Custom, Excise & Service Tax Tribunal
Arising Out Of Order-In-Appeal No.103 ... vs Dt. 24.04.2017 Passed By Cce ... on 31 October, 2017
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT CHENNAI S.No. Appeal No. Appellant Respondent
1. E/41801 to 41804/2017 Rajasriya Automotive Industries (P) Ltd.
Unit I & II CCE Chennai-III Arising out of Order-in-Appeal No.103 to 106/2017 (CXA-I) dt. 24.04.2017 passed by CCE (Appeals-I) Chennai
2. E/41853/2017 Rane NSK Steering System Private Ltd.
CCE Chennai-III Arising out of OIA No.296/2017 (CXA-II) dt. 31.05.2017 passed by CCE (Appeals-II) Chennai
3. E/41928/2017 Soundarya Decorators Pvt. Ltd.
CCE Chennai IV Arising out of OIA No.257/2017 (CXA-II) dt. 22.05.2017 passed by CCE (Appeals-II) Chennai
4. E/41961/2017 Butterfly Gandhimathi Appliances Ltd.
CCE Chennai IV Arising out of OIA No.255/2017 (CXA-II) dt. 22.05.2017 passed by CCE (Appeals-II) Chennai
5. E/42106/2017 The Ramco Cements Ltd.
CCE Chennai-I Arising out of OIA No.61/2017 (CTA-II) dt. 30.06.2017 passed by CCE (Appeals-II) Chennai Appearance:
Ms. S. Sridevi, Advocate (for Sl.No.1,2,3) Ms. Minchu Marriam Punnoose, Advocate (for Sl.No.4) Shri R. Parthasarathy, Consultant (for Sl.No.5) For the Appellant Shri Arul C. Durairaj, Superintendent (AR) For the Respondent CORAM:
Honble Ms. Sulekha Beevi C.S. Member (Judicial) Date of hearing/decision :31.10.2017 FINAL ORDER No. 42569-42576 / 2017 The issue involved in all these appeals being similar was heard together, and are being disposed of by this common order.E/41801 to 41804/2017
2.1 The brief facts of the case are that appellants availed cenvat credit on the outwards transportation services of the finished goods from their factory to the customers premises. The department was of the view that the said services would not qualify as input service since the buyers premises cannot be considered a place of removal. After due process of law, the original authority confirmed the demand along with interest and also imposed penalties. In appeal, the Commissioner (Appeals) upheld the same. Hence this appeal.
2.2 On behalf of appellant, Ld. counsel Ms. S. Sridevi submitted that the appellant has availed credit on outward transportation of the final product from the factory to the buyers premises on the basis of condition of sale which is F.O.R. Destination. She adverted to page 128 of the appeal paper book which contains a purchase order wherein it is indicated that the goods are to be delivered on F.O.R. Destination.
Appeal E/41853/2017 3.1 The appellants are engaged in manufacture of Power Steering Column assembly and Power Steering Components AND availed credit on outward transportation for clearance of finished goods from the factory to the buyers premises. Department was of the view that credit is not admissible for such outward transportation charges since buyers premises cannot be considered as 'place of removal'. SCN after adjudication, culminated in confirmation of the demand which was upheld by the original authority as well by the Commissioner (Appeals). Hence this appeal.
3.2 On behalf of appellant, Ld. Counsel Ms. S.Sridevi adverted to pages 58, 62, 77 etc of the appeal paper book which manifested that freight and insurance has been borne by the appellant and that the risk of the goods is on the appellant till the goods are delivered at the buyers premises.
Appeal E/41928/2017 4.1 The brief facts of the case are that the appellant is manufacture of Storage and Wall Panel and on verification of records, it was found that they had availed credit on service tax paid on outward transportation of finished goods from their factory to buyer's premises. SCN was issued proposing to deny the credit and for recovery of the same along with interest. After due process of law, the original authority confirmed the demand, interest and imposed penalty. Hence this appeal.
4.2 On behalf of appellant, Ld. Counsel Ms. S. Sridevi adverted to pages 66, 71 etc. in which it is indicated that the transportation is on F.O.R. Destination.
Appeal E/41961/2017 5.1 The brief facts of the case are that appellant is a manufacturer of LPG stoves, Aluminium Pressure Cookers etc. On verification of records, it was noticed that appellant had taken credit of service tax paid on outward transportation for the clearances of their finished goods from their factory to their buyers' premises. SCN was issued proposing to deny the credit and after adjudication, the original authority confirmed the demand along with interest and imposed penalties which was upheld by the Commissioner (Appeals).
5.2 On behalf of appellant, Ld. Counsel Ms. Minchu Mariam Punnoose adverted to pages 63 to 75 of the appeal paper book which contain various invoices in which it is indicated that the delivery is on FOB Destination. She has also drawn to the agreement of the appellant with IOCL in which it is shown that the goods are to be delivered at the buyer's premises showing the element of indemnity rests on the appellant till the goods are delivered. A separate Indemnity Bond to this extent is also executed between the parties.
Appeal E/42106/2017 6.1 the facts of the case are that appellant are engaged in manufacture of cement and are availing the cenvat credit of duty paid on inputs, capital godos and service tax paid on input services. During scrutiny of records, it was noticed that appellants availed cenvat credit of service tax paid on GTA services for outward transportation of the finished goods upto the place of customers. The department was of the view that such credit is not admissible and SCN was issued proposing to recover the wrongly availed credit with interest and for imposing penalty. The original authority confirmed the demand, interest and penalties which was upheld by the Commissioner (Appeals).
6.2 On behalf of appellant, Shri R. Parthasarathy, Consultant submitted that in the appellant's own case (Madras Cements Ltd.) the issue was considered by the Hon'ble High Court of Karnataka reported in 2015 (40) STR 645 (Kar.), wherein the Hon'ble High Court has held that appellant is eligible for credit. Similarly, for a different period, the Commissioner (Appeals) vide OIA No.14/2016 dt. 23.2.2016 has also allowed the credit observing that the clearances of the goods are on FOR Destination.
7. Ld. A.R Shri Arul C.Durairaj appeared in all the above appeals on behalf of respondent-Revenue. He contended that definition of 'input services' provides that services used by the manufacturer in relation to the manufacture of final products and clearance of final products upto the place of removal only would qualify as 'input services'. Thus the buyer's premises cannot be considered as the place of removal. He relies upon the judgment of Apex Court in the case of CCE Nagpur Vs Ispat Industries Ltd. - 2015 (324) ELT 670 (SC), wherein the Hon'ble Apex Court has held that place of removal is the factory gate and it cannot be the buyer's premises. It is also added by Ld. AR that definition of 'place of removal' given in the Central Excise Act has to be applied to the words "place of removal" used in the definition of 'input services'. Therefore the appellant cannot avail the credit on outward transportation services beyond the factory gate and upto the buyer's premises.
8. Heard both sides. The issue that arising for consideration in these appeals is whether the appellants are eligible for cenvat credit of outward transportation charges beyond the factory gate and upto the place of removal. The Board vide its Circular No.97/8/2007-ST dt. 23.8.2007 has clarified as under :
"8.2.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."
Thus from the above clarifications issued by the Board, it is seen that in cases where the ownership of the goods remains with the seller, till it is delivered to the buyer's premises, assessee would be eligible for taking cenvat credit on outward transportation services. The said issue has been analyzed and held in favour of assessee in the following cases :
(1) Palco Metals Ltd. Vs CCE 2012 (280) ELT 299 (Tri-Ahmd.) (2) Gala Precision Technology Pvt. Ltd. Vs CCE 2013-TIOL-853-CESTAT-Mumbai (3) Rohit Surfactant Pvt. Ltd. Vs CCE 2014 (33) STR 194 (Tri-Del.) (4) Surya Wires Pvt. Ltd. Vs CCE 2014-TIOL-2566--CESTAT-Del.
(5) Power Build Ltd. Vs CCE 2014 TIOL-685-CESTAT-Ahmd.
(6) Menon Pistons Ltd. Vs CCE 2015 (40) STR 283 (Tri-Mum.) (7) New Allenberry Works Vs CCE 2015 (37) STR 303 (Tri-Del) (8) Madras Cements Ltd. Vs CCE 2015 (40) STR 645 (Kar) (9) CCE Vs Lucas TVS Ltd. 2016 (43) STR (Tri Chennai) (10) Birla Corporation LTd. Vs CCE 2016-TIOL-2082-All (11) Bhilai Iron and Steel Processing Co. Ltd. Vs CCE 2016-TIOL-2092-CESTAT-Del.
(12) Hindustan Coca Cola Beverages Pvt. Ltd. Vs CCE 2016-TIOL-1887-CESTAT-Hyd.
(13) Forace Polymers Pvt. Ltd. Vs CCE 2016 TIOL-1712-Cestat-Del.
(14) CCE Vs Forace Polymers Pvt. Ltd. 2016-TIOL-2123-CESTAT-Del.
(15) CCE Vs Ultratech Cements Ltd. 2016-TIOL-1828-HC-Kar.
(16) Mahle Engine Components vs CCE., Indore 2017-TIOL-765-CESTAT-DEL It is seen that the issue is no longer res integra. As seen from the decisions relied upon by all the counsels appearing on behalf of appellants, from the totality of evidence placed before me as well as facts on record and also following the ratio laid down in the above decisions, I am of the view that the disallowance of credit is unjustified. Ld. A.R has relied upon the decision in the case of Ispat Industries Ltd. (supra) stating that the Hon'ble Supreme Court has held that buyer's premises cannot be considered as a 'place of removal'. The said decision has been rendered on an issue of valuation. Further, the Tribunal in the case of M/s.Forace Polymer Pvt. Ltd. Vs CCE & Service Tax, Meerut 2016-TIOL-1712-CESTAT-DEL. has distinguished the Ispat Industries case.
Impugned orders are set aside. Appeals are allowed with consequential benefits, if any, as per law.
(dictated and pronounced in open court) (Sulekha Beevi C.S.) Member (Judicial) gs 8 Appeal No.ST/41801-41804/2017 ST/41853,41928,/2017, E/41961/2017 E/42106/2017