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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 ..... 1-CE (NT)." 2. M/s. Sweety Industries [the appellant] is a contract manufacturing unit engaged in the manufacture and clearance of biscuits for its principal 'M/s. Parle Biscuits Pvt. Ltd., Mumbai' [Parle] . 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 [the Central Excise Act] and the Rules framed thereunder in respect of the goods manufactured on behalf of Parle. 3. The issue involved is as to whether credit of service tax on the freight paid to the goods transport agency for transportation of biscuits from the factory of the appellant to the depots/premises of the clearing and forwarding agents of Parle would 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. ***** ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk was entered into between the appellant and Parle. This Agreement provides that the appellant shall carry out processing activity of manufacture of biscuits on behalf of Parle out of the raw material given by Parle as per the standards and specifications of Parle and the quality control standards prescribed by Parle, but the ownership of property in all the materials supplied by Parle shall be that of Parle. The Agreement also provides that the raw materials to be supplied by Parle or the licensors of Parle shall be utilized only in the processing and packaging of biscuits ordered by Parle and for no other purpose. The Agreement further provides that the raw materials and the finished products after processing shall be held by the appellant in trust for Parle and for the purpose of being 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (1)(ii) of the Registration Exemption Notification. This authorisation had been accepted by the appellant and it agreed to discharge all liabilities under the Central Excise Act and the Rules made thereunder in respect of the goods manufactured by the appellant on behalf of Parle. The authorisation dated 23.11.2009 submitted by Parle to the department is reproduced below: "AUTHORISATION We M/s. Parle Biscuits Pvt. Ltd., Vile Palre (East), Mumbai-400057, hereby authorize M/s. Sweety Industries, 43/45, G.I.D.C., Industrial Estate, Nadiad387001 (Gujarat) Holding Central Excise Registration No. AAFFS8955FXM001 to manufacture on our behalf "Biscuits" falling under Central Excise Tariff No. 1905 90 20 and to comply on our behalf all the procedural formalities under the Central Excise Act 1944 and RULE made 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and duty would be paid on Retail Sale Price as shown on Biscuits packages by M/s. Parle Biscuits Pvt. Ltd., Mumbai. 8. The raw material and finished goods remains the property of Parle Biscuits Pvt. Ltd., Mumbai. For PARLE BISCUITS PVT. LTD. For SWEETY INDUSTIRES Sd/- &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleging that the appellant had wrongly availed CENVAT credit of service tax paid on GTA outward service beyond the 'place of removal' in contravention of rule 2(l) read with rule 2(qa) and rule 3 of the 2004 Rules. The appellant filed replies dated 09.03.2017 and 19.03.2017 to the aforesaid show cause notices denying the allegations made therein, but the Assistant Commissioner, by the order dated 28.03.2018 confirmed the demand proposed in the two show cause notices and the appeal filed by the appellant before the Commissioner (Appeals) to assail the aforesaid of the order of the Assistant Commissioner was dismissed by order dated 29.06.2018. After placing reliance upon the decision of the Tribunal in M/s. Ultratech Cement Ltd. vs. CCE, Bhavnagar [2007-TIOL-429 (CESTAT-Ahm.)] , the Commissioner (Appeals) observed as follows: "5.2 Hon'ble CESTAT in the case of Ultratech Cement Ltd. v. CCE, Chandigarh/Raipur (supra), has held that "since in this case the assessable value of the goods was not being determined under Section 4 but under Section 4A of the Central Excise Act, 1944, definition of "place of removal" as given in Section 4(3)(c) cannot be adopted for the purpose of Cenvat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to avail CENVAT credit in such circumstances. 19. It is in the light of the aforesaid facts that the issue that has been referred as to whether the appellant can avail credit of service tax on freight paid to GTA for transportation of biscuits from the factory gate of the appellant to the depot or premises of clearing and forwarding agent of Parle has to be decided. 20. It is not in dispute that the appellant is a contract manufacturing unit of Parle and that it manufactures biscuits on behalf of Parle under the authorisation dated 23.11.2009 submitted by Parle to the department, as required under the Registration Exemption Notification. In terms of the aforesaid authorisation, the appellant is required to hold Central Excise Registration for and on behalf of the principal manufacturer i.e. Parle and has to comply with all the procedural formalities under the Central Excise Act and the Rules made thereunder. The terms and conditions submitted with the authorisation dated 23.11.2009 clearly stipulate that the appellant would work as a job worker for Parle for the manufacture biscuits for Parle; that Parle would arrange to send the raw materials to the appellant; that the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ality control standards (includes brands, designs, etc.) prescribed from time to time by PARLE. SWEETY agrees to give priority to PARL for processing ordered quantities of biscuits. 'Process' ***** Furthermore, SWEETY will carry out such processing activity on behalf of PARLE in the spare capacity of SWEETY at its factory by SWEETY's own Workers and Personnel. ***** IV RAW & PACKING MATERIALS AND FINISHED PRODUCTS (i) PARLE shall supply to SWEETY all required raw materials and packaging materials for processing and packing of Parle-G, Marie, Milk Shakti Cream biscuits and similar such product/s under this agreement. All such materials are to be unloaded, inspected/ tested and stored by SWEETY as per the procedure laid down by PARLE from time to time at SWEETY'S coast. (ii) ***** (iii) It shall be the duty of SWEETY to keep the raw materials, packaging materials and finished product/s under proper and adequate storage conditions; any loss on account of improper storage and/or negligence shall be to the account of the SWEETY. V. IDEMNITY AND COMPENSATION FOR LOSSES ETC. (i) The ownership of property in all materials supplied by PARLE shall be of PARLE'S. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made by a demand draft/Payee's Account cheque in the name of local notified Scheduled Bank A/c. Central Excise (SWEETY INDUSTRIES). Similarly, payment of Sales Tax shall be made by a demand draft/Payee's Account cheque in the name of appropriate Authority. ***** (viii) PARLE will ensure that valid excise Invoice/Stock Transfer Note is made available to SWEETY in respect of materials procured by PARLE and consigned to SWEETY for availing of excise benefits / concessions. ***** XXII. BULK HANDLING AND STORAGE OF VANASPATI, PACKING MACHINES, DOMINO INKJET MACHINE, REWINDING MACHINE, CORONA TREATMENT MACHINE, DVD PLAYER, LCD PROJECTOR WITH ACCESSORIES, DIE ROLLS & OTHER MACHINERIES: Two bulk silos of 20 tons capacity each for storage of vanaspati and one service tank having a capacity of 2.5 tons along with elaborate handling system, five packing machines of Khosla make, seven Wrapping Machines of SV Mestry make, two S/W Machine with Cooling Tunnel of ABM make, one Domino Inkjet Machine, one Rewinding Machine, one Corona Treatment Machine, one DVD Player, one set LCD Projector with accessories, Die Rolls, etc. have been provided to SWEETY by PARLE and Licensor of PARLE at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CUITS - 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: BISCUITS Central Excise Regn No. : AAFFS8955FXM001 No. & Date of Notification under which any concessional rate of duty are claimed 12/2012 Dt. 17.03.2012, Notification of MRP valuation 49/2008 CE (NT) dt. 24.12.2008 Excise Serial No. 0000001199 Proparation Date 30.06.2017 Time: 15:39:25 CONSIGNEE NAME AND ADDRESS: PARLE BISCUITS PVT. LTD. C&F - SHREE LOGISTICS PLOT NO. 11-PART 2 OF HEBBLE 2ND PHASE, NEAR HP GAS PLANT INDUSTRIAL AREA MYSORE - 570016 Karnataka India VAT NO: 29250268322 CST NO: Date & Time of Removal : 30.06.2017 Date of Debit Entry for Duty in PLA : Date of Debit Entry in CENVAT : Manner of Transport / Truck No.: GJ12BV 3607 STN : C071201700018 STN DARE : 30.06.2017 26. According to the appellant, transportation charges form part of the assessable value/MRP and, therefore, service tax paid on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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" means the maximum price at which the excisable goods in packaged form may be sold to the ultimate customer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for such sale. ***** " 31. The Central Excise Invoices issued for removal of excisable goods under rule 11 of the 2001 Rules show the name and address of the factory as 'SWEETY INDUSTRIES, A/c Parle Biscuits Pvt. Ltd.', and the name and address of the consignee as 'PARLE BISCUITS PVT. LTD.', or 'C&FA', as the case may be. The Stock Transfer Notes have been issued against Form-F with details similar to Central Excise Invoices. 32. It is seen that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 appellant accepted the authorization and agreed to discharge all liabilities under the Excise Act and Rules made thereunder in respect of the goods manufactured from time to time by the appellant on behalf of Parle. The terms and conditions also stipulate that the appellant would work as a job worker for manufacture of "Biscuits" for Parle and that Parle would arrange to send the raw materials and packing materials to the appellant on payment of Central Excise duty and that the appellant would avail CENVAT credit of Excise duty paid on the raw and packing materials and capital goods. It also provides that the appellant would made excise invoice/stock, Transfer Notes to Depots or Wholesalers of Parle and would pay Excise duty on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 clearance of final products 'from the place of removal' to the warehouse or customer's place etc., was exigible for Cenvat Credit. This stands finally decided in Civil Appeal No. 11710 of 2016 (Commissioner of Central Excise Belgaum v. M/s. Vasavadatta Cements Ltd.) vide judgment dated January 17, 2018. However, vide amendment carried out in the aforesaid Rules in the year 2008, which became effective from March 1, 2008, the word 'from' is replaced by the word 'upto'. Thus, it is only 'upto the place of removal' that service is treated as input service. This amendment has changed the entire scenario. The benefit which was admissible even beyond the place of removal now gets terminated at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition 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, judgment of the High Court is set aside and the Order-in-Original dated August 22, 2011 of the Assessing Officer is restored." (emphasis supplied) 38. A perusal of the aforesaid judgment of the Supreme Court in Ultra Tech Cement would indicate that the Supreme Court did not lay down the principles for ascertaining the 'place of removal' in the context of admissibility of CENVAT credit on GTA services and only dealt with the change brought about by the amendment made in rule 2(l) of the 2004 Rules on 01.03.2008. This is how the Larger Bench of the Tribunal in The Ramco Cements Limited vs. The Commissioner of Central Excise [Excise Appeal No. 40575 of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 determined with reference to 'point of sale' with the condition that place of removal (premises) is to be referred with reference to the premises of the manufacturer. The observation of Hon'ble Court in para 16 in this regard is significant as reproduced below: "16. It will thus be seen where the price at which goods are ordinarily sold by the assessee is different for different places of removal, then each such price shall be deemed to be normal value thereof. Sub-clause (b)(iii) is 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the case. Past cases should accordingly be decided." (emphasis supplied) 41. The Larger Bench of the Tribunal in The Ramco Cements, after referring to the judgment of the Supreme Court in Ultra Tech Cement and the aforesaid Circular dated 08.06.2018, observed as follows: "27. Applying the said principle to the present circumstances, it is seen that the Supreme Court, though in paragraph 13 observed that CENVAT credit on Goods Transport Agency availed for transport of goods from place of removal to buyers' premises was not admissible, but the principles in ascertaining the place of removal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. 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 credit was to be claimed by it, was prohibited in law. Furthermore, it is not revenue's case that M/s. Parle Products Pvt. Ltd. availed of, such Cenvat credit as a matter of fact. 10. In these circumstances, the CESTAT, in our opinion correctly held by following its previous ruling in Lao More Biscuits Pvt. Ltd. (supra) that the assessee could not be accused of claiming credit from Cenvat. Similar issues was decided in M.P. Biscuits Pvt. Ltd. vs. Commissioner of C.EX. Allahabad, 2012 (282) E.L.T. 563 and Commissioner of Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 depots of M/s. Parle, in a case where, for earlier period, in appellants' own case, in the same facts of the case, the Tribunal has allowed the credit." The facts are not in dispute. The appellant manufactures biscuits on raw material supplied by Parle Biscuits at its factory. The finished goods are cleared from the factory of the appellant the Depot of Parle Biscuits on payment of duty. The goods are cleared at the factory gate. Significantly, both in the order of the Commissioner (Appeals) as well as i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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