Custom, Excise & Service Tax Tribunal
M/S. Pioneer Jellice India Pvt. Ltd vs Cce & St, Pondicherry on 5 December, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
E/41826 & 41827/2016
(Arising out of Order-in-Appeal Nos. 232 & 233/2016 (CXA II) dated 24.06.2016 passed by the Commissioner of Central Excise (Appeals-II), Chennai).
M/s. Pioneer Jellice India Pvt. Ltd. : Appellant
Vs.
CCE & ST, Pondicherry : Respondent
Appearance Shri S. Ramachandran, Adv., For the appellant Shri K. P. Muralidharan, AC (AR), For the respondent CORAM Honble Shri MADHU MOHAN DAMODHAR, Member (Technical) Date of Hearing/Decision:05.12.2016 FINAL ORDER Nos. 42409-42410 / 2016 Both the appeals filed are against the common order-in-appeal passed by the Commissioner (Appeals). Of the two issues in dispute, the first issue in both the appeals relate to disallowance of credit of service tax availed by the appellants on transportation during removal of excisable goods. The original authority disallowed the credit on the ground that the appellants had failed to prove any contract between the buyer and the seller to deliver of the goods, further they have not established with documentary evidence that the sale had taken place at FOR destination. The second issue in dispute in appeal No. E/41827/2016 relates to denial of credit for the reason that the documents are not in the name of the appellant company, Cuddalore but issued in the name of their Head Office at Madurai. On appeal the Commissioner (Appeals) vide the impugned order while taking note of Boards circular dated 23.08.2007, held that from a perusal of the invoices/purchase orders although the freight has been stated to be paid by the appellant, it is not indicated therein whether insurance was also borne by the appellant. Lower appellate authority rejected the appeal, interalia holding that there is absence of relevant contract apart from invoices wherein terms and conditions would be laid regarding freight and insurance, which have not been produced by the appellant. Hence these appeals.
2. Today when the matter came up for hearing, the Ld. Consultant Shri S. Ramachandran, submits that in both the appeals as regards to the issue of disallowance of credit of service tax of Rs. 31,365/- and Rs. 36,687/- availed by the appellants on transportation during removal of excisable goods is concerned, the Commissioner (Appeals) has not properly taken note of analysed submissions made before him. He drew attention to the submission filed at the time of hearing on 11.04.2006 at page-26 of the appeal paper book, wherein they had submitted that the price of which the excise duty has been paid is inclusive of freight charges ie. Price is FOR destination and further, all risks till delivery of goods to the customers place is borne by them as they also insure for transit risk in respect of DTA sales. They had also submitted to the lower appellate authority the copies of purchase orders and confirmation letters issued by the customers and also statements correlating Cenvat credit availed with sale invoices to their customers on FOR destination basis. He further submits that the matter is no longer res integra, in view of plethora of judgements of by various Honble High Courts including that of Madras Cements Ltd. Vs. ADCE, Bangalore 2015 (40) STR 604 (Kar.) and CCE & ST, Bangalore Vs. Ultra Tech 2016 (44) STR 227 (Kar.). He submits that the Commissioner (Appeals) though took cognizance of Circular N0. 97/8/2007-ST dated 23.08.2007 issued by the Board on the issue of eligibility of service tax paid on transportation during removal of excisable goods, however found that sample invoices of the appellant do not indicate FOR destination, that insurance were not borne by the appellant and hence it cannot be said that the goods were not sole ownership of the appellant it reaches buyers premises and the benefit of Boards Circular cannot be extended to them. He therefore, pleads for remand of the matter for denovo consideration wherein they would be able to produce the necessary documentary evidences to substantial their case.
3. As regards the second issue in appeal No. E/41827/2016 is concerned the Ld. Consultant submits that the Commissioner (Appeals) has disallowed the credit of Rs. 17,521/- being the credit taken on the bills towards man power supply service, maintenance service related to wind mill located outside the factory and courier and security related to their Head Office etc., not related to the appellant company at Cuddalore and ordered recovery of the same under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944. He further submits that the power generated in the wind-mill is being captively consumed in the factory at Cuddalore and other services such as courier and security services are related and utilized by their Head office and therefore they are entitled to credit on these services also.
4. On the other hand, Shri K. P. Muralidharan, AR, reiterates the correctness of the impugned order. However, he has no objection to remand the matter to the original authority.
5. Heard both sides. As regards the issue of eligibility of service tax paid on transportation during removal of excisable goods, I find that on identical issue this Tribunal has referred appeals to the adjudicating authority for denovo consideration to reconsider the matter based on the guidelines contained in the Boards Circular dated 23.08.2007. Following judicial propriety, I too remand the case back to the adjudicating authority to reconsider the matter based on the applicable Board Circulars and also keeping in mind the ratio laid down by a number of decisions including recent decision of the Honble High Court of Madras in CCE Chennai-III Vs BHEL 2016 (42) STR 815 (Mad.).
5. As regards the second issue is concerned, the Commissioner (Appeals) has held that the primary condition to avail cenvat credit is that the invoice is to be issued by the input service distributor and is required to be a registered person; that as regards security services, it was provided by the appellants to the residence of the Managing Director at Chennai and so also repair and maintenance service was utilised by the appellants to the wind-mill located outside the factory; that as regards bills issued by M/s. Lakshmi & Co., related to construction of wall and construction of workers rest room at Sakthinagar, Erode, those were availed in a place which is situated away from the place of manufacture. At this stage, Ld. AR drew my attention to the findings in the OIO, wherein the original authority has disallowed credits interalia on the ground that bills related to the construction of wall and construction of workers rest room has no nexus between the services availed at outside place at Erode ad the manufacturing activity at Cuddalore. I find merit in the submission of the Ld. AR. The services availed have no nexus with the manufacturing or business activity of the appellants. On this count, this part of the appeal No. E/41827/2016 totalling disallowance of credit of Rs.17.521/- is therefore, sustained and in consequence, the appeal of the appellants on this count stands rejected.
5. Appeal No. E/41826/2016 is allowed by way of remand and appeal No. E/41827/2016 is allowed by way of remand only in respect of disallowance of credit of outward transportation, however, appeal in respect of the second issue involving an amount of Rs. 17,521/-, is dismissed.
6. Both the appeals are disposed of on the above terms.
(Dictated and pronounced in open Court) (MADHU MOHAN DAMODHAR) MEMBER (TECHNICAL) BB 1