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TMI Blog2023 (12) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant from the direct shop which may be owned by M/s Frostees Export India Pvt. Ltd. or any other person. Once it is established that the appellant were paying duty on the value at which the bikes were sold from the direct shop at Kolkata then there cannot be any reason for not allowing the Cenvat Credit in respect of the services received at depot. Thus, there is no justification for holding that the direct shop at Kolkata from where the bikes were finally sold by the appellant is not the place of removal as per Rule 2 (qa) of the CENVAT Credit Rules, 2004 - the expenses incurred on rent, repair and maintenance of the direct shop cannot be excluded from the assessable value for the payment of Central Excise Duty and for the same reason the service tax paid in respect of these services received at depot cannot be denied. There is no justification for not allowing the credit in respect of input services received at the direct shop in Kolkata from where the goods are finally sold by the appellant after clearance from the factory. There is no merit in the impugned order and the same is set aside. As the demand for duty is set aside the demand for interest and penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses incurred towards transport including freight, insurance etc, from factory gate to such place of removal and other expenses incurred in maintaining and running the said place of removal will form part of the sale price for determination of assessable value. In the instant matter, except the bald statement the appellant has at no place attempted to establish such inclusion through documentary evidence. In any case, the eligibility regarding credit of taxes paid and inclusion of various factors in value for duty payment are two separate aspects and are to be considered independently. The appellant has not provided even a single copy of invoice for clearing the goods to their said direct shop. The credit on the invoices issued by M/s Frostees Export India Pvt. Ltd. are under dispute but the appellant has not made such invoices a part of their appeal memo even on sample basis. Apropos to above, I find that copy of earlier OIO dared 31-10-2016 is also available in file in which in para 15.1 the adjudicating authority has accepted the undisputed fact of direct shop at Kolkata belonging to M/s Frostees Export India Pvt. Ltd. This fact is in contrast to the stated facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long with interest as per Section 11AA of Central Excise Act, 1944 and also why the penalty under Rule 5 of Cenvat Credit Rules read with Section 11AC of the Central Excise Act, 1944 should not be imposed upon them. 2.5 This show cause notice was adjudicated by the Order-in-Original No.44/AC/2017 dated 27.02.2017 wherein Original Adjudicating Authority has dismissed the appeal of the appellant. Aggrieved by the order of the Original Authority, appellant preferred appeal before Commissioner (Appeals), who vide the impugned order held as referred in para-1 above. Aggrieved appellant has filed this appeal. 3.1 We have heard the learned Counsel Shri Tanuj Hazari appearing for the appellant and learned Authorised Representative Shri Sarweshwar T. Khairnar appearing for the respondent-revenue. 3.2 Arguing for the appellant learned Counsel submits that- The direct shop is the place of removal from where the final product (Motorcycle manufactured) by the appellant is sold. Thus, the direct show in Kolkata is place of removal as per Section 4 (3) (c) of Central Excise Act, 1944 and they were also relying upon the following decisions:- Prabhat Zarda Factory Ltd. Vs Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice, - (i) used by a provider of [output service] for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, . 4.3 From the plain reading of the above rule it is evident that the input services have been defined to mean any service used by the manufacturer, directly or indirectly, in or in relation to manufacture of final products and clearance of final product up to the place of removal. Phrase place of removal is defined under Explanation VI Section 4 (3) (c) to the Central Excise Act, 1944, as follows: (c) 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 deposited 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. 4.4 Rule 7 of Central Excise Valuation Rules, 2000 also prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue and exclusion of such cost allowed on similar lines as discussed earlier, when sales are effected from factory gate/warehouse. From the above it is quite evident that place of removal can be different from the factory gate and the value for determination of duty payable will be the value at which the goods are sold from the place of removal. 4.5 By Notification No 21/2014-CE (NT) dated 11th July 2014, the definition of place of removal as per Section 4 (3)(c) of the Central Excise Act, 1944 has been inserted as rule 2 (qa) in the CENVAT Credit Rules, 2004. 4.6 It has been clarified by the Board in the circular referred by the counsel for appellant, that in case of goods sold from the place other than the factory gate, the place of removal will be as per Section 4 (3) (c) and the value is to be determined at the place of removal. The relevant text of the Circular is reproduced bellow:- 4. While giving the judgment the Hon'ble bench of Supreme Court have observed (in para 13 of the said judgment) that in view of the discussions held above in our view the Commissioner of Central Excise and CEGAT erred in drawing an inference that the ownership in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontained in section 4(4)(b)(i), section 4 (3)(c)(ii) was identical to the earlier provision in section 4(4)(b)(ii) and rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, took care of the situation covered by the earlier section 4(4)(b)(iii). In the Finance Bill, 2003 (clause 128), the definition place of removal is proposed to be restored, through amendment of section 4 to the position as it existed just prior to 1.7.2000. 8. Thus, it would be essential in each case of removal of excisable goods to determine the point of sale . As per the above two Apex Court decisions this will depend on the terms (or conditions of contract) of the sale. The insurance of the goods during transit will, however, not be the sole consideration to decide the ownership or the point of sale of the goods. 4.7 Thus it is settled position in law that in case of sale of goods from any premises other than at the factory gate the value of excisable goods for payment of duty is to be determined at the place of removal i.e. the depot/ direct shop, premises of consignment agent or by whatever name it is called. 4.8 Rule 2 (l) as noted above provides t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent charges and hence cannot be deducted. . 65. The claim pertains to the interest on value of finished goods from the date the stocks are cleared from the gate till the date of sale through the depots. The contention of the assessee is that inasmuch as this is an expense incurred subsequent to the removal of the goods from the gate they are post-removal expenses and, therefore, qualify for deduction. The learned counsel for the assessee commended for our acceptance the reasoning in Para 14 of the judgment dated December 20, 1986 on this count. We are, however, unable to agree with the said submission. We have already held, following Bombay Tyre International, that expenditure incurred on sales organisation cannot be deducted. The claim herein is in reality expenses incurred by the assessee upto the date of delivery on account of storage charges held not excludible in Bombay Tyre International, even where the wholesale trade is effected by the assessee through its sales organisation at a place or places outside the factory gate . 4.10 The above has also been accepted by the board an following has been clarified by the circular No 1065/4/2018 dated 8th June 2018: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depot cannot be denied. 4.12 In the case of M/s Metro Shoes Pvt. Ltd. (supra) similar issue came up for consideration before the Mumbai Bench and following was held- 6. Considered the submissions made at length by both sides and perused the records. The issue involved in this case is regarding the denial of credit of the input services utilized by the appellant for the finished goods manufactured and cleared by them. For the proper appreciation of the said provisions we read the definition of the input services as given in Rule 2(l) of the Central Excise Rules, 2004 : (l) input service means any service, - (i) used by a provider of taxable service for providing an output service; or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or on office relating to such factory or premises, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant till the sale of the goods from the retail showroom, the appellant is eligible to avail said credit as input service credit. 7. The duty confirmed on the service directly and wholly attributable to the goods manufactured by the appellant and the demand pertaining to the credit of the service tax on the overhead expenses for running the retail outlets are eligible for credit. But as regards the service tax credit on amount of service tax taken by the appellant for the services which are directly and wholly attributable to the trading activities would not be eligible as credit, as the definition of the input services indicates that the credit is eligible only in respect of manufacture of the final product and clearance of the final product form the place of removal. The question of manufacturing the final product, in the case of trading activity does not arise as it is an admitted fact that the appellant purchased these goods for the trading activities, in their retail showroom. As such, we are of the view that the credit availed on the services which are directly attributable to the trading activity is ineligible to be availed as input service credit. Accordingly, we u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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