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TMI Blog2022 (10) TMI 1213X X X X Extracts X X X X X X X X Extracts X X X X ..... saction value, i.e. freight charges upto that point are includible in the assessable value determined under Section 4 - Admittedly appellant had paid duty including the freight charges upto the point of delivery at the destination. That being so the point of delivery is the place of removal for the purpose of determination of eligibility to CENVAT Credit in respect of the GTA Services received by the appellant. From the question framed itself it is quite evident that bench has referred the matter without considering the clarification issued by the Board in 2018. Since the clarification issued by the Board goes to the root of the matter and clarifies the conditions wherein the benefit of credit needs to be allowed following the decision of the Apex Court in the case of Roofit Cement, the decision is sub-silentio and cannot be treated as binding precedent. Appeal allowed. - Hon ble Mr. Sanjiv Srivastava, Member (Technical)And Hon ble Dr. Suvendu Kumar Pati, Member (Judicial) For the Appellant : Shri Rajesh Ostwal, Advocate For the Respondent : Shri Deepak Bhilegaonkar, Additional Commissioner, ORDER PER: SANJIV SRIVASTAVA This appeal is directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit so availed by the assessee on service tax paid on outward transportation of their goods appeared inadmissible in terms of Rule 3 (1) read with Rule 2 (1) of the Cenvat Credit Rules, 2004. 2.4 As per Rule 4(7) of the CENVAT Credit Rules, 2004, Cenvat credit in respect of input services would be allowed on or after the day on which payment is made of the value of input service and Service Tax paid/payable as is indicated in the invoice, bill or challan referred to in Rule 9. In the present case, the assessee has taken belatedly on 30.04.2009 credit of Service Tax amounts paid for the entire period from 2005 to 2009 with the full knowledge of non-admissibility of such credit. Moreover, as per Rule 9(6) of CENVAT Credit Rules, 2004, the burden of proof regarding the admissibility of Cenvat credit lies upon the manufacturer taking such credit. The assessee has failed to discharge this burden of proof equitably while availing the credit of Service Tax for the said period 2005 to 2009 and such credit was availed only with intent to evade payment of duty which would otherwise have been payable utilizing other means and resources. Thus it appeared that the assessee have rendered them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred infra. o UltraTech Cement Ltd. [2019 (2) TMI 1487 - CESTAT AHMEDABAD] Affirmed by Hon'ble HC at [2020 (3) TMI 1206- Gujarat High Court] Admitted in SC at 2021-TIOL-227-SC-CX-LB o Sanghi Industries Ltd. [2019 (369) ELT 1424 (T)] o Banco Products Ltd. [2021 (7) TMI 662 - CESTATAHM] o Polyplex Corporation Ltd. [2019-TIOL-1906-CESTATALL] o Chittor Polyfab Ltd. [2021 (8) TMI 1116 CESTAT NEW DELHI] o Harita Fehrer Ltd. [2019 (7) TMI 625 CESTAT CHENNAI] o GKN Driveline India (Pvt) Ltd. [2019 (9) TMI 466 CESTAT] o Rane Brake India Ltd. [2019 (7) TMI 1167 CESTAT CHENNAI] o AK Automatics [2018 (11) TMI 1603 CESTAT CHANDIGARH] o Hindustan Zinc Ltd. [2021 (9) TMI 692 CESTAT NEW DELHI] o Jayant Agro Organics Ltd. [2019 (11) TMI 1123 CESTAT] o MRF LTD. [2019 (7) TMI 1166 - CESTAT CHENNAI] o Venkateshwara Power Projects Ltd. [2019 (12) TMI 551 CESTAT] o Salasar Copper [2019 (4) TMI 11 CESTAT AHMEDABAD] o Ramco Cements Ltd. 2020 (6) TMI 794 - CESTAT CHENNAI o Shri Khemisati Polusacks Pvt. Ltd. [2021-TIOL-810- CESTAT o Hindustan Zinc Ltd. 2022-TIOL-161-CESTAT-DEL In the following cases after considering the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e next date of hearing as follows: 2. While passing the interim order, the Hon'ble CESTAT was of the view that cenvat credit on GTA service for outward transportation of goods from the factory gate to the buyer's premises in case where the goods are sold on FOR basis, is not admissible in light of the decision of Hon'ble Supreme Court in the case of Ultratech Cement Limited - 2018 (9) GSTL 337 (SC) as well as Ispat Industries Limited - 2015 (324) ELT 670 (SC). Accordingly, the Hon'ble CESTAT did not agree with the other CESTAT decisions wherein the matter has been remanded to the lower authority for determining the place of removal. Accordingly, this issue was referred to the Larger Bench of CESTAT. 3. In this regard, the Appellants submit that the aforesaid Interim Order in Ramco Cement case is not applicable in the present case since the following points has not been considered by the Hon'ble CESTAT while referring the issue to the Larger Bench of CESTAT: (A) CBIC vide Circular No. 1065/4/2018-CX dated 8.6.2018 issued clarification with regards to determination of 'place of removal' after considering the ratio laid down by the Hon'ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce on Para 4 of the Circular No. 1065/4/2018-CX dated 8.6.2018. Kindly refer para D.1 D.2 of synopsis. These decisions were not produced before the Hon'ble CESTAT in Ramco Cement matter. (D) The Hon'ble CESTAT in Interim Order has given finding that decision of Hon'ble Supreme Court in Roofit Industries Ltd. has been reversed by the Hon'ble Supreme Court in Ispat Industries case. During the arguments in the Ispat Industries case, when the counsel for assessees tried to apply the ratio of Roofit, the Hon'ble Supreme Court expressly distinguished the two decisions on facts and held that they would prevail in different contexts. Hence, the judgment of Roofit is not reversed in Ispat Industries. This submission is further supported by the Circular dated 8.6.2018 which recognises existence of both the judgments. (E) If the factory gate is the place of removal, the outward transportation charges is also not includible in the assessable value of the final product and consequently the same will not suffer excise duty. The excise duty so paid on the element of outward freight charges is much more than the Cenvat Credit availed on the outward GTA for the obvious r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at as it may, we are of the opinion that the outward transport service used by the manufacturers for transportation of finished goods from the place of removal up to the premises of the purchaser is covered within the definition of input service provided in Rule 2(1) of the Cenvat Credit Rules, 2004. 8. The Hon'ble Division Bench expressed their aforesaid opinion, but no reasons or appropriate reasons are ascertainable by us for the purpose of aforesaid proposition. 9. We are, as such, of the considered view that the opinion expressed by the Hon'ble Division Bench of the Gujarat High Court cannot be accepted. 9.2. Thus, the Hon'ble Calcutta High Court observed that the taxes paid for transportation of goods from the place of removal upto the customer's premises cannot be availed as cenvat credit. This exactly is the issue in the instant case. 9.3. The judgment of the Calcutta High Court, being of later date and in consideration of the Gujarat and Karnataka High Court judgments would be a binding precedent. This would be also so because the Calcutta High Court decision is supported by the reasoning that Rule 2(1) of the Cenvat Credit Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 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 up to 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 removal. 9.7. It would be seen that to avoid conflict with the supremacy of parentage, the main as well as the inclusive part of the definitional clause of Rule 2(1) of the Cenvat Credit Rules, 2004 restricts such input service the place of removal. 9.8. The time and place of removal in case of the goods cleared by the assessee to their customers/ original equipment manufacturers remains to be the factory gate or a depot for the simple reason that the assessment of the cleared excisable goods for the payability of central excise duty occurs at the factory gate or a depot. It does not shift to the premises of the customer/ original equipment manufacturer. The assessee may submit that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Calcutta High Court has held this issue also to be against the assessee by indicating in the judgement that the 2008 amendment merely was clarificatory and not amendatory. Even otherwise, the effect of a standing rule will govern the availment irrespective of the as to what period when the tax had been originally paid. 9.12 In view of the foregoing, I find that the said demands raised against the assessee on account of wrong availment are liable to be confirmed and recovered from them along with appropriate rate of interest. 4.3 From the impugned order it is quite evident that the only issue for consideration in this appeal is in respect of the admissibility of the CENVAT credit of the outward freight charges in case where the goods are removed from the factory for delivery on for destination basis. Undisputedly in the ace before us the goods were cleared by the appellant for delivery at destination of the customer and not on the factory gate. The issue had been under dispute and was clarified by the Board first in 2007, vide the Circular no. 97/8/2007-ST dated 23.08.2007, stating as follows: 8. CENVAT Credit. 8.1 With effect from 10.9.2004, under CENVAT C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been defined in CENVAT Credit Rules. In terms of sub-rule (t) of rule 2 of the said rules, if any words or expressions are used in the CENVAT Credit Rules, 2004 and are not defined therein but are defined in the Central Excise Act, 1944 or the Finance Act, 1994, they shall have the same meaning for the CENVAT Credit Rules as assigned to them in those Acts. The phrase 'place of removal' is defined under section 4 of the Central Excise Act, 1944. It states that,- place of removal means- (i) a factory or any other place or premises of production or manufacture of the excisable goods ; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be stored without payment of duty ; (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory; from where such goods are removed. It is, therefore, clear that for a manufacturer /consignor, the eligibility to avail credit of the service tax paid on the transportation during removal of excisable goods would depend upon the place of removal as per the definition. In case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le from a nonduty 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 Excise Act, 1944 as also in terms of the provisions under the Sale of Goods Act, 1930 occurred at the said place. 3) The operative part of the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 there upon passes to the buyer. Such assent may be expressed or implied and may be given either before or after the appropriation is made. Subsection (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 value , payment of insurance or who bears the risk are not the relevant considerations to ascertain the place of removal. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very important and makes it clear that a depot, the premises of a consignment agent, or any other place or premises from where the excisable goods are to be sold after their clearance from the factory are all places of removal. What is important to note is that each of the premises is referable only the manufacturer and not to the buyer of excisable goods. The depot or the premises of the consignment agent of the manufacturer are obviously places which are referable to the manufacturer. Even the expression any other place of premises refers only to a manufacturer s place or premises because such place or premises is to be stated to be where excisable goods are to be sold . These are key words of the sub-section. The place or premises from where excisable goods are to be sold can only be manufacturer s premises or premises referable to the manufacturer. If we were to accept contention of the revenue, then these words will have to be substituted by the words have been sold which would then possibly have reference to buyer s premises. 4.Exceptions: (i) The principle referred to in para 3 above would apply to all situations except where the contract for sale is FOR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of Circular of 2007 and 2014 have been withdrawn. In terms of this circular 4 it has been specifically clarified following the decision of Hon ble Supreme Court in case of Roofit Industries Ltd, it has been clarified that in case of FOR destination sale where the ownership, risk in transit, remained with the seller till the goods are accepted by the buyer the on delivery and till such time of delivery, seller alone remained the owner of goods retaining right of disposal the benefit of CENVAT Credit will have to be extended. Following this circular in following cases the benefit of credit has been extended in the following cases: o UltraTech Cement Ltd. [2019 (2) TMI 1487 - CESTAT AHMEDABAD] Affirmed by Hon'ble HC at [2020 (3) TMI 1206- Gujarat High Court] Admitted in SC at 2021-TIOL-227-SC-CXLB o Sanghi Industries Ltd. [2019 (369) ELT 1424 (T)] o Banco Products Ltd. [2021 (7) TMI 662 - CESTAT-AHM] o Polyplex Corporation Ltd. [2019-TIOL-1906-CESTAT-ALL] o Chittor Polyfab Ltd. [2021 (8) TMI 1116 - CESTAT NEW DELHI] o Harita Fehrer Ltd. [2019 (7) TMI 625 CESTAT CHENNAI] o GKN Driveline India (Pvt) Ltd. [2019 (9) TMI 466 CESTAT] o Rane Brake India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. As per the terms of payment clause contained in the procurement order, 100% payment for the supplies was to be made by the purchaser after the receipt and verification of material. Thus, there was no money given earlier by the buyer to the assessee and the consideration was to pass on only after the receipt of the goods which was at the premises of the buyer. From the aforesaid, it would be manifest that the sale of goods did not take place at the factory gate of the assessee but at the place of the buyer on the delivery of the goods in question. 14. The clear intent of the aforesaid purchase order was to transfer the property in goods to the buyer at the premises of the buyer when the goods are delivered and by virtue of Section 19 of Sale of Goods Act, the property in goods was transferred at that time only. Section 19 reads as under : 19. Property passed when intended to pass. - (1) Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. (2) For the purpose of ascertaining the intention of the parties regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the goods are sold for delivery at the buyer's premises, such buyer's premises become the place of removal has been over-turned by Hon'ble Apex Court in the case of Ispat Industries Limited [2015(324) ELT 670 (S.C.)] and it has been held that the buyer's premises can never be the place of removal under section 4 of Central Excise Act, 1944. He would further argue that the appellant's arguments that in the case of Ultratech Cement Limited, the Hon'ble Apex Court has not decided what is the place of removal, is without basis. On careful consideration of the arguments we find that Hon'ble Apex Court had indeed, in the case of Roofit Industries (supra) held that their goods are sold for delivery in the buyer's premises and sale being completed at the buyer's premises, they become the place of removal. This view has been over-turned by Hon'ble Apex Court in the case of Ispat Industries Limited (supra), para 24 of which reads as follows: 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 manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Courts below is clearly untenable for the following reasons: 13. From the aforesaid extract of the judgment, it does not appear that the Hon'ble Apex Court was oblivious of the fact or has not considered that the sale was alleged to have taken place at the buyer's door step, the cost and risk of the transport being borne by the seller. The case in hand is identical to this case. Accepting the arguments of the assessee in the Ultratech Cement (supra), Commissioner (Appeals), CESTAT as well as the Hon'ble High Court of Karnataka held that the assessee is entitled to Cenvat Credit on the transport of goods to the buyer's premises. This decision was set aside by the Hon'ble Apex Court in the following words in Para 13. 13. The upshot of the aforesaid discussion would be to hold that Cenvat on goods transport agency service availed for transport of goods from place of removal to buyer's premises was not admissible to the respondent. Accordingly, this appeal is allowed, judgment of the High Court is set aside and the Order-in-Original dated August 22, 2011 of the Assessing Officer is restored. 14. Learned counsel argues that the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses and that CENVAT Credit on GTA services is available on outward transportation of goods from factory to the buyer's premises. 17. As we do not agree with the aforesaid decisions of CESTAT Chennai, we find this is a fit case to be referred to Larger Bench to decide the following question: In the light of the judgment of the Hon'ble Apex Court in the case of Ultratech Cement Limited [2018(9)GSTL 337 (SC)] and the Ispat Industries Limited [2015(324)ELT 670 (SC)] should CENVAT Credit on GTA services for outward transportation of goods from the factory to the buyer's premises be denied in cases where the goods are sold on FOR (buyer's premises) basis or should such matters be remanded to the lower authorities for determining what is the place of removal? 18. Accordingly, we direct the Registry to place this file before Hon'ble President to consider constitution of a Larger Bench to decide the above question. 4.10 From the question framed itself it is quite evident that bench has referred the matter without considering the clarification issued by the Board in 2018. Since the clarification issued by the Board goes to the root of the matter a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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