2017 (3) TMI 297 - AT - Central Excise

CENVAT credit - outward service i.e. CHA Agency, DEPB Registration, Port Shipping, Customs Clearing Services, inland Haulage Services, Technical Handling Charges, Courier Services and Insurance Charges etc - denial on the ground that the services rendered were beyond the place of removal i.e. factory gate - Held that - without examining the relevant documents, Commissioner (Appeals) could not have come to a conclusion as to the place of removal. Admittedly, these documents which have been produced before the Tribunal were not before the Commissioner (Appeals). It will, therefore, be in interest of justice that the documents, which the appellants have now produced to substantiate their plea, are submitted before and examined by the Commissioner (Appeals) to record proper findings giving the basis for arriving at the same - appeal allowed by way of remand.

Summary

Issues:
Appeal against Order-in-Appeal regarding admissibility of Cenvat Credit for services beyond the place of removal, imposition of penalty under Section 11AC and Rule 15, reduction of penalty to 25%, and applicability of CBEC Circular No. 999/6/2015-CX.

Analysis:
The case involved appeals by both the appellants and the Revenue against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Chandigarh-II. The appellants, manufacturers of tractor parts exporting the same, availed Cenvat Credit against service tax paid on outward services related to export consignments. The Revenue contended that the services were beyond the place of removal, i.e., factory gate, making the Cenvat credit inadmissible. Two show cause notices were issued for recovery of wrongly taken credit, with penalties proposed. The demands and penalties were confirmed in adjudication, leading to appeals by both parties. The appellants argued that all services were business-related and utilized up to the port of loading, supporting their claim with documents. The Revenue argued that the place of removal was CFS, Ludhiana, based on a CBEC Circular. The Commissioner (Appeals) upheld the demands but allowed a reduced penalty of 25%, which both parties appealed against.

The Tribunal observed that the Commissioner (Appeals) did not provide a reasoned analysis for determining the place of removal as the factory gate and did not consider the documents submitted by the appellants. It was deemed necessary for the Commissioner (Appeals) to examine the documentary evidence supporting the FOB basis of export and issue a fresh order accordingly. Consequently, the matter was remanded back to the Commissioner (Appeals) for proper evaluation based on the newly submitted documents. As a result of setting aside the order-in-appeal for fresh adjudication, the appeals by the Revenue and the cross-objections by the appellants were disposed of.

In conclusion, the judgment focused on the admissibility of Cenvat Credit for services related to export consignments, the determination of the place of removal, the imposition and reduction of penalties, and the applicability of the CBEC Circular. The decision highlighted the importance of a thorough examination of evidence and a reasoned analysis by the adjudicating authority to ensure a just outcome in matters of tax liability and penalties.