Custom, Excise & Service Tax Tribunal
Mrf Ltd vs Commissioner Of Gst&Amp;Cce(Trichy) on 18 July, 2019
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/40751 to 40755/2019
[arising out of Orders-in-Appeal No.21 to 25/2019-TRY(CX), dated
05.02.2019 passed by the Commissioner of GST & Central Excise (Appeals),
Tiruchirapalli]
M/s.MRF LTD. APPELLANT
Versus
COMMISSIONER OF CGST & CENTRAL EXCISE, TRICHY RESPONDENT
Appearance:
For the Appellant Shri Karthik Sundaram, Adv. For the Respondent Shri M. Jagan Babu, AC (AR) CORAM:
Hon'be Smt. Sulekha Beevi C.S, Member (Judicial) Date of hearing/decision 18-07-2019 FINAL ORDER NOs. 40934-40938 / 2019 The issue involved in all these appeals being the same, they are heard together and disposed by this common order.
2. The appellants are manufacturers of tyres and tubes and are registered with the department. On verification of records, it was seen that they have availed Cenvat credit on the service tax paid on Goods Transport Agency Services used for outward transportation of finished goods from the factory to their customer‟s premises. According to department, the said credit is not eligible as the place of removal is the factory gate. Show-cause notices were issued for different period from Apr.‟12 to Mar.‟16, proposing to recover the wrongly availed 2 E/40751 to 40755/2019 credit along with interest and also for imposing penalties. After due process of law, the original authority vide separate Orders-in-Original confirmed the demand, interest and penalties. In appeal, the demand and interest was upheld by Commissioner (Appeals), however, the penalties were set aside. Aggrieved by such order, the appellants are now before this Tribunal.
3. On behalf of the appellant, the learned counsel Shri Karthik Sundaram appeared and argued the matter. He adverted to the various purchase orders issued by their customers to point out that the sale was on F.O.R. basis. The freight has been incurred by the appellants and included in the assessable value. The excise duty has been discharged by the appellants on the „single price‟, which includes the freight charges etc. Since the appellants have not collected freight charges separately from the buyers, the sale takes place at the buyer‟s premises. To support this contention, he relied upon the decision in the case of Commissioner of Customs & Central Excise, Aurangabad Vs M/s. Roofit Industries Ltd., reported in 2015 (319) E.L.T.221 (S.C.). It is argued by the learned counsel that the authorities below, have relied upon the decision in the case of M/s. Ispat Industries Ltd., to hold that the place of removal is the factory gate. When the purchase orders clearly states that the goods have to be delivered at the customer‟s premises and that appellants have to bear the freight charges, insurance etc., the place of removal can only be the buyer‟s premises as decided by the Apex Court in the case of M/s. Roofit Industries Ltd., (supra). In such circumstances, the decision laid by the Hon‟ble Apex Court in the case of CCE & ST Vs M/s. Ultratech 3 E/40751 to 40755/2019 Cement Ltd., reported in (2018) 2 SCC 721 would not apply. Further, the Board vide CBEC Circular No.1065/4/2018-Cx., dated 08.06.2018 has clarified that when the freight charges are incurred by the assessee, the place of removal has to be the buyer‟s premises. In the case of M/s. Ultratech Cement Ltd., Vs Commissioner of Central Excise, Kutch [Gandhidham] reported in 2019 (2) TMI 1487 - CESTAT AHMEDABAD, the Division Bench of the Tribunal has analysed this issue and held that the credit upto the buyer‟s premises would be eligible on GTA Services, when the freight has been cincluded in the assessable value. This Tribunal in the case of M/s. Genau Extrusions Ltd. Vs Commissioner of GST & CE vide Final Order No.40900/2019, dated 04.07.2019 also has followed the said decision to hold that the credit is eligible.
4. The learned Authorised Representative for the Revenue Shri M. Jagan Babu, AC (AR) supported the findings in the impugned order. He submitted that as per the decision in the case of M/s. Ispat Industries Ltd., (supra), the place of removal can only be the factory gate. Therefore, the authorities below have rightly denied the credit of service tax paid for GTA Services upto the buyer‟s premises.
5. Heard both sides.
6. The issue is whether the appellants are eligible for the credit of service tax paid on outward transportation of goods upto the buyer‟s premises. On perusal of various purchase orders, it is seen that the delivery terms is F.O.T. The learned counsel for appellants submitted that the "delivery is free on terms". The terms are specified in the purchase order as well as in customers‟ letters, which show that 4 E/40751 to 40755/2019 the appellant has to bear the freight charges, insurance etc., and deliver the goods to the customer‟s premises. It is also reflected from the purchase orders that the appellant has paid excise duty on the „single price‟ quoted in such orders. Invoices clearly show separate freight charges have been collected from the customers. Thus, the freight charges having been incurred by the appellants and also included in the assessable value, the place of removal can only be the buyer‟s premises as laid down by Hon‟ble Apex Court in the case of M/s. Roofit Industries Ltd.
7. In such circumstances, the credit availed on outward transportation of goods upto the buyer‟s premises is eligible as decided by Division Bench of the Tribunal in the case of M/s. Ultratech Cement Ltd., reported in 2019 (2) TMI 1487 - CESTAT AHMEDABAD. This Tribunal in the case of M/s. Genau Extrusions Ltd. (supra) also has followed the same and held that the credit is eligible. The relevant paragraphs are extracted as under:-
"6.1 On perusal of records as well as the purchase orders, it is seen that the sale is on F.O.R. basis. The authorities below have disallowed the credit holding that there is no evidence to establish that the sale is on F.O.R. basis. It is not necessary that there should be a separate contract for supply of goods. The parties can agree to the terms and conditions of the sale in the purchase orders itself. This becomes a concluded contract when the offer is accepted by the supplier/buyer. Therefore, when the purchase orders itself show that the condition for sale is F.O.R. basis, the observations made by the authorities below that the appellant has failed to produce any evidence/contract establish that they have borne the freight charges, insurance etc., is without any factual basis and unacceptable.
6.2. Further, in the present case, letters/certificates have been obtained by the appellant from the purchasers of the goods showing that the purchasers have not paid any freight charges separately. This strongly implies that the appellants have borne the freight charges and have included in the assessable value on which excise duty has been discharged by them.5
E/40751 to 40755/2019 6.3. From these facts, I am of the view that the decision in the case of Hon‟ble Apex Court in the case of M/s. Roofit Industries Ltd., (supra) will apply and the place of removal is the buyer‟s premises. In such circumstances, the decision of the Tribunal in the case of M/s. Ultratech Cement Ltd., reported in 2019 (2) TMI 1487 - CESTAT AHMEDABAD (supra) squarely applies. As rightly argued by the learned counsel for the appellants, the Hon‟ble Apex Court in the case of M/s. Ultratech Cement Ltd., reported in 2018 - TIOL - 42 -
SC - CX (supra) has observed that the credit on Outward Transportation of Goods will not be eligible beyond the place of removal. In the present case, the place of removal being the buyer‟s premises, the appellants are eligible for credit. The Tribunal in the case of M/s. Harita Fehrer Ltd., Vs Commissioner of GST & CE, Salem vide Final Order No.40894/2019, dated 02.07.2019 has considered this issue and allowed the credit in favour of the assessee."
8. From the above discussions, I am of the view that the disallowance of credit is unjustified. The impugned orders are set aside. The appeals are allowed with consequential reliefs, if any.
(Dictated and pronounced in open court) (SULEKHA BEEVI C.S) MEMBER (JUDICIAL) ksr 19-07-2019 6 E/40751 to 40755/2019 DRAFT Remarks I II III Date of 18.07.2019 dictation Draft Order 19.07.2019
- Date of typing Fair Order 19.07.2019 Typing Date of 19.07.2019 number 7 E/40751 to 40755/2019 and date of dispatch 8 E/40751 to 40755/2019