2024 (3) TMI 1039 - AT - Central Excise

CENVAT Credit - input service availed by the appellant at the depot level - nexus with the manufacture of the excisable goods either directly or indirectly in or in relation to the manufacture of the final product and clearance of the final product up to the place of removal - Rule 2 (L) of Cenvat Credit Rule 2004 - time limitation - HELD THAT - The appellant has appointed C F agents for receiving the consignment of the goods manufactured by them and they were storing the goods on behalf of the appellant at various depots. The goods were further sold/distributed to their ultimate buyers as per the orders received by such C F agent from the appellant - the contention made by the appellants that the ownership of the goods which were cleared from the factory has remained with them up to depot or the warehouse of the consignment agent (who was working on their behalf ) and actual sale of the goods have taken place from such depos agreed upon. It can be seen from the definition of the place of removal that if the goods are actually sold to an independent buyer from depot of the consignment agent the place of removal of the excisable goods will be such premises of the consignment agent or depot of the manufacturer. Since all the cost incurred up to the place of removal will be integral part of the price and therefore all the input and input services which are received up to the place of removal of the manufactured goods the assesse becomes entitled for credit of the same as per the provisions of the CENVAT Credit Rules. Thus the appellant are entitled for input input service credited up to the place of removal which is in this case is the depot or consignment agent premises. Time Limitation - HELD THAT - For the period July 2010 to May 2013 the impugned show cause notice has been issued on 20 July 2015 invoking extended time proviso under Section 11A of Central Excise 1944 read with Rule 2014 of CENVAT Credit Rule 2004. The fact that CENVAT Credit of Service Tax was availed by the appellant on the strength of proper duty paying documents and all the transaction have been mentioned in the statutory books of account maintained by the appellant also noted. The Cenvat Credit of input services are reflected in the monthly return in the form of ER-1 of the appellant. In that circumstances there are no ground on the part of the department to allege suppression of facts or willful mis-statement and therefore the demand beyond normal period of limitation is certainly time barred. The impugned order set aside - appeal allowed.

Summary

Issues involved:
The issues involved in this case are related to the admissibility of Cenvat Credit for input services availed by the appellant at the depot level, the interpretation of the concept of place of removal under the Central Excise Act, 1944, and the applicability of the extended time proviso under Section 11A of the CENVAT Credit Rules, 2004.

Admissibility of Cenvat Credit for Input Services:
The appellant, engaged in the manufacture of ceramic tiles, availed Cenvat Credit of Service Tax paid on clearing and forwarding services received at the depot. The department contended that these services were not directly or indirectly related to the manufacture or clearance of final products, thus not covered under input services as per the Cenvat Credit Rules, 2004.

Interpretation of Place of Removal:
The appellant argued that the ultimate sale of goods occurred from depots maintained by consignment agents on their behalf, extending the place of removal to these depots. They maintained that all input services availed up to the depot sale should be considered as input services eligible for Cenvat Credit, citing Section 4(3)(c)(iii) of the Central Excise Act, 1944.

Applicability of Extended Time Proviso:
The demand for the period July 2010 to May 2013 was issued invoking the extended time proviso under Section 11A read with Rule 14 of the CENVAT Credit Rules. The appellant argued against the applicability of the extended time proviso, stating that there was no suppression of facts or willful misstatement, as the department was aware of their activities through regular audits and filings.

The Tribunal observed that the appellant appointed C & F agents to receive and store goods on their behalf at various depots, with ownership of goods remaining with the appellant until sale to ultimate buyers. The definition of "place of removal" under the Central Excise Act, 1944 was referenced to determine that if goods were sold from a consignment agent's depot, it constituted the place of removal, making input services availed up to that point eligible for Cenvat Credit.

The Tribunal also considered precedent cases supporting the appellant's position and found that the impugned show cause notice for the period in question was time-barred, as there was no suppression of facts or willful misstatement. Consequently, the impugned orders were set aside, and the appeal was allowed.

This summary provides a detailed overview of the legal judgment, addressing each issue involved in the case.