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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 ..... agency 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 cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gents 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. ***** " 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 Notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ENVAT credit was taken after complying with the procedural formalities enumerated in the 2004 Rules. The appellant also availed CENVAT credit 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 reimburs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant would be entitled to avail CENVAT credit on outward GTA service used for transportation of goods from the premises of the appellant (a job worker) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... represented to PARLE that it has spare manufacturing capacity to process all types of biscuits in addition to SWEET's own independent manufacturing activity, the spare capacity 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing therefrom shall be held by SWEETY in trust for PARLE and for the purpose of being delivered to PARLE *****. (ii) All materials supplied by PARLE to SWEETY as stated above shall be stored in accordance with standards 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce shown on biscuits packages by Parle. 24. The relevant portion of the Stock Transfer Note dated 30.06.2017 is reproduced below: "STOCK TRANSFER NOTE Parle Biscuits Pvt. Ltd. Parle Biscuits Pvt. Ltd. North Level Crossing Vile Parle (East) Mumbai- 400057 Maharashtra 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) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration for and on behalf of the its principal manufacturer Parle and comply with all the procedural formalities under the Central Excise Law, including payment of central excise duty, and avail the benefits, which are available to the principal manufacturer. In the authorisation dated 23.11.2009 submitted by Parle to the department on 21.12.2009, which was accepted by 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( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 of 2019) [Krishna Food] . While examining similar terms and conditions between Parle and another unit manufacturing biscuits for Parle, the Larger Bench held that the appellant, in such circumstances, would step into the shoes of Parle. The relevant portion of the interim order of the Larger Bench of the Tribunal is reproduced below: "3. M/s. Krishna Food Products is the sole appellant in Excise Appeal No. 52692 of 2019. It claims to 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e clearing and forwarding agents. 35. Consequently, the appellant would be entitled to claim credit of the service tax on freight paid to goods transport agency on transportation of biscuits from the factory of the appellant to the depot or premises of the clearing and forwarding agents of Parle. 36. It would now be appropriate to examine the relevant decisions referred to in the referring order. 37. The judgment of the Supreme Court in Ultra Tech Cement Ltd. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oach of the Commissioner (Appeals) has been approved by the CESTAT as well as by the High Court. This was the main argument advanced by the learned counsel for the respondent supporting the judgment of the High Court. ***** 10. In the first instance, it needs to be kept in mind that Board's Circular dated August 23, 2007 was issued in clarification of the definition of 'input service' as existed on that date i.e. it related 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 'pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 018 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. Attention is invited to Boards circular no. 97/8/2007-CX dated 23.08.2007, 988/12/2014-CX dated 20.10.2014 and 999/6/2015-CX dated 28.02.2015. Attention is also invited to the judgment of Hon'ble Supreme Court in the case of CCE vs M/s Roofit Industries 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 owner of goods retaining right of disposal, benefit has been extended by the Apex Court on the basis of facts of the cases. (ii) Clearance for export of goods by a manufacturer shall continue to be dealt in terms of Circular No. 999/6/2015-CX., dated 28-2-2015 as the judgments 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 avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods at the buyer's premises and the price of goods would include 'outward freight'. Similarly, in the case of MAPAL India Pvt. Ltd. [CEA 71/2019], the CESTAT has recorded a similar finding. ***** 16. This Court in the case of Madras Cements Ltd., has held as follows: "11. From the facts of the present case, it is clear from the invoices that title of the goods had passed on from seller to buyer only at the place of destination, which is the address of the buyer. As such, the buyer had no right over the goods till delivered to it. The Tribunal has not considered this aspect and has only relied on 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ems, to M/s Parle Products Ltd. The mode adopted was that products were manufactured by the assessee, but for and on behalf of M/s Parle Products Ltd., which cleared the goods under Central Excise Act. The parties had, by mutual agreement, decided that the assessee would also transport the finished products to the premises of M/s Parle Products Ltd., apart from processing, manufacturing the confectionery and other items, as also packing and other services. The agreement further provided, as follows:- "Mound Trading Co. Pvt. Ltd would avail Cenvat credit of Central Excise duty paid on the raw and packing materials, capital goods. Mound 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 asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 and forwarding agents of Parle. It appears that these facts were not brought to the notice of the Tribunal or the High Court and that is why a finding was recorded that the goods were not cleared on 'FOR Destination'. These facts were brought to the notice of the Rajasthan High Court in Mound Trading. The relevant portion of the judgment of the Allahabad High Court is reproduced below: "The appeal 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er place or premises from where the excisable goods are to be sold after their clearance from the factory. In the present case, the clear finding, which has been recorded both by the Commissioner (Appeals) and by the Tribunal, is that the sale had not taken place on an "FOR Destination" basis. Hence, the place of removal in the present case is the factory gate of the appellant and not the Depot of Parle Biscuits. As a matter of fact, as held by the Commissioner (Appeals), the liability on account of freight is borne by Parle Biscuits. No amount was borne by the appellant towards freight under the agreement with Parle Biscuits. Hence, in this view of the matter, the Tribunal was justified in 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, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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