TaxTMI 
TaxTMI 
2024 (2) TMI 1393
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....ction 4A by applying the Notification No. 36/2001-CE (NT)." 2. M/s. Sweety Industries [the appellant] is a contract manufacturing unit engaged in the manufacture and clearance of biscuits for its principal 'M/s. Parle Biscuits Pvt. Ltd., Mumbai' [Parle] . It has been authorised by Parle to manufacture, on its behalf, 'biscuits' and to comply, on its behalf, all the procedural formalities contemplated under the Central Excise Act, 1944 [the Central Excise Act] and the Rules framed thereunder in respect of the goods manufactured on behalf of Parle. 3. The issue involved is as to whether credit of service tax on the freight paid to the goods transport agency for transportation of biscuits from the factory of the appellant to the depots/premises of the clearing and forwarding agents of Parle would be admissible to the appellant. 4. Rule 2(l) of the 2004 Rules defines 'input service' and the relevant portion is reproduced below: "2(l) "input service" means any service, (i) used by a provider of output service for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final p....
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....ity of the appellant for processing biscuits of its own brand names, an Agreement dated 07.08.2009 for Processing/Job Work was entered into between the appellant and Parle. This Agreement provides that the appellant shall carry out processing activity of manufacture of biscuits on behalf of Parle out of the raw material given by Parle as per the standards and specifications of Parle and the quality control standards prescribed by Parle, but the ownership of property in all the materials supplied by Parle shall be that of Parle. The Agreement also provides that the raw materials to be supplied by Parle or the licensors of Parle shall be utilized only in the processing and packaging of biscuits ordered by Parle and for no other purpose. The Agreement further provides that the raw materials and the finished products after processing shall be held by the appellant in trust for Parle and for the purpose of being delivered to Parle. As a consideration for the obligation and liabilities undertaken and accepted by the appellant, the appellant would receive from Parle conversion or job charges as per Annexure 1 to the Agreement. The Agreement also provides that the appellant shall bear and ....
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....12. As Parle was to get its goods manufactured on its account from another person, it submitted an authorisation dated 23.11.2009 to the department in terms of clause (1)(ii) of the Registration Exemption Notification. This authorisation had been accepted by the appellant and it agreed to discharge all liabilities under the Central Excise Act and the Rules made thereunder in respect of the goods manufactured by the appellant on behalf of Parle. The authorisation dated 23.11.2009 submitted by Parle to the department is reproduced below: "AUTHORISATION We M/s. Parle Biscuits Pvt. Ltd., Vile Palre (East), Mumbai-400057, hereby authorize M/s. Sweety Industries, 43/45, G.I.D.C., Industrial Estate, Nadiad387001 (Gujarat) Holding Central Excise Registration No. AAFFS8955FXM001 to manufacture on our behalf "Biscuits" falling under Central Excise Tariff No. 1905 90 20 and to comply on our behalf all the procedural formalities under the Central Excise Act 1944 and RULE made thereunder in respect of goods manufactured on our behalf and also to furnish information relating to the price at which M/s. Parle Biscuits Pvt. Ltd., sell the said Biscuits products in order to enable determ....
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.... would be borne by Sweety Industries, depending upon nature of the case. 6. Biscuits will produced and packed in wrappers/cartoons (C.B.) 7. Sweety Industries, would make Excise Invoice/Stock Transfer Notes (STN's) to Depots/or Wholesalers of Parle Biscuits Pvt. Ltd. and duty would be paid on Retail Sale Price as shown on Biscuits packages by M/s. Parle Biscuits Pvt. Ltd., Mumbai. 8. The raw material and finished goods remains the property of Parle Biscuits Pvt. Ltd., Mumbai. For PARLE BISCUITS PVT. LTD. For SWEETY INDUSTIRES Sd/-  ....
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....nal products from its factory to the depot of Parle on maximum retail price [MRP] , less abatement permissible under the relevant Notification but this is reimbursed by Parle. 15. Two show cause notices dated 06.02.2017 and 15.12.2017 covering the period from November 2015 to June 2017 were issued to the appellant alleging that the appellant had wrongly availed CENVAT credit of service tax paid on GTA outward service beyond the 'place of removal' in contravention of rule 2(l) read with rule 2(qa) and rule 3 of the 2004 Rules. The appellant filed replies dated 09.03.2017 and 19.03.2017 to the aforesaid show cause notices denying the allegations made therein, but the Assistant Commissioner, by the order dated 28.03.2018 confirmed the demand proposed in the two show cause notices and the appeal filed by the appellant before the Commissioner (Appeals) to assail the aforesaid of the order of the Assistant Commissioner was dismissed by order dated 29.06.2018. After placing reliance upon the decision of the Tribunal in M/s. Ultratech Cement Ltd. vs. CCE, Bhavnagar [2007-TIOL-429 (CESTAT-Ahm.)] , the Commissioner (Appeals) observed as follows: "5.2 Hon'ble CESTAT in the case of....
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....ng agents of Parle. 18. Shri Mihir G. Rayka, learned authorized representative of the department assisted by Shri Ashok Thanvi, however, submitted that in view of the decision of the Supreme Court in Commissioner of Central Excise and S.T. vs. Ultra Tech Cement Ltd. [2018 (9) G.S.T.L. 337 (S.C.)] , the appellant would not be entitled to avail CENVAT credit in such circumstances. 19. It is in the light of the aforesaid facts that the issue that has been referred as to whether the appellant can avail credit of service tax on freight paid to GTA for transportation of biscuits from the factory gate of the appellant to the depot or premises of clearing and forwarding agent of Parle has to be decided. 20. It is not in dispute that the appellant is a contract manufacturing unit of Parle and that it manufactures biscuits on behalf of Parle under the authorisation dated 23.11.2009 submitted by Parle to the department, as required under the Registration Exemption Notification. In terms of the aforesaid authorisation, the appellant is required to hold Central Excise Registration for and on behalf of the principal manufacturer i.e. Parle and has to comply with all the procedural forma....
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....ND BETWEEN the parties hereto as follows: I. MANUFACTURE AS A PROCESSOR (i) SWEETY shall process at its own factory situated at 43/45, G.I.D.C., Industrial Estate, Nadiad-387001 (Gujarat); biscuits out of the material given by PARLE and as per orders placed by PARLE in terms of this agreement, as per the standards and specifications of PARLE and as per the manufacturing process and quality control standards (includes brands, designs, etc.) prescribed from time to time by PARLE. SWEETY agrees to give priority to PARL for processing ordered quantities of biscuits. 'Process' ***** Furthermore, SWEETY will carry out such processing activity on behalf of PARLE in the spare capacity of SWEETY at its factory by SWEETY's own Workers and Personnel. ***** IV RAW & PACKING MATERIALS AND FINISHED PRODUCTS (i) PARLE shall supply to SWEETY all required raw materials and packaging materials for processing and packing of Parle-G, Marie, Milk Shakti Cream biscuits and similar such product/s under this agreement. All such materials are to be unloaded, inspected/ tested and stored by SWEETY as per the procedure laid down by PARLE from time to time....
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....se duties, or any other taxes, levies, etc. imposed from time to time in respect of the said product/s which will be reimbursed by PARLE. (ii) PARLE shall pay all taxes, Cesses and Levies such as Octroi, and any taxes, levies duties, cesses arising due to assessments or otherwise which in law are to be borne by PARLE. (iii) PARLE will directly pay monthly State and Central/Sales Tax/Entry Tax and other levies due to assessment or otherwise, which by laware to be borne by PARLE. (iv) Payment of Excise Duty shall be made by a demand draft/Payee's Account cheque in the name of local notified Scheduled Bank A/c. Central Excise (SWEETY INDUSTRIES). Similarly, payment of Sales Tax shall be made by a demand draft/Payee's Account cheque in the name of appropriate Authority. ***** (viii) PARLE will ensure that valid excise Invoice/Stock Transfer Note is made available to SWEETY in respect of materials procured by PARLE and consigned to SWEETY for availing of excise benefits / concessions. ***** XXII. BULK HANDLING AND STORAGE OF VANASPATI, PACKING MACHINES, DOMINO INKJET MACHINE, REWINDING MACHINE, CORONA TREATMENT MACHINE, DVD ....
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.... ***** STOCK TRANSFER AGAINST F-FORM Transporter Details : Transport Code and Name: 6000205- PARTH ROADLINES Truck No: GJI2BV 3607 Road Permit No: NA Truck Type : 32 ft Container MLR No : 2419 Shipment No. : 80224888 *****" 25. The corresponding Excise Invoice prepared by the appellant for stock transfer of goods to the premises of the clearing and forwarding agent of Parle is reproduced below: EXICSE INVOICE TRIPLICATE FOR ASSESSEE For Removal of Excisable goods from Factory or warehouse On payment of duty (Rule 11(2) of C Ex. Rules 2002) Duty payable as per Rule 8 of Central Excise Rules 2002 TIN - 24160900325 CST No. - 24660900325 Chapter/Sub-Heading : BISCUITS - 1905 90 20 Name & Address of Factory : Sweety Industries A/C: Parle Biscuits Pvt. Ltd. 43/45, GIDC, Industrial Estate Nadiad - 387001, Gujarat Name of Excisable Commodity: BISCUITS Central Excise Regn No. : AAFFS8955FXM001 No. & Date of Notification under which any concessional rate of duty are claimed 12/2012 Dt. 17.03.2012, Notification of MRP valuation 49/2008 CE (NT) dt. 24.12.2008 Excise Serial No. 00000011....
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.... by the appellant, it is specifically mentioned that manufacture of biscuits is on behalf of Parle. In the absence of such an authorisation, Parle would have been required to take Central Excise Registration for the said factory of the appellant and comply with the Central Excise formalities, including payment of duty. 30. At the time of clearance of the biscuits from the factory of the appellant to the depots/premises of clearing and forwarding agents of Parle, the appellant paid excise duty, which is reimbursed by Parle and the value of transportation of the goods from the factory of the appellant to the depots of Parle is included in the MRP of the biscuits in terms of section 4A(3) read with Explanation 1 of the Central Excise Act. The relevant portion of section 4A(3) with the Explanation is reproduced below: "4A(3). Valuation of excisable goods with reference to retail sales price - (1) ***** (2) ***** (3) The Central Government may, for the purpose of allowing any abatement under sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods. (4) ***** Explanat....
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.... the Larger Bench of the Tribunal is reproduced below: "3. M/s. Krishna Food Products is the sole appellant in Excise Appeal No. 52692 of 2019. It claims to be a contract manufacturing unit engaged in manufacturing biscuits for its principal "Parle Biscuit Pvt. Ltd.", which is the appellant in Excise Appeal No. 52694 of 2019. It claims that it has been authorised by Parle to manufacture on its behalf "biscuits" and to comply on its behalf all the procedural formalities contemplated under the Central Excise Act, 1944 and the Rules framed thereunder in respect of the goods manufactured on behalf of Parle and also to furnish information relating to the price at which Parle would sell the said biscuits in order to enable the determination of the value of the said goods under section 4A of the Excise Act. The appellant further claims that it complied with all the procedural formalities such as maintenance of records of the goods manufactured, credit taken, payments of excise duty, filing of returns and furnishing information to the Department as and when called for. According to the appellant, this was in accordance with clause (1)(ii) of the Notification 36/2001 dated 26.06.20....
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....t or premises of the clearing and forwarding agents of Parle. 36. It would now be appropriate to examine the relevant decisions referred to in the referring order. 37. The judgment of the Supreme Court in Ultra Tech Cement Ltd. vs. Commissioner of Central Excise and S.T. [2018 (9) G.S.T.L. 337 (S.C.)] needs to be considered first. The Supreme Court examined the admissibility or otherwise of the CENVAT credit availed on the service tax paid for GTA service for transport of goods from the 'place of removal' to buyer's premises. In this connection, the Supreme Court referred to the definition of 'input service' in rule 2(l) of the 2004 Rules as it stood prior to its amendment on 01.03.2008 and noted that in view of use of the expression 'from the place of removal', the service used by the manufacturer from the place of removal to the warehouse or customer's place would be exigible for CENVAT credit, but in view of the amendment made in the definition of 'input service' from 01.03.2008 replacing the word 'from' by the word 'upto', it would only be 'upto the place of removal' that service could be treated as 'input service'. The relevant observations of the Supreme Court are as fo....
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.... ***** 10. In the first instance, it needs to be kept in mind that Board's Circular dated August 23, 2007 was issued in clarification of the definition of 'input service' as existed on that date i.e. it related to unamended definition. 11. As can be seen from the reading of the aforesaid portion of the circular, the issue was examined after keeping in mind judgments of CESTAT in Gujarat Ambuja Cement Ltd. and M/s. Ultratech Cement Ltd. Those judgments, obviously, dealt with unamended Rule 2(l) of Rules, 2004. The three conditions which were mentioned explaining the 'place of removal' as defined under Section 4 of the Act, there is no quarrel upto this stage. However, the important aspect of the matter is that Cenvat Credit is permissible in respect of 'input service' and the Circular relates to the unamended regime. Therefore, it cannot be applied after amendment in the definition of 'input service' which brought about a total change. Now, the definition of 'place of removal' and the conditions which are to be satisfied have to be in the context of 'upto' the place of removal. It is this amendment which has made the entire difference. That aspect is not dea....
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.... : 'Place of Removal' under Section 4 of the Central Excise Act, 1944, the CENVAT Credit Rules, 2004 and the CENVAT Credit Rules, 2017 - Regarding. Attention is invited to Boards circular no. 97/8/2007-CX dated 23.08.2007, 988/12/2014-CX dated 20.10.2014 and 999/6/2015-CX dated 28.02.2015. Attention is also invited to the judgment of Hon'ble Supreme Court in the case of CCE vs M/s Roofit Industries Ltd. 2015 (319) ELT 221 (SC) = 2015-TIOL-87-SC-CX, CCE vs Ispat Industries Ltd 2015 (324) ELT 670 (SC) = 2015- TIOL-238-SC-CX, CCE, Mumbai-III vs Emco Ltd 2015 (322) ELT 394 (SC) = 2015-TIOL-163-SC-CX and CCE & ST vs. Ultra Tech Cement Ltd dated 1.2.2018 in Civil Appeal No. 11261 of 2016 = 2018-TIOL-42-SC-CX. In this regard, reference 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 ....
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..... Roofit Industries where the ownership, risk in transit, remained with the seller till goods are accepted by buyer on delivery and till such time of delivery, seller alone remained the owner of goods retaining right of disposal, benefit has been extended by the Apex Court on the basis of facts of the cases. (ii) Clearance for export of goods by a manufacturer shall continue to be dealt in terms of Circular No. 999/6/2015-CX., dated 28-2-2015 as the judgments cited above did not deal with issue of export of goods. In these cases otherwise also the buyer is located outside India. 5. CENVAT Credit on GTA Services etc.: The other issue decided by Hon'ble Supreme Court in relation to place of removal is in case of CCE & ST v. 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 rele....
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.... freight'. Similarly, in the case of MAPAL India Pvt. Ltd. [CEA 71/2019], the CESTAT has recorded a similar finding. ***** 16. This Court in the case of Madras Cements Ltd., has held as follows: "11. From the facts of the present case, it is clear from the invoices that title of the goods had passed on from seller to buyer only at the place of destination, which is the address of the buyer. As such, the buyer had no right over the goods till delivered to it. The Tribunal has not considered this aspect and has only relied on the amendment made to the definition of "input service" with effect from 1-4-2008 and rejected the claim of the appellant-assessee after that date. No further reason has been given by the Tribunal nor any finding has been recorded with regard to place of completion of sale of the goods. 12. Since we are of the opinion that the sale had concluded only after the delivery of the goods was made at the address of the buyer, in the facts of the present case the appellant-assessee would be entitled to the benefit of Cenvat credit on Service Tax paid on outward transportation of goods by the assessee even after 1-4-2008. The appellant....
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....nery items, to M/s Parle Products Ltd. The mode adopted was that products were manufactured by the assessee, but for and on behalf of M/s Parle Products Ltd., which cleared the goods under Central Excise Act. The parties had, by mutual agreement, decided that the assessee would also transport the finished products to the premises of M/s Parle Products Ltd., apart from processing, manufacturing the confectionery and other items, as also packing and other services. The agreement further provided, as follows:- "Mound Trading Co. Pvt. Ltd would avail Cenvat credit of Central Excise duty paid on the raw and packing materials, capital goods. Mound Trading Co. Pvt. Ltd. would make Excise Invoice/Stock Transfer Notes (STN's) to Depots/or Wholesalers of Parle Products Pvt Ltd. and would pay Excise duty on assessable value as shown in the Invoice of M/s Parle Products Pvt. Ltd., Mumbai." ***** 8. From the factual narrative and the record, it is apparent that according to the agreement of the parties, the assessee manufactured articles which were ultimately cleared by its principal i.e. M/s. Parle Products Pvt. Ltd. There is no dispute that Central Excise levy w....
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....appellant. The Excise Invoices issued for removal of goods contained the name of the appellant A/c Parle. The Stock Transfer Notes were issued against Form-F with similar details as the Excise Invoice. Whatever sale to buyers took place was either from the depots of Parle or from the premises of the clearing and forwarding agents of Parle. It appears that these facts were not brought to the notice of the Tribunal or the High Court and that is why a finding was recorded that the goods were not cleared on 'FOR Destination'. These facts were brought to the notice of the Rajasthan High Court in Mound Trading. The relevant portion of the judgment of the Allahabad High Court is reproduced below: "The appeal by the assessee arises from a decision of the Customs, Excise & Service Tax Appellate Tribunal, New Delhi dated 21 April 2014. The following questions of law have been formulated in support of the appeal; "(1) Whether Tribunal was justified in denying the Cenvat credit of service tax paid and freight paid by M/s. Parle on inward and outward transportation (from the appellants' factory to depots of M/s. Parle) on the ground that depots of M/s Parle cannot....
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....) of the Central Excise Act, 1944 to mean inter alia a depot, 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. In the present case, the clear finding, which has been recorded both by the Commissioner (Appeals) and by the Tribunal, is that the sale had not taken place on an "FOR Destination" basis. Hence, the place of removal in the present case is the factory gate of the appellant and not the Depot of Parle Biscuits. As a matter of fact, as held by the Commissioner (Appeals), the liability on account of freight is borne by Parle Biscuits. No amount was borne by the appellant towards freight under the agreement with Parle Biscuits. Hence, in this view of the matter, the Tribunal was justified in coming to the conclusion that the Cenvat credit on Service Tax paid on GTA Service availed for the transportation of the goods from the factory of the appellant to the Depot of Parle Biscuits, has been correctly denied. The view which has been taken by the Tribunal is in accordance with law. The appeal, therefore, does not give rise to any substantial question of law. It is, according....