TaxTMI 
TaxTMI 
2022 (10) TMI 1213
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....ve from M/s CEAT Ltd under the provisions of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11AB/ 11AA of Central Excise Act, 1944. (iii) I impose a penalty of Rs 1,18,78,786/- (Rupees One Crore Eighteen Lakhs Seventy Eight Thousand Sven Hundred and Eighty Six only) on M/s CEAT Limited under the provisions of Rule 15 (1) of the CENVAT Credit Rules, 2004 read with Section 11A of Central Excise Act, 1944" 2.1 Appellant are Engaged in manufacture of goods falling under chapter 40 of the First Schedule to the Central Excise Tariff Act, 1985 and avail Cenvat credit of duty/ service paid on inputs and input services. 2.2 During the period from April 2009 to June 2014 they had availed CENVAT credit of the service tax paid on "Goods Transport" which is nothing but outward transportation charges paid by them towards the transportation of their finished goods beyond the place of removal to their Customers/ Original Equipment Manufacturers. 2.3 As per the definition of input services under Rule 2(1) of the Cenvat Credit Rules, 2004, outward freight up to the place of removal is a valid input service for availing Cenvat credit. Appellant have taken Cenvat credit of service t....
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.... "i) service tax credit wrongly availed or utilized, should not demanded and recovered from them under Section 11A (1) of the Central Excise Act, 1944 read with Rule 14 of the CENVAT Credit Rules, 2004; ii) interest should not be demanded and recovered on the above said amounts from them under Section 11AB / 11 AA of the Central Excise Act, 1944 read with Rule 14 of the CENVAT Credit Rules, 2004; iii) Penalty should not be imposed upon them under Rule 15(1) of the CENVAT Credit Rules, 2004." 2.6 All the ten show cause notices were adjudicated by the Principal Commissioner as per the impugned order. Aggrieved appellants have filed this appeal. 3.1 We have heard Shri Rajesh Ostwal, Advocate for the Appellant and Shri Deepak Bhilegaonkar, Additional Commissioner for the revenue. 3.2 Arguing for the appellant learned counsel submits that issue  Present issue is no longer res-integra in view of the decisions referred infra. o UltraTech Cement Ltd. [2019 (2) TMI 1487 - CESTAT AHMEDABAD] Affirmed by Hon'ble HC at [2020 (3) TMI 1206- Gujarat High Court] Admitted in SC at 2021-TIOL-227-SC-CX-LB o Sanghi Industries Ltd. [2019 (369) ELT 1424 (T)] o Banco Produ....
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....appellants are not liable to pay excise duty on the freight charges. The appellants have already paid excise duty as applicable from time to time on the freight charges. The appellants submit that if the cenvat credit is denied on the aforesaid freight charges, the excess excise duty paid by them needs to be refunded. 3.3 Arguing for the revenue learned authorized representative while reiterating the findings recorded in the impugned order submitted that the issue involved in the present case has been referred to larger bench of the tribunal by Chennai Bench as per the Interim Order No 400002/2020 dated 08.06.2020 in case of The Ramco Cements. Taking note of the submissions made by the authorized representative the bench asked appellant to make submissions on this decision before the hearing can be concluded. 3.4 As directed by the bench counsel for appellant made additional submissions on the next date of hearing as follows: 2. While passing the interim order, the Hon'ble CESTAT was of the view that cenvat credit on GTA service for outward transportation of goods from the factory gate to the buyer's premises in case where the goods are sold on FOR basis, is not admissi....
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....he Hon'ble Gujarat High Court reported at 2020 (3) TMI 1206- Gujarat High Court. Similar view has also been taken in the case of Bharat Fritz Werner Ltd. Vs. CCE - 2022 (7) TMI 352 - KARNATAKA HIGH COURT. Once the present issue has been settled by the Hon'ble High Court considering all the prevalent decisions and circular, referring this issue to larger Bench by the Hon'ble CESTAT is not required. These decisions were rendered subsequent to the Ramco Cement matter was heard by the Hon'ble CESTAT and hence, in Ramco Cement case, the Hon'ble CESTAT had no occasion to consider the aforesaid judgements. (C) The Hon'ble CESTAT has decided the identical issue in favour of the assessee in the numerous judgments by allowing credit in respect of GTA services used for transportation of goods from factory gate to customers' premise in case of FOR sales by placing reliance on Para 4 of the Circular No. 1065/4/2018-CX dated 8.6.2018. Kindly refer para D.1 & D.2 of synopsis. These decisions were not produced before the Hon'ble CESTAT in Ramco Cement matter. (D) The Hon'ble CESTAT in Interim Order has given finding that decision of Hon'ble Supreme Court....
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....elaxation, the assessee is entitled to take the benefit thereof. But, we are not prepared to accept that effect of the Circular would be to amend the Rules. Rules remain what they were. On the basis of the Circular issued by the Board, it cannot be said that under the Rules, 'input service' includes the transportation service made available to the customer for the purpose of delivering the goods at the destination. ... 7. Mr. Majumder in support of his submission also relied upon the judgment of the Hon'ble Gujarat High Court in the case of Parth Poly Wooven Private Limited, reported in 2012 (25) STR 4. He relied upon paragraphs 18, 21 and 22. Paragraphs 18 and 21 do not support the contention of Mr Mazumdar as would appear from plain reading of those two paragraphs. Paragraph 22 of the judgment relied upon by Mr. Majumdar reads as follows: "22. Be that as it may, we are of the opinion that the outward transport service used by the manufacturers for transportation of finished goods from the place of removal up to the premises of the purchaser is covered within the definition of "input service" provided in Rule 2(1) of the Cenvat Credit Rules, 2004." 8. The Hon&....
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....ods and to provide for credit of service tax leviable under Chapter V of the Finance Act, 1994 (32 of 1994) paid or payable on taxable services used in, or in relation to, the manufacture of excisable goods. The Cenvat Credit Rules, 2004 are made by the Central Government in exercise of this power and therefore their ambit would not extend beyond the supremacy of the provisions of the Central Excise Act, 1944. 9.6. The definitional clause of Rule 2(1) of the Cenvat Credit Rules, 2004 has to be read in this context. It reads as under - "Input service" means any service - (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearances of final products up to the place of removal, and includes services used in relation to modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, sec....
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....goods under an Invoice, which amongst others, indicates central excise duty paid upon such removal. The said judgment also does not decide the place of removal to be the destined premises of customer and leaves such determination in a remand proceeding by the original adjudicating authority. Applying the ratio of the Calcutta High Court, such place of removal has to be invariably being the factory gate or the depot of the assessee. This is what I have already indicated in the preceding Para. 9.11. The assessee has also advanced pleading that though the availment of the Cenvat credit has been in the month of April, 2009, the credit pertains to the period 2005 to 2008, i.e., post 2008 amendment in the Rule 2(1) of the Cenvat Credit Rules, 2008 restricting such credit upto the place of removal, Be that as it may the Calcutta High Court has held this issue also to be against the assessee by indicating in the judgement that the 2008 amendment merely was clarificatory and not amendatory. Even otherwise, the effect of a standing rule will govern the availment irrespective of the as to what period when the tax had been originally paid. 9.12 In view of the foregoing, I find that the s....
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.... the various provisions". Similarly, in the case of M/s Ultratech Cements Ltd vs CCE Bhavnagar 2007-TOIL-429-CESTAT-AHM, it was held that after the final products are cleared from the place of removal, there will be no scope of subsequent use of service to be treated as input. The above observations and views explain the scope of the relevant provisions clearly, correctly and in accordance with the legal provisions. In conclusion, a manufacturer/ consignor can take credit on the service tax paid on outward transport of goods up to the place of removal and not beyond that. 8.2 In this connection, the phrase 'place of removal' needs determination taking into account the facts of an individual case and the applicable provisions. The phrase 'place of removal' has not been defined in CENVAT Credit Rules. In terms of sub-rule (t) of rule 2 of the said rules, if any words or expressions are used in the CENVAT Credit Rules, 2004 and are not defined therein but are defined in the Central Excise Act, 1944 or the Finance Act, 1994, they shall have the same meaning for the CENVAT Credit Rules as assigned to them in those Acts. The phrase 'place of removal' is defi....
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....uced below for ease of reference - (i) Circular dt 3-3-2003 : "8. Thus, it would be essential in each case of removal of excisable goods to determine the point of "sale". As per the above two Apex Court decisions this will depend on the terms (or conditions of contract) of the sale. The 'insurance' of the goods during transit will, however, not be the sole consideration to decide the ownership or the point of sale of the goods. " (ii) Circular dt 23-8-2007 : "8.2 ........ It is, therefore, clear that for a manufacturer/consignor, the eligibility to avail credit of the service tax paid on the transportation during removal of excisable goods would depend upon the place of removal as per the definition. In case of a factory gate sale, sale from a nonduty paid warehouse, or from a duty paid depot (from where the excisable goods are sold, after their clearance from the factory), the determination of the 'place of removal' does not pose much problem. 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....
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....buyer as alleged by the Revenue? In this connection it is necessary to refer to certain provisions of the Sale of Goods Act, 1930. Section 19 of the Sale of Goods Act provides that where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. Intention of the parties are to be ascertained with reference to the terms of the contract, the conduct of the parties and the circumstances of the case. Unless a different intention appears; the rules contained in Sections 20 to 24 are provisions for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer. Section 23 provides that where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods there upon passes to the buyer. Such assent may be expressed or implied and may be given either before or after th....
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....preme Court in the case of CCE vs Ispat Industries Ltd 2015(324) ELT670 (SC) may be applied. Apex Court, in this case has upheld the principle laid down in M/s Escorts JCB (Supra)to the extent that 'place of removal' is required to be determined with reference to 'point of sale' with the condition that place of removal (premises) is to be referred with reference to the premises of the manufacturer. The observation of Honb'le Court in para 16 in this regard is significant as reproduced below "16. It will thus be seen where the price at which goods are ordinarily sold by the assessee is different for different places of removal, then each such price shall be deemed to be normal value thereof. Sub-clause (b) (iii) is very important and makes it clear that a depot, the premises of a consignment agent, or any other place or premises from where the excisable goods are to be sold after their clearance from the factory are all places of removal. What is important to note is that each of the premises is referable only the manufacturer and not to the buyer of excisable goods. The depot or the premises of the consignment agent of the manufacturer are obviously places which are referable to....
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....lace of removal'. 6. Facts to be verified: This circular only bring to the notice of the field the various judgments of Hon'ble Supreme Court which may be referred for further guidance in individual cases based on facts and circumstances of each of the case. Past cases should accordingly be decided. 7.No extended period: Any new show cause notice issued on the basis of this circular should not invoke extended period of limitation in cases where an alternate interpretation was taken by the assessee before the date of the Supreme Court judgment as the issue is in the nature of interpretation of law." As a result of this circular, the clarifications issued by the Board in terms of Circular of 2007 and 2014 have been withdrawn. In terms of this circular 4 it has been specifically clarified following the decision of Hon'ble Supreme Court in case of Roofit Industries Ltd, it has been clarified that in case of FOR destination sale where the ownership, risk in transit, remained with the seller till the goods are accepted by the buyer the on delivery and till such time of delivery, seller alone remained the owner of goods retaining right of disposal the benefit of CENVAT Credi....
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....e various Government authorities. One such order, i.e., order dated 24-6-1996 placed by Kerala Water Authority is on record. On going through the terms and conditions of the said order, it becomes clear that the goods were to be delivered at the place of the buyer and it is only at that place where the acceptance of supplies was to be effected. Price of the goods was inclusive of cost of material, Central Excise duty, loading, transportation, transit risk and unloading charges, etc. Even transit damage/breakage on the assessee account which would clearly imply that till the goods reach the destination, ownership in the goods remain with the supplier namely the assessee. As per the 'terms of payment' clause contained in the procurement order, 100% payment for the supplies was to be made by the purchaser after the receipt and verification of material. Thus, there was no money given earlier by the buyer to the assessee and the consideration was to pass on only after the receipt of the goods which was at the premises of the buyer. From the aforesaid, it would be manifest that the sale of goods did not take place at the factory gate of the assessee but at the place of the buyer on the d....
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....viz; Cement where the goods were sold for delivery at the buyer's premises in the case of Ultratech Cement Limited [2018- TIOL-42-SC-CX)] [also reported in 2018 (9) GSTL 337 (SC)), the Hon'ble Apex Court has held that CENVAT credit is not available for the GTA services availed for transportation from the factory to the buyer's premises. This judgment of the Apex Court is binding on this Tribunal and hence there is no case to either allow CENVAT Credit or remand the matter to the lower authority. They would further submit that the decision of Hon'ble Apex Court in the case of Roofit Industries Limited (supra) holding that "where the goods are sold for delivery at the buyer's premises, such buyer's premises become the place of removal" has been over-turned by Hon'ble Apex Court in the case of Ispat Industries Limited [2015(324) ELT 670 (S.C.)] and it has been held that the buyer's premises can never be the place of removal under section 4 of Central Excise Act, 1944. He would further argue that the appellant's arguments that in the case of Ultratech Cement Limited, the Hon'ble Apex Court has not decided what is the place of removal, is without ....
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....herein stood satisfied insofar as the case of the respondent is concerned, 1.e. (1) regarding ownership of the goods till the delivery of the goods at the purchaser's door step; (ii) seller bearing the risk of or loss or damage to the goods during transit to the destination and; (iii) freight charges to be integral part of the price of the goods. This approach of the Commissioner (Appeals) has been approved by the CESTAT as well as by the High Court. This was the main argument advanced by the learned counsel for the respondent supporting the judgment of the High Court. 9. We are afraid that the aforesaid approach of the Courts below is clearly untenable for the following reasons:" 13. From the aforesaid extract of the judgment, it does not appear that the Hon'ble Apex Court was oblivious of the fact or has not considered that the sale was alleged to have taken place at the buyer's door step, the cost and risk of the transport being borne by the seller. The case in hand is identical to this case. Accepting the arguments of the assessee in the Ultratech Cement (supra), Commissioner (Appeals), CESTAT as well as the Hon'ble High Court of Karnataka held that the as....