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TMI Blog2024 (4) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods remains with seller till delivery at customer s doorstep, seller bears risk of loss or damage to the goods during transit to the destination, and property in the goods is not transferred till delivery. So outward transportation qualifies as input service and is eligible for CENVAT Credit - The sale being of gases manufactured by the appellant, due to the peculiar nature, sale happens at the buyer s premises and admittedly such sale is on F.O.R basis. In Ranadey Micronutrients etc. vs. Collector of Central Excise [ 1996 (9) TMI 124 - SUPREME COURT] , the Supreme Court held that in view of Section 37B of the Central Excise Salt Act, 1944, instructions issued by the Board in order to ensure uniform practice of assessment of excisable goods throughout the country get statutory status and significance, and they are binding on officers of the Central Excise Department. The Tribunal was not justified in holding that place of removal for the GTA Services provided under FOR sale contract is the manufacturer s premises and not the place where the goods are sold; that the Tribunal was not justified in holding that the GTA services in the present case are being received beyond the pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises is the appellant's responsibility; the purchase order reflects only one agreed value for the entire transaction as the consideration payable by the customer is inclusive of transportation charges; the excise duty and VAT at appropriate rates is to be paid on the basic rate, transportation charges and facility charges; the appellant is responsible for any loss in transit as it is the responsibility of the appellant to deliver the goods; and the ownership is transferred only when the goods are delivered and accepted by customers. 7) The appellant s stand is that it is availing and utilizing the CENVAT Credit of duty paid on Inputs and Capital Goods as well as credit of Service tax paid on Input Services, including GTA Services in terms of Rule 3(1) read with Rule 3(4) of the CENVAT Credit Rules, 2004. 8) The Audit officers conducted an audit of the financial records of the appellant, and during the course of scrutiny of records of the appellant, they observed that the appellant has taken CENVAT Credit of Service tax paid by them on the outward freight for transporting the gases from factory gate to the buyers premises by treating the same as Input Services and felt that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as meaning any service used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final product upto the place of removal ; and held that in view of the said definition, credit on outward transportation of goods beyond the place of removal is not admissible. He held that credit of transportation of goods upto the place of removal alone is relevant and it would not cover transportation from the place of removal. He also rejected the contention of the appellant that (i) their product being of special nature, it requires special type of transport vehicles and the issue of invoices for the quantity actually delivered at the buyers premises, (ii) that property in the goods remains with them till the goods are delivered at buyers premises, (iii) that their sale being on FOR basis, the place of removal shifts to the door step to the buyer. The Authority held that simply because price is fixed on F.O.R basis and goods are delivered in special type of vehicles, it does not give rise to a conclusion that ownership is transferred at buyers door steps or buyer s premises becomes the place of removal; and even delivery to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... individual case and the applicable provisions; 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 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 or the seller bore the risk of loss or damage to the goods during transit to the destination and 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 upto 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 occurred at the said place. 20) The Tribunal held that the entire argument of the appellant is based on the fact that goods were delivered on F.O.R bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and M/s Roofit Industries where the ownership, risk in transit, remained with the seller till goods are accepted by buyer on delivery and till such time of delivery, seller alone remained the owner of goods retaining right of disposal, benefit has been extended by the Apex Court on the basis of facts of the cases. ( emphasis supplied) 24) He, therefore, contended that since there is no dispute that in the instant case the sale of gases is on F.O.R contract basis; and since ownership, risk in transit, remained with the seller till goods are accepted by buyer on delivery, and till such time of delivery, the seller alone remained the owner of the goods retaining right of disposal, the judgment in Ultra Tech Cement (1 supra) would have no application and the judgments cited in the circular CCE, Mumbai-III vs. Emco Ltd. 2015(322) ELT 394(SC) = (2015) 10 SCC 321 and CCE vs. M/s Roofit Industries Ltd. 2015(319) ELT 221(SC) = (2015) 8 SCC 229 would apply. 25) Learned counsel for the respondent refuted the said submissions and supported the order passed by the lower Authorities. Consideration by the Court 26) It is not in dispute that for a manufacturer/consignor, the eligibility to avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of material, Central excise duty, loading, transportation, transit risk and unloading charges, etc. Even transit damage/breakage on the assessee account which would clearly imply that till the goods reach the destination, ownership in the goods remain with the supplier, namely, 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. 15. 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 the Sale of Goods Act, the property in goods was transferred at that time only. Section 19 reads as under: 19. Property passes when intended to pass. ( 1) Wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant in M/s. Inox Air Products Limited vs. Commissioner of GST and Central Excise Excise Appeal No. 41117 of 2013 dt. 22.2.2024, by the Customs, Excise and Service Tax Appellate Tribunal, Chennai rendered on 22.02.2024, where a plea similar to that one raised by the appellant in the instant case was accepted by the Customs, Excise and Service Tax Appellate Tribunal, Chennai. In the said case, the Tribunal has also held that there is no dispute in the payment of service tax or in regard to the documents and the appellant need not to produce one-to-one co-relation and it has no need to establish nexus of the input services with manufacturing activity. 37) Reliance was also placed by the Tribunal on its Larger Bench decision in M/s Ramco Cements Limited vs. Commissioner of Central Excise, Puducherry Appeal No.E/40575/2018, dt. 21.12.2023, wherein the Larger Bench had held that the credit availed on outward transportation services is eligible when the freight charges are included in the taxable value. 38) Therefore, we hold on issues mentioned above that the Tribunal was not justified in holding that place of removal for the GTA Services provided under FOR sale contract is the manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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