TaxTMI 
TaxTMI 
2026 (3) TMI 1587
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.... 84 of the Central Excise Tariff Act, 1985. The appellant operates as a 100% Export Oriented Unit with a Customs bonded warehouse licence under the Customs Act, 1962 and clears finished goods both to Domestic Tariff Area (DTA) customers and for export. 1.2 The appellant had availed CENVAT credit of service tax paid on input services distributed through Input Service Distributor (ISD) invoices issued by their registered ISD office, which included courier services used for transportation of finished goods to customers' premises through agencies such as Safex Express. During departmental audit, it was alleged that the credit pertained to outward transportation beyond the factory gate, which according to the department constituted the "place of removal", and therefore such services were not eligible input services under Rule 2(l) of the CENVAT Credit Rules, 2004. On this basis, a show cause notice dated 07.02.2017 was issued proposing recovery of CENVAT credit of Rs. 4,66,99,006/- along with interest and penalty under Rule 14 of the CENVAT Credit Rules read with Sections 11A, 11AA and 11AC of the Central Excise Act, 1944 respectively, which was subsequently confirmed by the Commissi....
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....he Hon'ble Supreme Court in Cosmic Dye Chemical vs CCE and Padmini Products vs CCE, wherein it was held that suppression of facts must be deliberate and accompanied by an intent to evade duty and that the extended period cannot be invoked in cases involving interpretational disputes. 5.1 The Ld. Authorized Representative for the Revenue reiterated the findings recorded in the impugned order and submitted that the place of removal in the present case is the factory gate, since the goods were cleared from the appellant's factory and handed over to courier agencies at that point. It was argued that once the goods were entrusted to the courier agencies at the factory gate, the property in the goods passed to the buyer and therefore the factory gate must be treated as the place of removal for the purposes of the CENVAT Credit Rules. 5.2 It was further contended that Rule 2(l) of the CENVAT Credit Rules permits credit of service tax on outward transportation only up to the place of removal and that any transportation beyond the factory gate would not qualify as an input service. In support of this contention, reliance was placed on the judgments of the Hon'ble Supreme Court in CCE ....
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....ntain the nature of service and other details of services... Obviously the eligibility or otherwise of the service tax credit has to be examined only at the end of input service distributor."(Para 5) 7.3 The appellant has further relied upon the decision of the Tribunal in India Cements Ltd vs Commissioner of CGST & Central Excise - 2025 (2) TMI 622 (CESTAT Chennai) where the Tribunal reiterated the principle that denial of credit taken on the basis of ISD invoices cannot be sustained without examining the distribution of credit at the level of the ISD. 7.4 However, the Ld. Authorized Representative appearing for the Revenue has strongly disputed the appellant's contention. The Revenue has relied upon the decision of the Tribunal in SKF India Ltd vs Commissioner of Central Excise, Pune 2016(41) S.T.R. 737(Tri-Mum). In that case, it was ruled that where credit has been wrongly availed by a manufacturing unit, recovery can be made from the recipient unit even if the credit originated from an Input Service Distributor. 7.5 The Revenue has also relied upon the decision of the Principal Bench of the Tribunal in Roca Bathroom Products Pvt Ltd vs CCE - 2017 (51) STR 432 (Tri.-Del....
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....yond that point cannot be considered as an input service used in relation to the manufacture or clearance of final products. 8.3 On the other hand, the appellant has contended that the courier services are used for transportation of the ATMs up to the customer's premises where the equipment is installed and commissioned and that the sale of the goods is completed only upon installation and acceptance of the equipment by the customer. It has been argued that the transportation of the equipment up to the installation site forms an integral part of the contractual obligation of the appellant and therefore such services qualify as "input services" used in relation to the clearance of final products. 8.4 In order to appreciate the rival contentions, it is necessary to refer to the definition of "input service" contained in Rule 2(l) of the CENVAT Credit Rules, 2004. The definition, as it stood during the relevant period, included services used by the manufacturer directly or indirectly in relation to the manufacture of final products and clearance of final products up to the place of removal. Thus, the admissibility of credit on outward transportation services depends upon the det....
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....ibility for delivery of goods up to that point, the credit of service tax paid on outward transportation up to the buyer's premises is admissible. 8.10 We also find that the Central Board of Excise and Customs has issued Circular No. 988/12/2014-CX dated 20.10.2014 clarifying the concept of "place of removal" for the purpose of admissibility of CENVAT credit on outward transportation services. The circular clarifies that the place of removal may extend up to the buyer's premises depending upon the contractual terms governing the transfer of ownership and risk in the goods where such ownership and risk during transit remain with the seller until delivery at the buyer's premises. 8.11 From the above judicial precedents and the clarification issued by the Board, it becomes clear that the admissibility of credit on outward transportation services depends upon the determination of the place of removal where the sale transaction is completed. 8.12 In the present case, the appellant has contended that the supply of ATMs is not merely a supply of goods but includes delivery, installation, commissioning and acceptance of the equipment at the customer's premises. If the contractual ....
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....of the RFP." This clause clearly indicates that the contractual obligation of the appellant is not discharged merely upon dispatch or delivery of the goods but only upon commissioning and acceptance of the equipment by the buyer. 9.4 Clause 3.12 of the agreement further reinforces this position and reads as follows: - "The installation will be deemed as incomplete if any component of the CD and other equipments is not delivered or is delivered but not installed and/or not operational or not acceptable to the bank after acceptance testing/examination. In such an event the supply, installation and commissioning will be termed as incomplete and systems will not be accepted and the warranty period will not commence. The installation will be accepted only after complete commissioning of CD and other equipments." The above clause unequivocally establishes that the supply itself is treated as incomplete unless the installation and commissioning of the equipment are completed and accepted by the buyer. 9.5 From the above contractual provisions, it becomes evident that the transfer of ownership and completion of the sale transaction occur only after the equipment is ins....
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....mmissioned at the buyer's premises and only thereafter handed over to the buyer upon acceptance. The point at which the buyer accepts the equipment after commissioning is therefore the point at which the sale is completed. 9.10 Accordingly, we hold that the actual "place of removal" in the present case is the buyer's premises, where the ATMs are installed, commissioned and accepted by the customer. 9.11 However, we also note that the two contracts placed before us appear to be representative contracts and there may also be other contracts governing supplies during the relevant period. Since the determination of the place of removal depends upon the contractual terms governing the particular transaction, it becomes necessary to verify whether the remaining contracts entered into by the appellant during the relevant period contain similar terms regarding installation, commissioning and acceptance at the buyer's premises. 9.12 On merits, we therefore are required to remand the matter to the adjudicating authority for the limited purpose of verifying whether the other contracts governing the supplies during the relevant period contain contractual terms similar to those examine....
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....ry documents maintained by the appellant and was available for scrutiny by the department. 10.2 In this regard, we find it appropriate to refer to the judgment of the Hon'ble Supreme Court in Cosmic Dye Chemical vs CCE - 1994 (9) TMI 86 (SC) wherein the Court clearly held that suppression of facts must be wilful and accompanied by intent to evade payment of duty. The Hon'ble Supreme Court observed as follows: - "Mis-statement or suppression of facts must be wilful." (Para 6). The above principle makes it clear that the extended period of limitation cannot be invoked merely on the ground that the department subsequently forms a different view regarding the admissibility of credit when the relevant facts were already available in the records of the assessee. 10.3 We further note that the Hon'ble Supreme Court in Padmini Products vs CCE - 1989 (8) TMI 80(SC) held that where the dispute relates to interpretation of statutory provisions and the assessee entertains a bona fide belief regarding the eligibility of duty or credit, the extended period of limitation cannot be invoked. In the present case the dispute essentially concerns the interpretation of the definition o....