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TMI Blog2017 (8) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... lly begin with the qualifying words, similar to the words used in the present case, namely unless there is anything repugnant in the subject or context. The CENVAT Credit Rules extends credit of the duty/tax paid on various services incurred in or in relation to manufacture of goods, enumerated under the definition of input service which includes outward transportation up to the place of removal - Even though the meaning of place of removal has to be considered to be factory gate, however, the Courts while interpreting the meaning of input service laid emphasis on the condition of sale so as to ascertain whether the services rendered by the assessee was in relation to delivery of the manufactured/finished goods at the place of the buyer. Ascertainment of place of removal - two circulars of the Board namely 37B order no 59/1/2003, dated 3-3-2003 and Circular No. 97/8/2007, dated 23-8-2007 - Held that: - no specific finding has been recorded analyzing the evidences as to whether sale of the manufactured goods is at the factory gate or at the premises of the buyer as per the agreement for sale, purchase Order, invoice etc. Thus, all these appeals need to be remanded to the origi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cases, remanded the matter to the original authority to ascertain the place of removal, based on the agreement of sale between the manufacturer and its buyer. 3.2 It is his contention that the present controversy arose after delivery of the judgment by Hon'ble Supreme Court in the case of CCE Nagpur Vs Ispat Industries Ltd - 2015 (324) ELT 670 (SC). It is his contention that the even though the Hon'ble Supreme Court laid down the principle in the context of determination of assessable value, under Section 4 of Central Excise Act, 1944, but, in applying the said principle, to consider the eligibility of CENVAT credit on GTA Service(out ward freight) it has been argued that the meaning and scope of place of removal can never be the place of the buyer, even when the manufacturer, under an agreement, delivers the goods by including the freight element in the price of the goods or recovering separately the freight charges mentioning same in the respective excise invoice. 3.3 He has further submitted that the meaning and scope of the expression place of removal as laid down by the Hon'ble Supreme Court in Ispat Industries case, cannot be made applicable to the meanin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion place of removal for its application by the public at large cannot be ignored and should be given due importance in implementing the CENVAT provisions by the Department. These circulars are binding on the Revenue and in support, he has referred to the decision of Hon'ble Gujarat High Court in the case of Smartchem Technologies Ltd Vs UoI - 2011 (272) ELT 533 (Guj.) 4. Further, he has submitted that this Tribunal after considering the Ispat Industries judgment, in the case of CCE Dehradun Vs Forace Polymers Pvt. Ltd 2016 (45) STR 198(Tri-Del) and Birla Corporation Ltd Vs CCE Lucknow - 2016 (45) STR 103 (Tri-All.), held that CENVAT Credit on outward freight when the sale is on FOR destination basis is admissible. 5. Further, he has submitted that assuming that in the recent decision of Hon'ble Supreme Court, in the case of Ispat Industries Ltd, laid down the meaning of place of removal only to be the factory gate, but it cannot deprive the Appellant the benefit of CENVAT Credit on outward freight services, when the delivery of goods as per agreement, to be at the premises of the customer. In support, the learned Advocate referred to the decision of Hon'ble Mum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit, if the place of removal cannot be extended beyond the factory premises. In support, he has referred to the decision of Hon'ble Supreme Court in the case of Maruti Suzuki Ltd Vs CCE Delhi-III - 2009 (240) ELT 641 (SC). 8. Further, he has submitted that the circulars issued by the Board may be binding on the Department, but in arriving at the correct interpretation of the expression place of removal in the light of the principle laid down by Hon'ble Supreme Court ought to be followed. In support, he has referred to the decision of Hon'ble Supreme Court on the binding nature of the circular viz. CCE Bolpur Vs Ratan Melting Wire Inds - 2008 (231) STR 22 (SC). The learned Authorized Representative for the Revenue, distinguishing the judgment of the Tribunal in Forace Polymers Pvt. Ltd (supra) and Birla Corporation Ltd (supra), submitted that the said judgments are sub silentio and cannot be considered as binding precedent inasmuch as the statutory provisions viz. Rule 2(t) of CENVAT Credit Rules 2004 has not been considered. 9. Heard the advocates and the Revenue at length. The nerve chord of dispute rests on the meaning and scope of the expression place of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearance of final products upto the place of removal, and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; (c) place of removal means -? a factory or any other place or premises of production or?(i) manufacture of the excisable goods; a warehouse or any other place or premises wherein the?(ii) excisable goods have been permitted to be deposited without [payment of duty;] a depot, premises of a consignment agent or any other?[(iii) place or premises from where the excisable goods are to be sold after their clearance from the factory;] from where such goods are removed; 13. To understand the meaning of place of removal more accurately as hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on and after 14-5-2003, the position as it obtained from 28-9-1996 to 1-7-2000 has now been reinstated. Rule 5 as substituted in 2003 also confirms the position that the cost of transportation from the place of removal to the place of delivery is to be excluded, save and except in a case where the factory is not the place of removal. 24.?It will thus be seen that, in law, it is clear that for the period from 28-9-1996 up to 1-7-2000, the place of removal has reference only to places from which goods are to be sold by the manufacturer, and has no reference to the place of delivery which may be either the buyer s premises or such other premises as the buyer may direct the manufacturer to send his goods. As a matter of law therefore, the Commissioner s order and Revenue s argument based on that order that freight charges must be included as the sale in the present facts took place at the buyer s premises is incorrect. Further, for the period 1-7-2000 to 31-3-2003 there will be no extended place of removal, the factory premises or the warehouse (in the circumstances mentioned in the Section), alone being places of removal. Under no circumstances can the buyer s premises, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the definition of input service which includes outward transportation up to the place of removal. Thus, the meaning of place of removal interpreted by the Hon ble Supreme Court in Ispat Industries case cannot be mechanically adopted and applied in extending the benefit of credit for outward freight (GTA service) rendered in transporting the goods from the factory premises to the premises of buyer if the condition of sale so requires. Even though the meaning of place of removal has to be considered to be factory gate, however, the Courts while interpreting the meaning of input service laid emphasis on the condition of sale so as to ascertain whether the services rendered by the assessee was in relation to delivery of the manufactured/finished goods at the place of the buyer. 17. The argument of the learned Advocates is that the view taken by the CEBC all along is consistent based on the interpretation of the Tribunal on the meaning of place of removal in the context of input service as defined under Cenvat Credit Rules,2004. It has been clarified that to extend the benefit of CENVAT Credit on the service tax paid on out ward freight (GTA Service), it is to be ascertained whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid on the transportation during removal of excisable goods would depend upon the place of removal as per the definition. In case of a factory gate sale, sale from a non-duty paid warehouse, or from a duty paid depot (from where the excisable goods are sold, after their clearance from the factory), the determination of the place of removal does not pose much problem. However, there may be situations where the manufacturer/consignor may claim that the sale has taken place at the destination point because in terms of the sale contract/agreement (i) the ownership of goods and the property in the goods remained with the seller of the goods till the delivery of the goods in acceptable condition to the purchaser at his door step; (ii) the seller bore the risk of loss of or damage to the goods during transit to the destination; and (iii) the freight charges were an integral part of the price of goods. In such cases, the credit of the service tax paid on the transportation up to such place of sale would be admissible if it can be established by the claimant of such credit that the sale and the transfer of property in goods (in terms of the definition as under Section 2 of the Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer. Section 23 provides that where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be expressed or implied and may be given either before or after the appropriation is made. Sub-section (2) of Section 23 further provides that where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purposes of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract. (6)?It is reiterated that the place of removal needs to be ascertained in term of provisions of Central Excise Act, 1944 read with provisions of the Sale of Goods Act, 1930. Payment of transport, inclusion of transport charges in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded analyzing the evidences as to whether sale of the manufactured goods is at the factory gate or at the premises of the buyer as per the agreement for sale, purchase Order, invoice etc. Thus, all these appeals need to be remanded to the original authority to examine the said aspect and then consider the eligibility of CENVAT Credit on outward freight (GTA services) (by ascertaining the place of sale in the light of above observation and the circulars issued by the Board. Appeal No.E/11954/2013-SM, 10221-10222, 11240, 12046-12047, 12271-12272, 12958-12960, 12992, 13214, 13395, 13430, 13443-13444, 13450, 13454, 13517, 13527, 13553, 13590, 13612-13615, 13622-13623, 13628, 13630, 13679,13691, 13716-13718, 13802, 13812, 13834, 13867-13868, 13918-13919, 13933, 13948/2014, E/10296-10299/2015-SM, E/11129/2016-SM --------------------------------------------------------------------------------------------------------- 19. In these circumstances, the impugned orders are set aside and the appeals are remanded to the adjudicating authority. Since the main issue raised in the respective Appeals is remanded to the adjudicating authority other ancillary issues raised in the Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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