2019 (12) TMI 551 - AT - Central Excise

CENVAT Credit - input services - transport of goods by road on outward carriage - Circular No. 1065/4/2018-CX dated 08/06/2018 - HELD THAT - After the decision of the Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. 2018 (2) TMI 117 - SUPREME COURT , the CBEC has issued the Circular dated 08/06/2018 wherein the field formation have been given the liberty to examine each and every case on the basis of the law laid down in various cases. Also, after the Circular issued by the Board various Benches of the Tribunal have remanded the case back to the original authority to examine the eligibility of cenvat credit of service tax on transportation of goods up to the customer s premises after the period w.e.f. 01/04/2008. In view of the decision of the Madras High Court in the case of BATA INDIA LIMITED, HOSUR VERSUS THE COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, CHENNAI-III 2019 (3) TMI 519 - MADRAS HIGH COURT and also in view of the Board Circular No. 1065/4/2018-CX dated 08/06/2018, the matter needs to be remanded to the original authority to verify certain factual aspects such as whether the sale is on FOR basis, whether the freight is integral part of the sale price, whether the duty paid on the value inclusive of freight amount etc. The matter is remanded back to the original authority to pass a fresh order after examining the various documents for the disputed period - appeal allowed by way of remand.

Summary

Issues:
- Eligibility of cenvat credit on service tax paid on transportation of goods up to the customer's premises.
- Interpretation of the definition of 'input service' under Rule 2(l) of Cenvat Credit Rules.
- Applicability of the definition of 'place of removal' under Clause (c) of sub-section (3) of Section 4 of Central Excise Act.
- Binding nature of Circular issued by the Board on the Department.
- Remand of the case based on recent judicial decisions and Circular issued by the Board.

Analysis:

Eligibility of Cenvat Credit on Service Tax:
The appellant, a manufacturer of sugar and molasses, availed cenvat credit on various inputs, input services, and capital goods. The dispute arose when the appellant paid service tax on the transport of goods by road on outward carriage and claimed ineligible cenvat credit. The Assistant Commissioner disallowed the credit and imposed a penalty, leading to the appeal before the Commissioner, ultimately rejected. The appellant argued that they were eligible for cenvat credit of service tax paid on transportation up to the customer's premises since 2008, citing relevant legal provisions and decisions.

Interpretation of 'Input Service' and 'Place of Removal':
The appellant contended that the impugned order failed to appreciate the definition of 'input service' under Rule 2(l) of Cenvat Credit Rules and the concept of 'place of removal' under the Central Excise Act. They argued that if goods are sold at a place other than the factory gate, the place of removal should be that location. The appellant relied on various judicial decisions to support their interpretation of the legal provisions.

Binding Nature of Circular and Previous Orders:
The appellant emphasized that the Circular issued by the Board is binding on the Department, and the Department cannot take a stand contrary to it. They cited several decisions to support this argument. Additionally, the appellant highlighted that previous show-cause notices on similar issues were dropped by lower adjudicating authorities and accepted by the Department, indicating a precedent in favor of the appellant's position.

Remand Based on Recent Judicial Decisions and Circular:
The learned AR defended the impugned order, relying on a Supreme Court decision that established the place of removal as the factory gate post-2008, limiting cenvat credit on transportation. However, recent judicial decisions and a Circular issued by the Board prompted various Tribunals to remand cases for further examination. The Tribunal, considering the submissions and relevant legal precedents, decided to remand the case to the original authority for a fresh assessment based on specific factual aspects, in line with the Circular and recent judicial interpretations.

In conclusion, the Tribunal allowed the appeal by remanding the case back to the original authority for a comprehensive review, keeping all issues open for further adjudication based on recent legal developments and the Circular issued by the Board.