Custom, Excise & Service Tax Tribunal
Rane Trw Steering Systems P Ltd vs Commissioner Of Gst&Amp;Cce(Chennai ... on 22 April, 2019
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CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
Regional Bench - Court No. III
Excise Appeal No. 40041 of 2019
(Arising out of Order-in-Appeal No. 461/2018 (CTA-II) dated 28.09.2018 passed by
the Commissioner of Central Tax (Appeals-II), Newry Towers, 2nd Floor, Plot No.
2054, I Block, II Avenue, Anna Nagar, Chennai - 600 040)
M/s. Rane TRW Steering Systems Pvt. Ltd., : Appellant
48th Kilometer, GST Road,
Singa Perumal Koil - 603 204
VERSUS
The Commissioner of G.S.T. & Central Excise, : Respondent
Chennai Outer Commissionerate, Newry Towers, No. 2054/1, 2nd Avenue, 12th Main Road, Anna Nagar, Chennai - 600 040 APPEARANCE:
Ms. S. Sridevi, Advocate for the Appellant Shri. S. Govindarajan, Authorized Representative for the Respondent CORAM:
HON'BLE MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) FINAL ORDER NO. 40672 / 2019 DATE OF HEARING: 22.04.2019 DATE OF DECISION: 22.04.2019 Brief facts of the case are that the appellants are engaged in the manufacture of Motor Vehicle Parts and are registered with the Central Excise Department. They are availing the CENVAT Credit of Excise Duty paid on inputs and capital goods and Service Tax paid on input services.
2. During the scrutiny of documents, it was found that they had availed CENVAT Credit of service tax paid on GTA and Courier Services, which were used for transporting the finished goods up to the buyer's premises. The Department was of the view that as per the definition of 'input services', as amended with effect from 01.04.2008, the credit on outward transportation 2 of goods is eligible only up to the place of removal. Therefore, a Statement of Demand dated 05.05.2017 was issued proposing to recover the credit availed on outward transportation of goods alleging that the same is ineligible. After due process of law, the Original Authority vide Order-in- Original dated 31.05.2018 confirmed the demand, interest and imposed penalty. In appeal, the Commissioner (Appeals) vide impugned order dated 28.09.2018 upheld the same. Hence, this appeal.
3.1 On behalf of the appellant, Ld. Advocate Ms. S. Sridevi submitted that the authorities below had rejected the claim for credit of Service Tax paid on outward transportation of goods up to the buyer's premises relying upon the decision of the Hon'ble Apex Court in the case of Commissioner of Central Excise & Service Tax Vs. M/s. Ultra Tech Cement Ltd. reported in 2018 (2) T.M.I. 117 (S.C.). It is pointed out by her that later, the Department had issued a Circular No. 1065/4/2018-CX dated 08.06.2018 wherein certain clarifications have been issued with regard to the place of removal. In the appellant's case, the place of removal is the buyer's premises, which is evident from the purchase orders. Though the appellant had furnished all these documents, the Department has not considered the contention of the appellant that the buyer's premises is the place of removal.
3.2 She submitted that the Hon'ble Apex Court in the case of Commissioner of Cus. & C.Ex., Aurangabad Vs. M/s. Roofit Industries Ltd. reported in 2015 (319) E.L.T. 221 (S.C.) had held that the place of removal for the purpose of valuation would be the buyer's premises in case the goods are sold on FOR basis. The purchase order is placed by the buyer, which has been accepted by the appellant herein, which concludes the contract. Therefore, the purchase order which shows that the place of removal is the buyer's premises has to be considered as a document for deciding the place of removal for clearance of the finished goods. The allegation that the place of removal is the factory gate is therefore factually incorrect.
3.3 That the Tribunal in a batch of cases in M/s. Mahle Engine Components India Pvt. Ltd. Vs. C.C.E. & S.T., Chennai-III & Ors. reported in 2019 (4) T.M.I. 635 - CESTAT Chennai had remanded the matters to the adjudicating authority on the basis of the Circular dated 08.06.2018 issued by the Department. The Tribunal in the said judgement had directed the authorities below to determine the place of removal and 3 then decide the eligibility of credit. She therefore requested that the appeal may be considered favourably.
4. Ld. AR Shri. S. Govindarajan appearing on behalf of the Department supported the findings in the impugned order. He submitted that the Commissioner (Appeals) had relied upon the decision of the Hon'ble Apex Court in the case of M/s. Ultra Tech Cement Ltd. (supra) and has correctly analysed the issue of eligibility of credit. He referred to paragraph 11 of the impugned order wherein it is stated that the appellant had not produced any documentary evidence to prove that the sale is on FOR basis. Thus, the contentions of the appellant on this account cannot be accepted.
5. Heard both sides.
6. The issue is with regard to the eligibility of credit on outward transportation of goods up to the buyer's premises.
7. The Commissioner (Appeals) has relied upon the decision of the Hon'ble Apex Court in the case of M/s. Ultra Tech Cement Ltd. - 2018 (2) T.M.I. 117 (S.C.) (supra). It is correct that the Hon'ble Apex Court in the said case has held that the credit on outward transportation is eligible only up to the place of removal. The Board had later issued a Circular No. 10/6/65/4/2018-CX dated 08.06.2018 wherein it was clarified that for the purpose of valuation, the place of removal is the buyer's premises when the goods are sold on FOR basis. The Tribunal in the case of M/s. Mahle Engine Components India Pvt. Ltd. (supra) had remanded the batch of appeals directing the adjudicating authority to determine the place of removal as per the Circular issued by the Board and then decide the eligibility of credit. In the present case, the Ld. Counsel for the appellant has submitted that they have produced purchase orders before the authorities below to establish that the clearance of goods/sale of goods was on FOR basis.
8.1 In paragraph 11 of the impugned order, although the Commissioner (Appeals) has referred to the Circular issued by the Board, has submitted that the appellant has not produced the necessary documentary evidence. It is also noted that the appellant could not produce any agreement/contract indicating FOR sale to its buyers. However, in a transaction of sale, it is not always necessary to enter into contracts/agreements for sale of goods/moveable properties. The practice may be to place a purchase order which is an offer by the buyer and later on, accepted by the seller. In such cases, the contract can be said to be 4 concluded when the offer is accepted and the goods are cleared/sold by the manufacturer. If the purchase order mentions that the sale is on FOR basis, it is a condition for sale which is agreed upon by both parties. When the purchase order mentions that the sale is on FOR basis, it definitely indicates that the ownership of the goods will pass on to the buyer only after the goods are delivered to the buyer at the buyer's premises. This is very much clear from the discussion in the case of M/s. Roofit Industries Ltd. (supra).
8.2 For the very same reason, when the goods are sold on FOR basis on the basis of purchase orders, the Tribunal has held that the assessable value has to include freight charges to the buyer's premises. Thus, for valuation purposes, the purchase order can be looked into to decide whether the sale is on FOR basis. The same document can be relied upon for deciding the place of removal to determine the eligibility of credit on outward transportation also.
9. The matter then requires to be remanded to the Original Authority who is directed to look into the Circular as well as the documents produced by the appellant and determine the place of removal and then decide the issue of eligibility of credit on outward transportation of finished goods. In such adjudication, the Original Authority shall look into the discussions made, as above. The impugned order is set aside.
10. The appeal is allowed by way of remand.
(Dictated and pronounced in open court) (SULEKHA BEEVI C.S.) MEMBER (JUDICIAL) Sdd