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TMI Blog2024 (4) TMI 817X X X X Extracts X X X X X X X X Extracts X X X X ..... disputed by the department, that the appellant sells its final products to the customers on FOR destination basis and consequently remains responsible for getting the goods delivered till the premises of the buyers. The appellant further claims that it bears the risk of loss while the goods are in transit and the property in the goods passes from the seller to the buyer at the customers place when the sale takes place. It is for this reason that the appellant claims that it availed CENVAT credit of service tax paid on such GTA services for outward transportation of the final products from the factory or the depots of the appellant to the premises of the buyer. 3. A show cause notice for the period from January 2008 to September 2008 was issued the appellant proposing to recover the alleged inadmissible CENVAT credit amounting to Rs. 28,61,265/- under rule 14 of the 2004 Rules read with section 11A of the Central Excise Act, 1944 [the Central Excise Act] with interest and penalty on the ground that the 'place of removal' in the present case would be the factory gate of the appellant and so CENVAT credit on outward transportation of goods from the factory gate to the premises of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of "input service" was amended w.e.f. 01.04.2008 vide Notification No. 10/2008-CE(NT) dated 01.03.2008 whereby the aforesaid expression "from the place of removal" is substituted by 'into the place of removal". Thus, from 01.04.2008, with the aforesaid amendment, the Cenvat Credit is available only upto the place of removal. xxxxxxxxx. From the above, it is cleared that the GTA service used for the purpose of outward transportation of goods from the factory/depot to customer's premises is not covered within the ambit of Rule 2(l) of the CCR, 2004. xxxxxxxxxxx 8. I further find that the present issue has already been decided by Hon'ble Supreme Court in relation to place of removal is in case of CCE & ST vs. Ultra Tech Cement Ltd. - 2018 (9) G.S.T.L. 337 (S.C.), dated 1-2-2018 in Civil Appeal No. 11261 of 2016 on the issue of CENVAT Credit on Goods Transport Agency Service availed for transport of goods from the 'place of removal' to the buyer's premises. By following the decision of the Hon'ble Supreme Court in the cited case, I concluded that the appellant has wrongly availed cenvat credit of service tax of Rs. 1,27,70,269/- paid on outward freight (as demanded in above ten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble in terms of rule 2(l) of the 2004 Rules. In support of this submission, learned counsel placed reliance upon the Circular dated 08.06.2018 issued by the Central Board of Indirect Taxes and Customs [the 2018 Circular] as also the decision of the Larger Bench of the Tribunal in The Ramco Cements Limited vs. The Commissioner of Central Excise [Central Excise Appeal No. 40575 of 2018 decided on 21.12.2023] and the judgment of the Karnataka High Court in Bharat Fritz Werner Ltd. and Mapal India Private Limited vs. The Commissioner of Central Tax, Bangalore [2022 (7) TMI 352 - Karnataka High Court]. Learned counsel also placed reliance on the decision of the Tribunal in Ultratech Cement Ltd. vs. C.C.E. Kutch (Gandhidham) [2019 (2) TMI 1487 - CESTAT Ahmedabad] as upheld by the Gujarat High Court in Commissioner, Central Goods and Service Tax vs. M/s. Ultratech Cement Ltd. [2020 (3) TMI 1206 - Gujarat High Court]; and (ii) The Commissioner (Appeals) committed an illegality in confirming the imposition of penalty and recovery of interest. 11. Shri Rakesh Agarwal, learned authorised representative appearing for the department, however, supported the impugned order and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the premises of the buyers as the sale is on FOR destination basis, while according to the department the 'place of removal' would be the factory gate of the appellant. 19. It also needs to be noted that 'place of removal' was not defined in the 2004 Rules prior to 11.07.2014. Rule 2(t) of the 2004 Rules, however, provides that words and expressions used in the 2004 Rules and not defined but defined in the Excise Act or the Finance Act shall have the meanings respectively assigned to them in those Acts. The said rule 2(t) is reproduced below: "2(t) words and expressions used in these rules and not defined but defined in the Excise Act or the Finance Act shall have the meanings respectively assigned to them in those Acts." 20. Section 4(3)(c) of the Central Excise Act defines 'place of removal' 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 go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis the judgment of the Supreme Court in Ultratech Cement. This judgment, therefore, needs to be considered first. 28. The Supreme Court examined the admissibility or otherwise of the CENVAT credit availed on service tax paid for GTA service for transport of goods from the 'place of removal' to buyer's premises. In this connection, the Supreme Court referred to the definition of 'input service' in rule 2(l) of the 2004 Rules as it stood prior to its amendment on 01.03.2008 and noted that in view of the use of the expression 'from the place of removal', the service used by the manufacturer from the place of removal to the warehouse or customer's place would be exigible for CENVAT credit, but in view of the amendment made in the definition of 'input service' from 01.03.2008 replacing the word 'from' by the word 'upto', it would only be 'upto the place of removal' that service could be treated as 'input service'. The relevant observations of the Supreme Court in Ultratech Cement are as follows: "7. It may be relevant to point out here that the original definition of 'input service' contained in Rule 2(l) of the Rules, 2004 used the expression 'from the place of removal'. As per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to unamended definition. 11. As can be seen from the reading of the aforesaid portion of the circular, the issue was examined after keeping in mind judgments of CESTAT in Gujarat Ambuja Cement Ltd. and M/s. Ultratech Cement Ltd. Those judgments, obviously, dealt with unamended Rule 2(l) of Rules, 2004. The three conditions which were mentioned explaining the 'place of removal' as defined under Section 4 of the Act, there is no quarrel upto this stage. However, the important aspect of the matter is that Cenvat Credit is permissible in respect of 'input service' and the Circular relates to the unamended regime. Therefore, it cannot be applied after amendment in the definition of 'input service' which brought about a total change. Now, the definition of 'place of removal' and the conditions which are to be satisfied have to be in the context of 'upto' the place of removal. It is this amendment which has made the entire difference. That aspect is not dealt with in the said Board's circular, nor it could be. ***** 13. The upshot of the aforesaid discussion would be to hold that Cenvat Credit on goods transport agency service availed for transport of goods from place of removal t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es for determination of 'place of removal' were laid down in paragraph 3, and paragraph 4 provided for exceptions to the principles contained in paragraph 3. The Circular points out that, in general, the 'place of removal' is required to be determined with reference to 'point of sale' in terms of the principles laid down by the Supreme Court in Commissioner of Cus. & C. Ex., Nagpur vs. Ispat Industries Ltd [2015 (324) E.L.T. 670 (S.C.)]. The Circular also deals with CENVAT credit on GTA service and clarifies that the Circular only brings to the notice of the field formations the various judgments of the Supreme Court, which decisions can be referred to for further guidance in the individual cases. 33. It would, therefore, be appropriate to reproduce the relevant portion of the Circular dated 08.06.2018 and it is as follows: "Circular No. 1065/4/2018-CX., dated 8-6-2018 F. No. 116/23/2018-CX-3 Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes & Customs, New Delhi Subject : 'Place of Removal' under Section 4 of the Central Excise Act, 1944, the CENVAT Credit Rules, 2004 and the CENVAT Credit Rules, 2017 - Regarding. Atte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble 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 contract in the circumstances identical to the judgment in the case of CCE, Mumbai-III v. Emco Ltd. - 2015 (322) E.L.T. 394 (S.C.) and CCE v. M/s. Roofit Industries Ltd. 2015 (319) E.L.T. 221 (S.C.). To summarise, in the case of FOR destination sale such as M/s. Emco Ltd. 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 owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the buyer, any expenditure incurred, thereafter, has to be on the account of the buyer and cannot be a component which would be included while ascertaining the valuation of goods. In this connection the Supreme Court made the following observations: "13. In the present case, we find that most of the orders placed with the respondent assessee were by the various Government authorities. One such order, i.e., order dated 24-6-1996 placed by Kerala Water Authority is on record. On going through the terms and conditions of the said order, it becomes clear that the goods were to be delivered at the place of the buyer and it is only at that place where the acceptance of supplies was to be effected. Price of the goods was inclusive of cost 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 ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods was inclusive of transportation charges. As transit damage on the assessee's account would imply that till the goods reached their destination, ownership in the goods remained with the supplier, namely, the assessee, freight charges would have to be added as a component of excise duty. Further, as per the terms of the payment clause contained in the procurement order, payment was only to be made after receipt of goods at the premises of the buyer. On facts, therefore, it was held that the sale of goods did not take place at the factory gate of the assessee." (emphasis supplied) 37. However, the Supreme Court in 33 noticed that the factual position was different from the factual position emerging in Roofit Industries as the goods manufactured were sold at the factory gate and the relevant observations are as follows: 33. xxxxxxxxxx. When the goods were handed over to the transporter, the respondent had no right to the disposal of the goods nor did it reserve such rights inasmuch as title had already passed to its customer. On facts, therefore, it is clear that Roofit's judgment is wholly distinguishable. 38. The Karnataka High Court in Bharat Fritz Werner also cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal to the extent of disallowing Cenvat credit to the appellant for the period after 31-3-2008 is quashed." 17. The Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs, New Delhi, has issued Circular dated 8-6-2018 and clarified the definition, 'Place of Removal'. In Para 5 of the Circular, the Ministry has referred to the judgment in the case of CCE & ST v. Ultra Tech Cement Ltd. [Civil Appeal No. 11261 of 2016, dated 1-2-2018] [2018 (9) G.S.T.L. 337 (S.C.)] and stated that, in that case, the Apex Court has held that Cenvat credit on GTA Service from the place of removal to the buyer's premises is not admissible. 18. In the instant cases, the place of removal is buyer's premises. Therefore, the authority in the case of Madras Cements Ltd., is applicable to the facts of this case and these appeals merit consideration. Hence, the following: ORDER (a) The questions of law framed by this Court in CEAs No. 56/2019 and 71/2019 are answered in favour of the assessee holding that the Tribunal's view is unsustainable in law; (b) CEA No. 56/2019 is allowed and impugned order vide Final Order Nos. 21960-21962/2018, dated 31-12-2018 passed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be entitled to avail CENVAT credit of the service tax paid on GTA service for transportation of goods from the factory to the buyers premises when the sale is on FOR destination basis. The relevant portion of one such decision in Hindustan Zinc Ltd. vs. Commissioner of Central Excise, Meerut [2023 (11) TMI 299 - CESTAT Allahabad] is reproduced below: "4.3 In the above paragraphs Commissioner has concluded and agreed with the submissions made by the appellants that their sales are all on FOR basis. CBI has vide circular No 1065/4/2018-CX dated 08.06.2018 clarified as follows: xxxxxxxxx 4.4 The finding recorded by the Commissioner in the impugned order is that the goods were cleared by the appellant on FOR basis then in view of the above referred circular the place of removal will be the place of delivery of goods and the CENVAT Credit on services of GTA till that point will be admissible. 4.5 We also note that the issue is no longer res-integra and Mumbai bench has in case of M/s CEAT Ltd, [Final Order No A/86173/2022 dated 19.10.2022]] decided the issue following the said circular. 4.6 We thus do not find any merits in the impugned order. 4.7 Appeal is allowed." 42. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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