TaxTMI 
TaxTMI 
2022 (10) TMI 1213
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....by order recovery of interest on the amount confirmed above 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 ava....
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....3 to January 2014 625020 10 28.08.2014 February 2014 to June 2014 427197 11878786 asking them to show cause as to why: "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 ....
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....  Cost of GTA service is included in the assessable value of the final products manufactured by the appellants.  Without prejudice, demand of credit should be adjusted against excess duty paid on value of final product by inclusion of value of freight which was not to be included.  Assuming without admitting, even if the place of removal is the factory gate, the 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 befor....
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....Hon'ble CESTAT after relying upon the Circular dated 8.6.2018 as well as the decision of the Supreme Court in the case of Ultratech reported at 2018 (9) GSTL 337 (SC) and CCE Vs. Roofit Industries Ltd. 2015 (319) ELT 221 (SC) has held that the assessee is eligible for the cenvat credit of service tax paid on GTA for transportation of final product from factory to customer premises. This judgment of CESTAT has been affirmed by the 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....
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....t in Vesuvious India Limited, wherein, the High Court observed in no uncertain terms that - 5. 'Input service' as defined in Rule 2(1)(ii) does not include the expenses with regard to post-manufacturing stage except for the purpose of transportation of goods from one place of removal to another place of removal. It is, however, true that relaxation in that regard was made by the Circular issued by the Board on 23rd August, 2007. When the Board has made the relaxation, 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 contenti....
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....moval referred to in sub-clause (iii) of clause (c), shall be deemed to be the time at which such goods are cleared from the factory; 9.5. It is well known construction of statute that rules made there under cannot override the provisions of Act. To give effect to the supremacy of the parentage, the Section 37(2)(xvia) and (xviaa) of the central Excise Act, 1944 regulate the power of the Central Government to provide for the credit of duty paid or deemed to have been paid on the goods used in, or in relation to the manufacture of excisable goods 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 di....
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.... service the decision of the Chhattisgarh nigh Court in Ultratech Cement, supra. In this case, the High Court has decided that place of removal would shift depending upon the place of sale. But then, Section 4(3) (cc) of the Central Excise Act, 1944 deems the time of removal for the purpose of assessability of the excisable goods to be the time of clearance thereof from the factory of removal. The place of removal consequently could not be the premises of the customer/ original equipment manufacturer for the simple reason that Rule 10 of the Central Excise rules, 2002 provides for removal of 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 ha....
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....used for outward transportation upto the place of removal are to be treated as input service. The first clause does not mention transport service in particular. The second clause restricts transport service credit upto the place of removal. When these two clauses are read together, it becomes clear that transport service credit cannot go beyond transport upto the place of removal . The two clauses, the one dealing with general provision and other dealing with a specific item, are not to be read disjunctively so as to bring about conflict to defeat the laws' scheme. The purpose of interpretation is to find harmony and reconciliation among 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 p....
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....by the claimant of such credit that the sale and the transfer of property in goods (in terms of the definition asunder 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" Impugned order is based on this circular issued by the Board. 4.5 By the Circular No 988/12/2014-CX dated 20.10.2014, Board has clarified as follows: 2) The second associated issue is regarding ascertainment of place of removal. In this regard there are two circulars of the Board namely 37B order no 59/1/2003 dt 3-3-2003 and circular no 97/8/2007 dt. 23.8.2007. The relevant paragraphs of these two circulars are reproduced 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 : ....
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.... in goods has taken place. This is a deviation from the Board's circular and is also contrary to the legal position on the subject. 5) It may be noted that there are very well laid rules regarding the time when property in goods is transferred from the buyer to the seller in the Sale of Goods Act , 1930 which has been referred at paragraph 17 of the Associated Strips Case (supra )reproduced below for ease of reference - "17. Now we are to consider the facts of the present case as to find out when did the transfer of possession of the goods to the buyer occur or when did the property in the goods pass from the seller to the buyer. Is it at the factory gate as claimed by the appellant or is it at the place of the 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 ....
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....vs Emco Ltd 2015(322) ELT 394(SC) and CCE &ST vs. Ultra Tech Cement Ltd dated 1.2.2018 in Civil Appeal No. 11261 of 2016. In this regard, references have been received from field formations seeking clarification on implementation of aforesaid circulars of the Board in view of judgments of Hon'ble Supreme Court. 2. In order to bring clarity on the issue it has been decided that Circular no. 988/12/2014-CX dated 20.10.2014 shall stand rescinded from the date of issue of this circular. Further, clause (c) of para 8.1 and para 8.2 of the circular no. 97/8/2007-CX dated 23.08.2007 are also omitted from the date of issue of this circular. 3. General Principle: As regards determination of 'place of removal', in general the principle laid by Hon'ble Supreme 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 o....
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....GTA Services etc: The other issue decided by Hon'ble Supreme Court in relation to place of removal is in case of CCE &ST vs. Ultra Tech Cement Ltd dated 1.2.2018 in Civil Appeal No. 11261 of 2016 on the issue of CENVAT Credit on Goods Transport Agency Service availed for transport of goods from the 'place of removal' to the buyer's premises. The Apex Court has allowed the appeal filed by the Revenue and held that CENVAT Credit on Goods Transport Agency service availed for transport of goods from the place of removal to buyer's premises was not admissible for the relevant period. The Apex Court has observed that after amendment of in the definition of 'input service' under Rule 2(l) of the CENVAT Credit Rules, 2004,effective from 01.03.2008, the service is treated as input service only 'up to the place 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 notic....
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....whether as to at what point of time sale is effected namely whether it is on factory gate or at a later point of time, i.e., when the delivery of the goods is effected to the buyer at his premises. This aspect is to be seen in the light of provisions of the Sale of Goods Act by applying the same to the facts of each case to determine as to when the ownership in the goods is transferred from the seller to the buyer. The charges which are to be added have put up to the stage of the transfer of that ownership inasmuch as once the ownership in goods stands transferred to the buyer, any expenditure incurred thereafter has to be on buyer's account and cannot be a component which would be included while ascertaining the valuation of the goods manufactured by the buyer. That is the plain meaning which has to be assigned to Section 4 read with Valuation Rules. 13. In the present case, we find that most of the orders placed with the respondent assessee were by the 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 t....
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....property in the goods would happen at the point of the delivery of the goods and all expenses till that point would be includible in the transaction value, i.e. freight charges upto that point are includible in the assessable value determined under Section 4. Admittedly appellant had paid duty including the freight charges upto the point of delivery at the destination. That being so the point of delivery is the place of removal for the purpose of determination of eligibility to CENVAT Credit in respect of the GTA Services received by the appellant. 4.9 Following the law as settled in the decisions the appeal needs to be allowed. However learned authorized representative has referred to the decision of the Chennai Bench, to argue that the issue involved in this appeal has been referred to larger bench. For the same reason we reproduce the relevant paras of the said decision in case of the Ramco Cements: "10. Per contra, the case of the Revenue is that with respect to the same product 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 H....
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....facts of the present case." 11. In this judgment, the Hon'ble Apex Court has also distinguished the case of Ispat Industries Limited from the case of Roofit Industries on some facts. This, in our considered view, is the settled legal position that the place of removal can never be the buyer's premises and it has to be the seller's premises such as their factory, godown, consignment agent's premises, etc. 12. We have also considered the arguments of the appellant that in the case of Ultratech Limited (supra), the Hon'ble Apex Court while denying the CENVAT Credit, has not dealt with the issue as to what was the place of removal of goods. The Hon'ble Apex Court in Paras 8 & 9 of the judgment observed as follows: "8. The aforesaid order of the Adjudicating Authority was upset by the Commissioner (Appeals) principally on the ground that the Board in its Circular dated August 23, 2007 had clarified the definition of 'place of removal and the three conditions contained therein 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&#....
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....error much less apparent in the impugned order. The review petition is, accordingly, dismissed." 15. One of us (P.V. Subba Rao) has also decided an identical case in the case of Ultratech Cement Limited (Appeal No. E/30147/2019) vide Final Order No. A/30355/2019, dated 16.06.2019 (CESTAT, Hyderabad), holding that no CENVAT Credit is admissible on the GTA services availed for transporting the cement from the factory or the depot to the buyer's premises even when such sale is on FOR buyer's premises basis, relying on the above judgment of Hon'ble Apex Court on the exact same issue. 16. However, we find that on an identical issue, Hon'ble Single Member Bench of CESTAT Chennai in Final Order No. 42569 - 42576/2017, dated 31.10.2017 and the Hon'ble Division Bench of CESTAT Chennal in final orders No. 40440 - 40450/2019, dated 25.02.2019, remanded the matters back to the adjudicating authority to reconsider the issue afresh, deciding what is the place of removal in those cases. We respectfully disagree with these decisions and are of the view that once the Hon'ble Apex Court decided that the place of removal can not be the buyer's premises in....