Custom, Excise & Service Tax Tribunal
M/S P G Foils Limited vs Cce & St Jaipur-I I on 28 May, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. IV
Excise Appeal No. E/55342, 55344-55347/2013-[SM]
[Arising out of Order-In-Appeal No. 40-44 (RDN)CE/JPR-II/2012 dated 26.09.2012 passed by the Commissioner (Appeals-II), Jaipur]
Excise Appeal No. E/55343/2013-[SM]
[Arising out of Order-In-Appeal No. 46 (RDN)CE/JPR-II/2012 dated 27.09.2012 passed by the Commissioner (Appeals-II), Jaipur]
Excise Appeal No. E/55341/2013-[SM]
[Arising out of Order-In-Appeal No. 47 (RDN)CE/JPR-II/2012 dated
27.09.2012 passed by the Commissioner (Appeals-II), Jaipur]
For approval and signature:
Hon'ble Mr. S.K. Mohanty, 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 Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s P G Foils Limited ...Appellant(s)
Vs.
CCE & ST Jaipur-I I Respondent(s)
Appearance:
Ms. Asmita Nayak (Advocate) for the Appellant Mr. R K Mishra, DR for the Respondent CORAM:
Hon'ble Mr. S.K. Mohanty, Member (Judicial) Date of Hearing/ Decision. 28.05.2015 Final Order No. 53001-53007/2015_ Per S K Mohanty:
These seven numbers of appeal have been filed against the impugned order dated 26.09.2012 and 27.09.2012 passed by Commissioner (Appeals-II) Customs and Central Excise- Jaipur-II, wherein cenvat credit of service tax on freight charges paid for safe transportation of goods by the appellant to its buyers premises has been denied on the ground that the service tax paid on such service cannot be considered as input service as defined in Rule 2(l) of the Cenvat Credit Rules, 2004.
1 The period involved in this case is from March 2006 to September 2010. The brief facts of the case are that the appellant is engaged in the manufacture of aluminum foils falling under chapter 76 of the Central Excise Tariff Act, 1985. During the disputed period, the appellant availed cenvat credit of Service tax paid on Insurance Services, Courier Services and GTA Services (All related to outward transportation of goods to the buyers premises). The credit so taken were denied and penalty imposed in the adjudication orders. In appeal, the Commissioner (Appeals) has upheld confirmation of the adjudged demand. The Commissioner (Appeals) vide the impugned orders has held that the appellant had not complied with the requirement of Circular No. 97/08/2007-ST dated 23.08.2007 issued by the CBEC, to substantiate the fact that place of removal of the excisable goods is not the factory gate, but the premises of the buyer, where ownership/ title to goods have been transferred. Feeling aggrieved with the impugned orders, the appellant is in appeal before this Tribunal.
2. Ms. Asmita Nayak, the Ld. Advocate appearing for the appellant submits that the ownership/ title of goods all along remained with the appellant, till the same were delivered at the customers doorstep; that the appellant bore the risk of loss or damage to the goods during the transit to the destination; and that freight charges mentioned in the invoices were an integral part of the price of goods.
3 During the course of hearing, the Ld. Advocate submitted the certificate issued by the buyers of goods and also the certificate of the practicing Chartered Accountant to demonstrate that the ownership of goods always remained with the appellant till the same were ultimately delivered at the customers end/ site. To substantiate her stand that the service tax paid on the freight amount for transportation of goods up to the premises of the buyers shall be construed as input service for the purpose of taking cenvat credit by the appellant, the Ld. Advocate has relied on the judgment of Honble Gujarat High Court in the case of Ambuja Cement Ltd. vs UOI reported in 2009 (236) ELT 431 (P&H), CCE & Customs vs Parth Poly Wooven Pvt. Ltd. reported in 2012 (25) STR 4 (Guj.), Ultratech Cement Ltd. vs CCE Raipur reported in 2014 (307) ELT 3 (Chhattisgarh) and Commissioner vs Alloys Time Ltd. reported in 2013 (34) STR 801 (Guj.). She also referred to and relied on the CBEC Circular being No. 97/8/2007-ST dated 23.08.2007 to support her stand+ that the clarification/ guidelines issued therein are squarely applicable to the facts of the present case for the purpose of consideration of the place of removal as the factory gate of the buyer, for availing the cenvat benefit by the appellant.
4. Per contra, Sh. R K Mishra the Ld. DR appearing for the respondent reiterates the findings recorded in the impugned order and further submits that the Commissioner (Appeals) having been held that the requirement of the Circular dated 23.08.2007 had not been complied with by the appellant, the cenvat benefit of service tax paid on the freight charges for transportation of goods will not be available to the appellant.
5. I have heard the Ld. Counsel for both the sides and perused the records.
6. The short question involved in these appeals for consideration by this Tribunal, is as to whether, outward freight charges paid by the appellant for transportation of goods to its buyers premises should be considered as input service, defined under Rule 2(l) of the Cenvat Credit Rules, 2004 and whether service tax paid on the freight charges is admissible to the appellant as cenvat credit.
7. The input service definition contained in the cenvat statute takes within its ambit the phrase clearance of final product from the place of removal. The definition was amended w.e.f. 01.04.2008 wherein upto the place of removal was inserted by way of substitution of the said phrase. Since part of the demand arising out of the impugned orders relate to the period, prior to amendment of Rule 2(l), in my opinion, service tax paid by the appellant on outward freight for transportation of goods to its buyers premises shall be eligible for consideration as input service, since there is no intricacy in this regard to the place of removal explained in the un-amended Rule 2(l). However, the question involved in these appeals for consideration, is as to whether, service tax on freight element is eligible to the appellant as cenvat credit after the period 01.04.2008 in terms of amended definition of input service. In this context, I find that the CBEC has issued the Circular dated 23.08.2007 in framing the guidelines by relying on the judgment of Punjab & Haryana High Court in the case of Ambuja Cements Ltd. vs UOI reported in 2009 (14) ST (P&H). In the said circular, it has been clarified that credit of service tax paid on transportation upto the place of removal would be admissible upon fulfillment of the conditions, namely, (i) the ownership of goods and the property in the goods remained with the seller of the goods till the delivery of goods in acceptable condition to the purchaser at his doorstep; (ii) the seller bore the risk or 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.
8. I find from the purchase orders placed in the file that the buyer of the goods have specifically indicated therein that risk and reward will be of supplier till the delivery of goods at our site. Further the invoices issued by the appellant clearly depict that the freight has been separately charged in the said invoices which is forming the part of overall sale price and also the certificates issued by the buyer of the goods by the practicing Chartered Accountant, clearly demonstrate that the ownership of the goods remained with the seller (appellant herein) till the same is delivered at the buyers end. Since the certificates were issued upon proper verification of the records/ documents, the same have the evidentiary value. Further the documents available in the file transpire that the appellant borne the risk or loss or damage to the goods during transit to the destination and also the freight charges mentioned in the invoices issued by the appellant were an integral part of the price of goods. Since, the conditions enumerated in the Circular dated 23.08.2007 have been duly complied with by the appellant, I am of the considered view that the freight charges incurred for transportation of goods up to the buyers premises should be considered as input service after amendment of the provisions of Rule 2(l) w.e.f. 01.04.2008. The judgment relied on by the Appellant squarely apply to the facts of the present case, wherein the principles enunciated are that outward transportation service utilized by the manufacturer for transportation of finished goods from the place of removal up to the premises of the purchaser is covered within the definition of input service.
8. In view of the above settled position of law on the issue, I do not find any merits in the impugned orders, and thus, the same are set aside and appeals are allowed in favour of the appellant with consequential relief, if any, as per law.
(Operative part of the order pronounced in open court)
(S. K. Mohanty) Member(Judicial)
Neha
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