Custom, Excise & Service Tax Tribunal
M/S Essel Propack Ltd vs Commissioner Of Central Excise, ... on 29 October, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. IV Appeal No. E/114/12 (Arising out of Order-in-Appeal No. YDB(231)Th-I/2011 dated 18.10.2011 passed by the Commissioner of Central Excise (Appeals), Mumbai-I). For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No 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 : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Essel Propack Ltd. Appellant Vs. Commissioner of Central Excise, Thane-I Respondent Appearance: Shri Mihir Mehta, CA for Appellant Shri Ashutosh Nath, AC (AR) for Respondent CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Date of Hearing: 29.10.2014 Date of Decision: 29.10.2014 ORDER NO. Per: Shri Anil Choudhary
This appeal by M/s Essel Propack Ltd. arise from Order-in-Appeal No. YDB(231)Th-I/2011 dated 18.10.2011 passed by the Commissioner of Central Excise (Appeals), Mumbai-I.
2. The brief facts are that the appellant are manufacturer of excisable goods Multilayered Plastic flexible laminated collapsible tubes, Multilayered Plastic flexible laminated web (aluminum foil based), Machinery for sealing of plastic collapsible tubes, machines for filling and packing of plastic laminated tube, Multilayered Plastic flexible laminated collapsible tube making machine etc. and availed CENVAT Credit with respect to duty paid on inputs and capital goods received in the factory. During EA-2000 Audit for the period April, 2005 to Dec., 2007, it has found the appellant had availed and utilized CENVAT Credit of Service Tax paid on Business Support Services provided by the Custom House Agents, Octroi Agents and Freight Forwarders with respect to export of final products and other materials through Airport/Port. CENVAT Credit was availed with respect to services received by the appellant for export of goods and other materials on expenses like truck clearance charges paid to Octroi Agent, transport and delivery charges, warehouse charges, freight charges, packaging strapping charges, package loading charges, packaging forwarding for examination, document charges, Airport authority charges, agency charges, DEPB charges, loading unloading charges, EDI charges, security charges, X-ray charges, AWB fees, PCA charges, Airway Bill charges, IAAI charges, etc. totaling Rs.6,66,027/- in respect of Service Tax paid on the aforementioned services. The Revenue felt that the appellant have availed credit of Service Tax on Business Support Services meant for export of goods and the place of removal is factory gate and accordingly CENVAT Credit was not available to the appellant in terms of Rule 3 read with Rule 2(b) read with Rule 2(l) read with Section 4 of the Central Excise Act and accordingly show-cause notice dated 16.4.2010 was issued proposing to disallow the alleged wrong availment of CENVAT Credit of Rs.6,66,027/- along with interest and penalty under Rule 15 of Cenvat Credit Rules read with Section 11AC of the Central Excise Act and also penalty under Rule 25 of the Central Excise Rules, 2002. Vide Order-in-Original dated 27.5.2011, the proposed demand was confirmed along with interest thereon and also equal amount of penalty was imposed under Rule 15 of Central Excise Rules read with Section 11AC of the Act and since the goods were not available for confiscation, a further penalty of equal amount was imposed under Rule 25 of Central Excise Rules, 2004.
2.1 Being aggrieved, the appellant preferred an appeal before the Commissioner (Appeals), who was pleased to recording finding that from a plain reading of the definition under Section 4(3)(c) of the Act, place of removal does not take in its ambit the port of export as place of removal in the case of export clearance. It was further observed that since the definition of input service prevailing during the relevant period covered input service used from the place of removal, the CENVAT Credit on such services will be admissible to the appellant subject to the condition that such expenses form the integral part of the cost of the finished goods. Further, reference was made to para 8.2 of CBE&C Circular No. 97/8/2007-Service Tax dated 23.8.2007, which reads as under: -
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. Further held the appellant have failed to establish as to why the said services availed by them is input service, having nexus and integral connection with their business of clearing of final product. Accordingly, the appeal was rejected save and except the penalty imposed under Rule 25 of Central Excise Rules, 2007 was set aside.
3. Being aggrieved, the appellant is before this Tribunal. The appellant urges that the issue is no more res integra and the issue has been decided in favour of the assessee by this Tribunal in Commissioner of Central Excise vs. Adani Pharmachem Pvt. Ltd. 2008 (232) ELT 804 (Tri-Ahmd), wherein on the question of eligibility of Service Tax paid on CHA services rendered in the port to the exporter when the export has been made on FOB basis, in view of the fact that the place of removal is considered the port where the goods are put on board the ship or aircraft, as the case may be, this Tribunal observed that there is no dispute that the goods have been sold on FOB basis/CIF basis. There is also no dispute that Service Tax have been paid for the services rendered and after referring to para 8.2 of the aforementioned Circular wherein the Board has given direction that place of removal should be determined with respect to the facts and circumstances in each case and it was held that where the sale is on FOB/CIF basis, the place of removal has to be the load port only and accordingly held, the input services rendered in relation to outward transportation etc. upto the place of removal are allowable and accordingly, input services rendered for outward transportation upto the place of removal and other connected services availed to facilitate the movement of goods to the port and their handling, documentation etc. to enable the loading of the goods on the vessel for export. Reliance was placed on the ruling of this Tribunal in the case of Commissioner Vs. Rolex Rings Pvt. Ltd. 2008 (230) ELT 569 (Tri-Ahmd).
4. The learned AR appearing for the Revenue relies on the impugned order.
5. Having considered the rival contention, in view of the Circular dated 23.8.2007 (supra) para 8.2., it is clearly provided therein that eligibility to availing CENVAT Credit of Service Tax paid is dependent upon the place of removal, in the facts and circumstances, which may even include sale taking place at the destination point and the Hon'ble High Court of Punjab & Haryana in the case of Ambuja Cements Ltd. Vs. UOI 2009 (236) ELT 431 (P&H) in respect of Goods Transport Agency services, being outward freight, when paid by manufacturer upto customers door step, have found that credit availed on such services is admissible, for ownership of the goods remained with the seller till delivery at customers door step, transit insurance borne by the assessee and property in goods not transferred to buyer till delivery and freight charges forming part of value of excisable goods and borne by the assessee on FOR destination basis, CENVAT Credit is allowable and also held that CBE&Cs Circular is binding on the Revenue. He further relies on the ruling of the Tribunal in the case of Adani Pharmachem Pvt. Ltd. (supra), I hold that the Commissioner (Appeals) has erred in the facts and circumstances of the case, that the place of removal is not port, but the factory gate. I hold that in the facts and circumstances of the case, the place of removal is port and accordingly, I set aside the impugned order and allow the appeal. The appellant will be entitled to consequential benefit, if any.
(Dictated and pronounced in Court) (Anil Choudhary) Member (Judicial) Sinha 1