Custom, Excise & Service Tax Tribunal
M/S Ultratech Cement Ltd vs Cc, Ce & St, Hyderabad on 4 May, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench SMB Court I Appeal No. E/21998/2014 (Arising out of Order-in-Appeal No. 19/2014 (H-IV)CE dt. 28.02.2014 passed by CC, CE & ST (Appeals-II), Hyderabad) For approval and signature: Honble Ms. Sulekha Beevi, C.S., 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? 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 Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s Ultratech Cement Ltd., ..Appellant(s) Vs. CC, CE & ST, Hyderabad ..Respondent(s)
Appearance Shri Nitesh, Chartered Accountant for Appellant.
Shri J.V.S. Chakarvarthy, Assistant Commissioner (AR) for Respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member(Judicial) Date of Hearing: 04.05.2016 Date of decision: 04.05.2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The appellant is aggrieved by the denial of Cenvat credit of service tax availed on freight on outward transportation of goods.
2. The appellants, M/s Ultra Tech Cement Ltd., are engaged in manufacture of cement and are registered with service tax department for payment of service tax on transportation of goods by road. The appellant undertakes trade sale as well as non-trade sale. In trade sale the finished goods are on Free On Road (FOR) basis for delivery upto premises of the customer/dealer. The appellants engage transporter for transporting cement in case of FOR sales and freight charges are paid to transporter. The service tax applicable is paid under reverse charge mechanism and they availed CENVAT credit thereon. It is the case of department that credit is not admissible, for the reason that as per the definition of input service the buyers place cannot be termed as a place from where the cement was sold at it is merely a place which facilitates delivery of cement after the clearance from the place of removal i.e. factory premises. That buyers place cannot be considered as place of removal, for the mere reason that transportation of cement is on FOR basis. That outward transportation of cement to customers premises though on FOR basis would not qualify as input service.
3. A show cause notice was issued to appellant and after due process of law, the original authority confirmed the demand along with interest and imposed penalty. On appeal, the Commissioner (Appeals) upheld the demand & interest, but reduced the penalty. The appellants are thus before the Tribunal.
4. On behalf of the appellant, the learned Chartered Accountant, Sri Nitesh adverted to the various documents to show that the goods were transported on FOR basis. He pointed out that in the purchase orders it is stated that price is inclusive of all taxes and transportation upto the site and on FOR basis. The invoices show that amount as per purchase order alone has been recovered without raising any separate charges towards freight. The appellant has entered into agreement with transporter. The agreement shows that any damage during transit i.e. from the loading of the truck to unloading at godown/customers place, will be debited in the account of the transporter at the FOR price of the designated destination. This makes it clear that the ownership in goods rests with appellant till delivery to customer. The appellants have also furnished a certificate issued by Chartered Accountant wherein it is certified that freight is included in price of goods and form integral part of assessable value. That appellant has paid appropriate duty of excise payable when calculated by including freight in the assessable value, in case of sales made on FOR basis. These documents sufficiently establish that sale was on FOR basis, and freight was borne by appellant.
5. The Board Circular No. 97/8/2007-ST dated 23.08.2007 lays down three conditions to be satisfied to avail credit of outward transportation on FOR basis. I find that all three conditions are satisfied. The Honble High Court in the case of CCE & Cus Vs Parth Poly Wooven (P) Ltd., [2012 (25) STR 4 (Guj)] referring to this Circular held that outward transportation is an input service and is eligible for credit.
6. Following the judgment in the above case and applying the same to the facts presented before me, I hold that denial of credit is not legal or proper. In view thereof, I set aside the impugned order. The appeal is allowed with consequential reliefs, if any.
(Operative part of this order was pronounced in court on conclusion of the hearing) SULEKHA BEEVI C.S. MEMBER(JUDICIAL) Jaya.
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