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TMI Blog2024 (10) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... ce only up to the place of removal .' Undisputedly in the present case the supplies were made on FOR basis and the value of the goods for payment of duty determined accordingly. In view of the clarification, it is clear that Cenvat credit in case where supplies were made on FOR basis to the premises of the customers Cenvat credit of the GTA Services shall be admissible. There are no merits in the impugned order - appeal allowed. - P. K. CHOUDHARY MEMBER ( JUDICIAL ) And SANJIV SRIVASTAVA MEMBER ( TECHNICAL ) Shri Atul Gupta, Advocate Ms. Ayushi Srivastava, Advocate for the Appellant Ms. Chitra Srivastava, Authorized Representative for the Respondent ORDER SANJIV SRIVASTAVA : This appeal is directed against Order-in-Original No.03/Commr./VNS/2018 dated 26.04.2018 passed by Commissioner of Central Excise CGST, Varanasi. By the impugned order following have been held as under:- ORDER (i) I hold that M/s Dalla Cement Factory (Unit of Jai Prakash Associates Ltd.), Post Dalla, Sonebhadra are not eligible for availment of Cenvat credit amounting to Rs.14,89,613/- on outward freight during the period 2012-13 to 2016-17 (upto August, 2016). (ii) I confirm the demand of Rs.14,89,613/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rage for subsequent removal from there for sale/supply to customers, (ii) Rs.9,43,578/- in respect of F.O.R. destination sales to customers from Dumps and (iii) Rs.5,46,035/- in respect of Freight Charges for transportation to customers from Factory on F.O.R destination basis. 50. First of all I will examine admissibility of Cenvat credit in respect of F.O.R. destination sales to customers from Dumps as well as admissibility of Cenvat credit in respect of Freight Charges for transportation to customers from Factory on F.O.R destination basis. I find that for deciding this issues various aspects like 'place of removal', 'freight for transportation of goods on F.O.R. destination basis', definition of input service in terms of Rule 2(l) of the Cenvat credit Rules, 2004, sales from the factory gate, applicability of CIRCULAR Nos.97/8/2007-ST DATED 23.08.2007, 988/12/2014-CX DATED 20.10.2014 AND 999/06/2015-CX DATED 28.02.2015 all have been discussed in the recent judgment of apex court in the case of COMMISSIONER OF CENTRAL EXCISE AND S.T. Versus ULTRA TECH CEMENT LTD, in Civil Appeal No.11261 of 2016, decided on 1-2-2018. Hence, I place reliance on the following judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice used for the purpose of outward transportation of the goods from factory to customer s premises is not input service within the ambit of Rule 2(l)(ii) of the Rules, 2004. It was further mentioned that the total Cenvat Credit claimed was in the sum of Rs. 25,66,131/- and the assessee was called upon to show cause as to why the said amount be not recovered and penalty be not imposed. The assessee submitted its reply to the show cause notice contesting the position contained therein. 2. After hearing, the Adjudicating Authority passed Order-in-Original dated August 22, 2011 holding that once the final products are cleared from the factory premises, extending the credit beyond the point of clearance of final product is not permissible under Cenvat Credit Rules and post clearance use of services in transport of manufactured goods cannot be input service for the manufacture of final product. Further, the Adjudicating Authority held that CBEC vide its Circular No. 97/8/2007-ST, dated August 23, 2007 has clarified the definition of place of removal. With respect to fulfillment of requirement of Circular dated August 23, 2007, it was held that the assessee has not produced any documenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 2(l) of the Rules, 2004 which reads as under : 2(l) input service means any service :- (i) Used by a provider of taxable service for providing an output services; or (ii) Used by the 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 and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal; 6. It is an admitted position that the instant case does not fall in sub-clause (i) and the issue is to be decided on the application of sub-clause (ii). Reading of the aforesaid provision makes it clear that those services are included which are use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransport service in particular. The second clause restricts transport service credit upto the place of removal. When these two clauses are read together, it becomes clear that transport services credit cannot go beyond transport upto the place of removal. The two clauses, the one dealing with general provision and other dealing with a specific item, are not to be read disjunctively so as to bring about conflict to defeat the laws scheme. The purpose of interpretation is to find harmony and reconciliation among the various provisions. 15. Credit availability is in regard to inputs . The credit covers duty paid on input materials as well as tax paid on services, used in or in relation to the manufacture of the final product . The final products, manufactured by the assessee in their factory premises and once the final products are fully manufactured and cleared from the factory premises, the question of utilization of service does not arise as such services cannot be considered as used in relation to the manufacture of the final product. Therefore, extending the credit beyond the point of removal of the final product on payment of duty would be contrary to the scheme of Cenvat Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amended definition. Relevant portion of the said circular is as under : ISSUE : Up to what stage a manufacturer/consignor can take credit on the service tax paid on goods transport by road? COMMENTS: This issue has been examined in great detail by the CESTAT in the case of M/s. Gujarat Ambuja Cements Ltd. vs. CCE, Ludhiana [2007 (6) S.T.R. 249 (Tri-D)]. In this case, CESTAT has made the following observations :- the post sale transport of manufactured goods is not an input for the manufacturer/consignor. The two clauses in the definition of input services take care to circumscribe input credit by stating that service used in relation to the clearance from the place of removal and service used for outward transportation upto the place of removal are to be treated as input service. The first clause does not mention transport service in particular. The second clause restricts transport service credit upto the place of removal. When these two clauses are read together, it becomes clear that transport service credit cannot go beyond transport upto the place of removal. The two clauses, the one dealing with general provision and other dealing with a specific item, are not to be read disj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er /consignor may claim that the sale has taken place at the destination point because in terms of the sale contract/agreement (i) 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; (ii) the seller bore the risk of loss of or damage to the goods during transit to the destination; and (iii) 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 up to 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 (in terms of the definition as under Section 2 of the Central Excise Act, 1944 as also in terms of the provisions under the Sale of Goods Act, 1930) occurred at the said place. 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., 2007 (6) S.T.R. 249 (Tribunal) and M/s. Ultratech Cement Ltd., 2007 (6) S.T.R. 364 (Tri.- Ahd.). Those judgments, obviously, dealt with un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) E.L.T. 394 (S.C.) and CCE vs. 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 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 28.02.2015 as the judgment 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 vs. 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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