the service tax paid on the transportation up to 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 the definition as under Section 2 of the Central Excise 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 port only. Further the definition of input services also has been defined to mean any service rendered in relation to outward transportation up to the place of removal. Since, input service includes services rendered for outward transportation up to the place of removal, all the service tax paid to facilitate goods to reach the place of removal has to be eligible for the benefit of CENVAT credit. Further the definition of input service also includes any service used for manufacture directly or indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal. There is no dispute that the CHA services are required to facilitate clearance of final products from the place of removal i.e. the load port. Coming to the conflict between the two decisions Tribunal cited, it is noticed that the decision in the case of M/s. Excel Crop Care Ltd. was rendered on 30-4-2007 whereas the circular was issued by the CBEC on 23-8-2007 and therefore the ld. Member did not have the benefit of the Boards circular at that time. It is also noticed that in para 4, it has been stated in the order that ld. SDR submits that input services, should be strictly construed as per the definition. The services rendered at port by CHAs are after clearance of the goods from the factory gate and hence cannot be treated as input services. From this it emerges that the place of removal in that case, was factory gate. There is no doubt that in each and every case, it is necessary to consider as to exactly which is the place of removal before allowing the benefit of CENVAT credit. Therefore any decision rendered in an individual case cannot be applied to another case unless the facts happen to be same. Therefore the decision of the Tribunal in M/s. Excel Crop Care Ltd.s case cannot be considered and applied to the cases under consideration now. On the other hand I find that the decision of the Tribunal cited by the ld. Advocate for the respondents is applicable on facts and this decision has also considered the decision in M/s. Excel Crop Care Ltd. and has distinguished the same. I am in full agreement with the decision cited by the ld. Advocate and in view of the discussions above, the appeals filed by the Department are without merit and accordingly are rejected.
8. It can be seen from the above reproduced portion of the co-ordinate Benchs order that service tax paid on the CHA services, is eligible for availment as cenvat credit by a manufacturer.
9. Accordingly, in view of the forgoing reasionings and respectfully following the decision of the Co-ordinate Bench, I set aside the impugned order to the extent it denies the credit of service tax paid on the CHA services and allow the appeal with consequential relief, if any.
(Pronounced and dictated in open court) (M.V.Ravindran) Member (Judicial) Nr 6