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TMI Blog2024 (2) TMI 1393X X X X Extracts X X X X X X X X Extracts X X X X ..... y on transportation of biscuits from the factory of the appellant to the depot or premises of the clearing and forwarding agents of Parle. The Rajasthan High Court in Mound Trading Company Pvt. Ltd. vs. Commissioner Central Excise Jaipur-I [ 2019 (7) TMI 1175 - RAJASTHAN HIGH COURT ], in the matter of the appellant itself, held that the appellant could avail CENVAT credit under rule 2(l) of the 2004 Rules on the service tax paid for transportation of the manufactured products from the place of manufacture upto the depot of Parle. In the present case, in view of the authorisation dated 23.11.2009 and the terms and conditions submitted at the time of authorisation as also the Agreement dated 07.08.2009, it is clear that no sale took place at the factory gate of the appellant since the goods belonged to Parle and were merely stock transferred to Parle from the factory gate of the appellant. The Excise Invoices issued for removal of goods contained the name of the appellant A/c Parle. The Stock Transfer Notes were issued against Form-F with similar details as the Excise Invoice - Whatever sale to buyers took place was either from the depots of Parle or from the premises of the clearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be admissible to the appellant. 4. Rule 2(l) of the 2004 Rules defines input service and the relevant portion is reproduced below: 2(l) input service means any service, (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. ***** 5. The place of removal is defined in rule 2(qa) of the CENVAT Credit Rules, 2004 [the 2004 Rules] It was inserted on 11.07.2014 and is reproduced below: 2(qa) 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, from where such goods are removed. 6. It is clear from the aforesaid rules that input service means any service used by a manufacturer, directly or indirectly, in or in relation to the manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delivered to Parle. As a consideration for the obligation and liabilities undertaken and accepted by the appellant, the appellant would receive from Parle conversion or job charges as per Annexure 1 to the Agreement. The Agreement also provides that the appellant shall bear and pay excise duties, or any other taxes, levied from time to time in respect of the products, which shall be reimbursed by Parle. The terms and conditions mutually agreed upon between the appellant and Parle also provides that the appellant would make Excise Invoice/Stock Transfer Notes to the depots of Parle. 10. Rule 9(1) of the Central Excise Rules, 2001 [the 2001 Rules] provides for registration of every person, who produces, manufactures, carries on trade, holds private store-room or warehouse or otherwise uses excisable goods. However, rule 9(2) of the 2001 Rules provides that the Board, may by Notification, and subject to such conditions or limitations as may be specified in the Notification, specify person or class of persons who may not require such registration. 11. It is in pursuance of rule 9(2) of the 2001 Rules, that the Notification No. 36/2001 dated 26.06.2001 [the Registration Exemption Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereunder in respect of goods manufactured on our behalf and also to furnish information relating to the price at which M/s. Parle Biscuits Pvt. Ltd., sell the said Biscuits products in order to enable determination of value of the said goods under Section 4A of the said Act. This will remain enforce till it is cancelled or another such authorization is filled. This is with effect from 21/12/2009. Earlier Authorisation dt. 15/9/2001 of Parle Products to be treated as cancelled. For PARLE BISCUTS PVT. LIMITED Sd/- (Authorised Signatory) Place: Mumbai Date: 23/11/2009 (Manufacturers who gets his goods manufactured From any other person or his authorized Agent) We M/s. Sweety Industries holding Central Excise Registration AAFFS8955FXM001 of Nadiad hereby accept the above authorization and agree to discharge all liabilities under the Central Excise Act 1944 and Rules made there under in the respect the said goods manufactured from time to time by us on behalf of the above mentioned manufacturer. For SWEETY INDUSTRIES Sd/- (Authorised Signatory) Place: Nadiad Date: 23/11/2009 (Actual manufacturer or his authorized signatory) (emphasis supplied) 13. The terms and conditions between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the service tax paid on input services used in the manufacture of dutiable final products in terms of rule 2(l) of the 2004 Rules. These input services included the services of Goods Transport Agency [GTA] for outward transportation of finished goods upto the depot of the principal manufacturer Parle, which according to the appellant is the place of removal. The appellant is a holder of central excise registration as also service tax registration for payment of service tax on GTA on account of the principal in terms of rule 2(l)(v) of the Service Tax Rules, 1944 [the Service Tax Rules] . According to the appellant, the goods are cleared to the depots of Parle or the premises of the clearing and forwarding agents under Excise Invoice on Stock Transfer basis and no sale takes place at the factory gate. The appellant claims that it pays excise duty at the time of clearance of the final products from its factory to the depot of Parle on maximum retail price [MRP] , less abatement permissible under the relevant Notification but this is reimbursed by Parle. 15. Two show cause notices dated 06.02.2017 and 15.12.2017 covering the period from November 2015 to June 2017 were issued to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the depot of the principal (Parle) when the valuation has been adopted under section 4A of the Central Excise Act. 17. Shri M.H. Patil, learned counsel appearing for the appellant assisted by Shri Viraj Reshamwala submitted that in the facts and circumstances of the case, place of removal under rule 2(qa) of the 2004 Rules (inserted w.e.f. 11.07.2014) and section 4(3)(c)(iii) of the Central Excise Act (inserted w.e.f. 14.05.2003) would mean the depot of Parle or the premises of the clearing and forwarding agents of Parle from where the excisable goods are to be sold after the clearance from the factory of the appellant and, therefore, the appellant would be entitled to avail CENVAT credit on outward GTA service used for transportation of goods from the premises of the appellant to the depot of Parle or the premises of the cleaning and forwarding agents of Parle. 18. Shri Mihir G. Rayka, learned authorized representative of the department assisted by Shri Ashok Thanvi, however, submitted that in view of the decision of the Supreme Court in Commissioner of Central Excise and S.T. vs. Ultra Tech Cement Ltd. [2018 (9) G.S.T.L. 337 (S.C.)] , the appellant would not be entitled to ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty could be used for PARLE by SWEETY on Principal basis. (d) SWEETY has represented to PARLE that it has obtained or renewed all licenses, authorizations and permissions, necessary or requisite in law, for processing of the said product/s. Further, it has also confirmed that all such licenses, authorizations and permissions are presently in full force and effect and that it will be kept updated or renewed during the tenure of this agreement in accordance with the laws applicable from time to time. (e) PARLE intends to utilize the spare manufacturing capacity of SWEETY for processing biscuits of their own brand names and also having registered trade mark on the faith and strength of the aforesaid representation and warranties. NOW IT IS HEREBY AGREED TO AND DECLARED BY AND BETWEEN the parties hereto as follows: I. MANUFACTURE AS A PROCESSOR (i) SWEETY shall process at its own factory situated at 43/45, G.I.D.C., Industrial Estate, Nadiad-387001 (Gujarat); biscuits out of the material given by PARLE and as per orders placed by PARLE in terms of this agreement, as per the standards and specifications of PARLE and as per the manufacturing process and quality control standards (includes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds specified by PARLE to SWEETY and will be the property of PARLE. *****. ***** VIII. CONVERSION CHARGES OR JOB CHARGES (i) As a consideration for the obligation and liabilities undertaken and accepted by SWEETY, it is agreed between SWEETY and PARLE that SWEETY shall received from PARLE conversion or job and other charges as per Annexure-I. All the weights are declared net weights of biscuits manufactured using L.D.O./F.O./Gas oven and packed in outer corrugated boxes or tins or other packing, ready for trade/sale. ***** IX. EXCISE DUTY AND OTHER LEVIES (i) SWEETY shall bear and pay excise duties, or any other taxes, levies, etc. imposed from time to time in respect of the said product/s which will be reimbursed by PARLE. (ii) PARLE shall pay all taxes, Cesses and Levies such as Octroi, and any taxes, levies duties, cesses arising due to assessments or otherwise which in law are to be borne by PARLE. (iii) PARLE will directly pay monthly State and Central/Sales Tax/Entry Tax and other levies due to assessment or otherwise, which by laware to be borne by PARLE. (iv) Payment of Excise Duty shall be made by a demand draft/Payee s Account cheque in the name of local notified Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra CIN: U15412MH1974PTC017797, FSSAI No: 10013022002253 STN No: C0712017000180 / SAP NO: 22259097 Date: 30.06.2017 Excise No: 0000001199, FSSAI No : 10013022002253 CONSIGNEE NAME ADDRESS : N012 PARLE BISCUITS PVT. LTD. CONSIGNER NAME ADDRESS : C071 SWEETY INDUSTIRES, A/c. PARLE BISCUITS PVT. LTD. 43/45, GIDC, NADIAD INDUSTIRAL ESTATE, NADIAD 387001 Gujarat ***** STOCK TRANSFER AGAINST F-FORM Transporter Details : Transport Code and Name: 6000205- PARTH ROADLINES Truck No: GJI2BV 3607 Road Permit No: NA Truck Type : 32 ft Container MLR No : 2419 Shipment No. : 80224888 ***** 25. The corresponding Excise Invoice prepared by the appellant for stock transfer of goods to the premises of the clearing and forwarding agent of Parle is reproduced below: EXICSE INVOICE TRIPLICATE FOR ASSESSEE For Removal of Excisable goods from Factory or warehouse On payment of duty (Rule 11(2) of C Ex. Rules 2002) Duty payable as per Rule 8 of Central Excise Rules 2002 TIN 24160900325 CST No. 24660900325 Chapter/Sub-Heading : BISCUITS 1905 90 20 Name Address of Factory : Sweety Industries A/C: Parle Biscuits Pvt. Ltd. 43/45, GIDC, Industrial Estate Nadiad 387001, Gujarat Name of Excisable Commodity: BISCUI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellant, it is specifically mentioned that manufacture of biscuits is on behalf of Parle. In the absence of such an authorisation, Parle would have been required to take Central Excise Registration for the said factory of the appellant and comply with the Central Excise formalities, including payment of duty. 30. At the time of clearance of the biscuits from the factory of the appellant to the depots/premises of clearing and forwarding agents of Parle, the appellant paid excise duty, which is reimbursed by Parle and the value of transportation of the goods from the factory of the appellant to the depots of Parle is included in the MRP of the biscuits in terms of section 4A(3) read with Explanation 1 of the Central Excise Act. The relevant portion of section 4A(3) with the Explanation is reproduced below: 4A(3). Valuation of excisable goods with reference to retail sales price (1) ***** (2) ***** (3) The Central Government may, for the purpose of allowing any abatement under sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods. (4) ***** Explanation 1. For the purposes of this section, retail sales price me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a contract manufacturing unit engaged in manufacturing biscuits for its principal Parle Biscuit Pvt. Ltd. , which is the appellant in Excise Appeal No. 52694 of 2019. It claims that it has been authorised by Parle to manufacture on its behalf biscuits and to comply on its behalf all the procedural formalities contemplated under the Central Excise Act, 1944 and the Rules framed thereunder in respect of the goods manufactured on behalf of Parle and also to furnish information relating to the price at which Parle would sell the said biscuits in order to enable the determination of the value of the said goods under section 4A of the Excise Act. The appellant further claims that it complied with all the procedural formalities such as maintenance of records of the goods manufactured, credit taken, payments of excise duty, filing of returns and furnishing information to the Department as and when called for. According to the appellant, this was in accordance with clause (1)(ii) of the Notification 36/2001 dated 26.06.2001, which deals with exemption from registration of certain category of persons under the Central Excise Rules 2001. ***** 22 . It is clear from the aforesaid that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Commissioner of Central Excise and S.T. [2018 (9) G.S.T.L. 337 (S.C.)] needs to be considered first. The Supreme Court examined the admissibility or otherwise of the CENVAT credit availed on the 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 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 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 the said definition, service used by the manufacturer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid 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 to buyer s premises was not admissible to the respondent. Accordingly, this appeal is allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustries Ltd. 2015 (319) ELT 221 (SC) = 2015-TIOL-87-SC-CX, CCE vs Ispat Industries Ltd 2015 (324) ELT 670 (SC) = 2015- TIOL-238-SC-CX, CCE, Mumbai-III vs Emco Ltd 2015 (322) ELT 394 (SC) = 2015-TIOL-163-SC-CX and CCE ST vs. Ultra Tech Cement Ltd dated 1.2.2018 in Civil Appeal No. 11261 of 2016 = 2018-TIOL-42-SC-CX. In this regard, reference have been received from field formations seeking clarification on implementation of aforesaid circulars of the Board in view of judgments of Hon ble Supreme Court. 2. In order to bring clarity on the issue it has been decided that Circular no. 988/12/2014-CX dated 20.10.2014 shall stand rescinded from the date of issue of this circular. Further, clause (c) of para 8.1 and para 8.2 of the circular no. 97/8/2007-CX dated 23.08.2007 are also omitted from the date of issue of this circular. 3 . General Principle: As regards determination of place of removal , in general the principle laid by Hon ble Supreme Court in the case of CCE v. Ispat Industries Ltd. - 2015 (324) E.L.T. 670 (S.C.) may be applied. Apex Court, in this case has upheld the principle laid down in M/s. Escorts JCB (supra) to the extent that place of removal is required to be determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts cited above did not deal with issue of export of goods. In these cases otherwise also the buyer is located outside India. 5. CENVAT Credit on GTA Services etc.: The other issue decided by Hon ble Supreme Court in relation to place of removal is in case of CCE ST v. Ultra Tech Cement Ltd., 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. The Apex Court has allowed the appeal filed by the Revenue and held that CENVAT Credit on Goods Transport Agency service availed for transport of goods from the place of removal to buyer s premises was not admissible for the relevant period. The Apex Court has observed that after amendment of in the definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004, effective from 1-3-2008, the service is treated as input service only up to the place of removal . 6. Facts to be verified: This circular only bring to the notice of the field the various judgments of Hon ble Supreme Court which may be referred for further guidance in individual cases based on facts and circumstances of each of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amendment made to the definition of input service with effect from 1-4-2008 and rejected the claim of the appellant-assessee after that date. No further reason has been given by the Tribunal nor any finding has been recorded with regard to place of completion of sale of the goods. 12. Since we are of the opinion that the sale had concluded only after the delivery of the goods was made at the address of the buyer, in the facts of the present case the appellant-assessee would be entitled to the benefit of Cenvat credit on Service Tax paid on outward transportation of goods by the assessee even after 1-4-2008. The appellant-assessee would thus be entitled to such benefit for the period 1-4-2008 to 31-7-2008 which has been denied to it by the authorities below. 13. For the forgoing reasons, this appeal stands allowed. The question of law is answered in favour of the assessee and against the Revenue. The order of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Trading Co. Pvt. Ltd. would make Excise Invoice/Stock Transfer Notes (STN's) to Depots/or Wholesalers of Parle Products Pvt Ltd. and would pay Excise duty on assessable value as shown in the Invoice of M/s Parle Products Pvt. Ltd., Mumbai. ***** 8. From the factual narrative and the record, it is apparent that according to the agreement of the parties, the assessee manufactured articles which were ultimately cleared by its principal i.e. M/s. Parle Products Pvt. Ltd. There is no dispute that Central Excise levy was borne by Parle. The assessee was merely authorized to manufacture the goods. 9. So far as provisions of Service tax is concerned, this Court notices that there were two components. One, job work itself i.e. manufacture of confectionery and biscuits, which was the provision of service, i.e. the main service to M/s. Parle Products Pvt. Ltd. and secondly, the transportation services. It is the second component which is in issue in the present case. There is nothing either on record or in the show cause notice or even in the Order in Original which suggests that the agreement, which parties entered into whereby service tax was to be borne by the assessee and input cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee arises from a decision of the Customs, Excise Service Tax Appellate Tribunal, New Delhi dated 21 April 2014. The following questions of law have been formulated in support of the appeal; (1) Whether Tribunal was justified in denying the Cenvat credit of service tax paid and freight paid by M/s. Parle on inward and outward transportation (from the appellants' factory to depots of M/s. Parle) on the ground that depots of M/s Parle cannot be the place of removal' and that freight charges were not borne by the appellants but M/s. Parle; (2) Whether the Cenvat credit of Service Tax paid on outward freight paid to Goods Transport Agency (GTA) is deniable on the ground that in case of finished goods governed by the provisions of Section 4A of CEA, 1944, 'place of manufacture' is 'place of removal' and Cenvat credit under Rule 2(1) is not admissible beyond the place of removal, in a case, where, 'Retail Sale Price' under Section 4A is the maximum price inclusive of freight and transport charges till the ultimate consumer. (3) Whether Tribunal was justified in denying the Cenvat credit of service tax paid on outward transportation up to the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n coming to the conclusion that the Cenvat credit on Service Tax paid on GTA Service availed for the transportation of the goods from the factory of the appellant to the Depot of Parle Biscuits, has been correctly denied. The view which has been taken by the Tribunal is in accordance with law. The appeal, therefore, does not give rise to any substantial question of law. It is, accordingly, dismissed. There shall be no order as to costs. (emphasis supplied) 46. The inevitable conclusion, therefore, that follows from the aforesaid decision is that the appellant would be entitled to avail CENVAT credit of the service tax paid on outward GTA service for transportation of the goods from the factory of the appellant to the depots of Parle or to the premises of the clearing and forwarding agents of Parle in terms of the authorisation and the Agreement executed between the parties when the valuation is determined under section 4A of the Central Excise Act. 47. The reference is, accordingly, answered in the following manner: The appellant would be entitled to avail CENVAT credit of the service tax paid on outward GTA service for transportation of the goods from the factory of the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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