2016 (9) TMI 100 - AT - Service Tax

Assessee wins CENVAT Credit on freight charges for biscuit transport. Revenue appeals dismissed.

The Tribunal concluded that the Assessee is eligible for CENVAT Credit on Service Tax paid on outward freight charges for transporting biscuits from the ... Job work - Cenvat credit - Service tax paid on outward freight charges (GTA services) - for transporting the manufactured biscuits from their factory to the depots of M/s PPPL - Held that:- it is found that there is an arrangement/agreement between the Assessee and M/s Parle Products Pvt. Ltd had been in existence for manufacture of biscuits on job work basis and transportation of the manufactured biscuits to their various depots. Therefore, the judgment of Tribunal in the case of M.P. Biscuits Pvt. Ltd Vs CCE Allahabad [2012 (10) TMI 623 - CESTAT, New Delhi] is squarely applicable to the facts of the case. It is also found that the duty paid on input raw materials and packaging materials by M/s PPPL which was supplied for conversion into biscuits were availed as credit by the assessee and there is no dispute in this regard. I find force in the argument of the appellant that the basis on which Kohinoor Biscuits case was rendered by the Division Bench of this Tribunal, that since the biscuits are assessable to Section 4A, hence the place of removal ought to be considered as factory gate, relying on the judgment of this Tribunal in Ultratech Cement Ltd case, cannot be considered a good law, as the said judgment was not accepted by Hon'ble Chhatisgarh High Court in their order dt.05.08.2014 reported as Ultratech Cement Ltd. Vs. Commissioner of Central Excise, Raipur [2014 (8) TMI 788 - CHHATTISGARH HIGH COURT]. Besides, the said judgment was rendered relating to the period 2009, that is, after amendment to the definition of input service w.e.f. 01.4.2008. Also, it is crystal clear from the judgment of the Hon'ble Gujrat High Court in CCE Vs Parth Poly Wooven Pvt. Ltd. [2011 (4) TMI 975 - GUJARAT HIGH COURT] that cenvat credit on GTA service(out ward freight) from the place of removal to the purchaser s premises prior to 01.04.2008 was admissible. Interpreting the scope of means & includes employed in the definition of input service as was in existence prior to 01.04.2008. - Decided against the Revenue Issues Involved:1. Eligibility of CENVAT Credit on Service Tax paid on outward freight charges (GTA services) for transporting manufactured biscuits from the factory to the depots of M/s Parle Products Pvt. Ltd.2. Compliance with the provisions of Section 35F of the Central Excise Act, 1944 in the context of the appeals filed by the Revenue.Detailed Analysis:1. Eligibility of CENVAT Credit on Service Tax Paid on Outward Freight Charges:The primary issue revolves around whether the Assessee, a job worker for M/s Parle Products Pvt. Ltd (PPPL), is entitled to CENVAT Credit on the Service Tax paid on outward freight charges for transporting manufactured biscuits from their factory to PPPL's depots.Arguments by the Assessee:- The Assessee argued that under an agreement with PPPL, they were required to deliver manufactured biscuits to various depots of PPPL and pay excise duty on the price declared by PPPL.- The Assessee contended that the Commissioner (Appeals) erred in denying CENVAT Credit on Service Tax paid on freight charges up to PPPL's depots, asserting that the issue is covered by precedents such as M.P. Biscuits Pvt. Ltd Vs CCE Allahabad and CCE Indore Vs Dhananjay Confectionary (P) Ltd.- The Assessee highlighted that the period in question (August 2005 to February 2007) was prior to the amendment to the definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004, effective from 01.04.2008. Therefore, Service Tax paid on outward freight to PPPL's depots should be eligible for CENVAT Credit, supported by the Gujarat High Court's decision in CCE Vs Parth Poly Wooven Pvt. Ltd.Arguments by the Revenue:- The Revenue argued that the factory gate is the place of removal, and thus Service Tax paid on outward freight from the factory gate to PPPL's depots is not eligible for CENVAT Credit, referencing the Tribunal's decision in Kohinoor Biscuit Products Vs CCE Noida.Tribunal's Findings:- The Tribunal noted that the Assessee had an agreement with PPPL to manufacture and transport biscuits to various depots, and this arrangement was communicated to the Central Excise authorities.- The Tribunal referred to the judgment in M.P. Biscuits Pvt. Ltd., which established that outward transportation up to the place of removal falls within the definition of input service.- The Tribunal found that the duty paid on input raw materials and packaging materials by PPPL, which were converted into biscuits by the Assessee, was availed as credit without dispute.- The Tribunal rejected the Revenue's reliance on Kohinoor Biscuits, noting that the judgment was based on a period after the amendment to the definition of input service and was not accepted by the Chhattisgarh High Court in Ultratech Cement Ltd. Vs. Commissioner of Central Excise, Raipur.- The Tribunal also cited the Gujarat High Court's judgment in Parth Polywoven Pvt. Ltd., affirming that CENVAT Credit on GTA service (outward freight) from the place of removal to the purchaser's premises prior to 01.04.2008 was admissible.Conclusion:The Tribunal concluded that the Assessee is eligible for CENVAT Credit on Service Tax paid on outward freight charges for transporting biscuits from the factory to PPPL's depots. Consequently, the three appeals filed by the Assessee were allowed.2. Compliance with Provisions of Section 35F:The second issue pertains to the compliance with the provisions of Section 35F of the Central Excise Act, 1944, in the context of the appeals filed by the Revenue.Background:- The Revenue's appeals were based on the rejection of demands by the Adjudicating Authority due to the Assessee's non-compliance with Section 35F provisions.- The Tribunal had previously remanded the appeals to the Commissioner (Appeals) for reconsideration based on the Larger Bench decision in ABB Ltd. Vs. Commissioner of C.E & S.T Bangalore.- Upon reconsideration, the Commissioner (Appeals) decided in favor of the Assessee, setting aside the Adjudicating Authority's orders, prompting the Revenue's appeals.Tribunal's Findings:- The Tribunal found that the Commissioner (Appeals) had correctly analyzed the evidence and principles laid down in the ABB Ltd. case, allowing CENVAT Credit on Service Tax paid on both inward and outward freight during the relevant period.- The Tribunal dismissed the Revenue's contention that there was no arrangement between the Assessee and PPPL to discharge Service Tax on GTA services, affirming that the specific agreement was communicated to the Range Superintendent.Conclusion:The Tribunal dismissed the two appeals filed by the Revenue, upholding the decision of the Commissioner (Appeals) in favor of the Assessee.Final Disposition:All five appeals were disposed of as follows:- The three appeals filed by the Assessee were allowed.- The two appeals filed by the Revenue were dismissed.Pronounced in Court on 31.08.2016.