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TMI Blog2023 (10) TMI 1464X X X X Extracts X X X X X X X X Extracts X X X X ..... agent or by whatever name it is called. Rule 2 (l) provides that the input service is the services used directly or in-directly, in or in relation to manufacture and clearance of the finished products up to the place of removal. Undisputedly, the place of removal in the present case is the direct shop in Kolkata and the claim of appellant that the duty is paid on the value determined on the basis of sale value from the direct shop is not disputed in the impugned order - The assessee has been discharging the Excise Duty on the bikes sold from direct shop at Kolkata at a value at which bikes are sold from Kolkata direct shop and not at any notional value at the time of dispatch of bikes from the factory gate. However adjudicating authority has not given any finding on this submission. There is no justification for holding that the direct shop at Kolkata from where the bikes were finally sold by the appellant is not the place of removal as per Rule 2 (qa) of the CENVAT Credit Rules, 2004. The expenses incurred on rent, repair and maintenance of the direct shop cannot be excluded from the assessable value for the payment of Central Excise Duty and for the same reason the service tax pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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; 5.4 Thus as per the definition it is clear that either the factory premises, or warehouse or depot or premises of the consignment agent can be the place of removal. Hence the issue largely depends upon the facts of the case rather than the interpretation of statute in the instant case. The appellant has submitted that the direct shop is the place of removal however they have at no point of time attempted to establish that the said shop is the factory premises, or a warehouse or any other premises wherein the excisable goods have been permitted to be stored without payment of duty, or depot or premises of consignment agent. The appellant is claiming their direct shop to be a depot, I find that if a depot of manufacturer is accepted as place of removal, then all the expenses incurred towards transport including freight, insurance etc from the factory gate to such place of removal alongwith other ancillary expenses incurred in mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntenance services were not related to the manufacturing activity and did not relate to the assessee premises as well. This resulted in irregular availing of CENVAT Credit of Rs. 18.72~Lakh. After making necessary investigations and enquiries a Show cause notice dated 14.09.2015 was issued to the appellant for the period April 2010 to March 2015, demanding CENVAT credit alleged to be wrongly taken by the appellant amounting to Rs 51,24,373/- in respect of the service tax paid on services of rent, repair and maintenance for its unit at Kolkata. A statement of demand for the period April 2015 to March 2016, demanding wrongly availed Cenvat Credit of Rs 12,91,099/- has been issued on 13.04.2016 2.3 As a sequel of the above stated show cause notice this statement of demand for recovery of Cenvat credit wrongly availed on the input services received at the direct shop in Kolkata have been issued asking the appellant to show cause as to why the period from April 2016 to March, 2017 Cenvat credit amounting to Rs. 6,59,762/- should not be demanded from them under Rule 14 of the Cenvat Credit Rules, 2004 along with interest as per Section 11AA of Central Excise Act, 1944 and also why the pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese are taken into consideration while demanding assessable value on which duty has been paid involvement of credit in respect of the same cannot be upheld. There is no requirement/mandate under the Central Excise Act, 1944 that the direct retail shop and get it notified. There is no suppression by the appellant. Interest is not chargeable under Section 11AA and 11AB and penalties under Section 11AC are not imposable as the issue involved is an interpretation of law. Appellant has taken the credit under bonafide view entertained by them. 3.3 Arguing for the revenue learned Authorized Representative reiterates the findings recorded in the impugned order and the Order-in-Original. 4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument. 4.2 The only issue involved in the present case is in a very narrow compass with regards to the interpretation of Rule 2 (l) of the Cenvat Credit Rules, 2004 as amended from time to time. Rule 2 (l) is reproduced bellow:- (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 ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on value as given in the valuation rules. What it basically means is the transaction value at which the greatest aggregate quantity of goods from the depots etc. are sold at or about the time of removal of the goods being from the factory/warehouse. If, however, the identical goods are not sold by the assessee from depot/consignment agent s place on the date of removal from the factory/warehouse, the nearest date on which such goods were sold or would be sold shall be taken into account. In either case if there are series of sales at or about the same time, the normal transaction value for sale to independent buyers will have to be determined and taken as basis for valuation of goods at the time of removal from factory/warehouse. It follows from the Valuation Rules that in such categories of cases also if the price charges is with reference to delivery at a place other than the depot, etc. then the actual cost of transportation will not be taken to be a part of the transaction value and exclusion of such cost allowed on similar lines as discussed earlier, when sales are effected from factory gate/warehouse. From the above it is quite evident that place of removal can be different f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Depot would be includible in the assessable value for the purposes of excise. However, the sale being at the Depot, the freight and insurance for delivery to the customers from the Depot would not be so includible as per the said judgment. 6. The Central Board of Excise and Customs have in consultation with Additional Solicitor General, decided not to file review petition against the said Supreme Court judgements. 7. Assessable value is to be determined at the place of removal . Prior to 1.7.2000, place of removal [section 4 (4)(b)-sub clauses (i), (ii) and (iii)], was the factory gate, warehouse or the depot or any other premises from where the goods were to be sold. Though the definition of place of removal was amended with effect from 1.7.2000, the point of determination of the assessable value under section 4 remained substantially the same. Section 4 (3)(c)(i)[as on 1.7.2000] was identical to the earlier provision contained in section 4(4)(b)(i), section 4 (3)(c)(ii) was identical to the earlier provision in section 4(4)(b)(ii) and rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, took care of the situation covered by the earlier s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit in respect of the services received at depot. The observations made by the Hon ble Supreme Court in case of MRF Ltd [1997 (92) ELT 3 (SC)] though in respect of the Section 4 and Valuation Rules prior to their amendment in year 2000 as worth noting: 25. We agree that it is for each assessee to decide where to sell his goods. He can choose to sell his goods at the gate, i.e., at the place of removal or he may choose to sell his goods through his selling organisation, as in the case of Madras Rubber Factory. Where the goods are sold in the course of wholesale trade through depots outside the place of removal, the assessee does no doubt incur expenses not only for transporting the goods from the place of removal to the depots but also on maintenance and running of depots but these expenses, according to Bombay Tyre International are on the same par as after-sale service charges and advertisement charges and hence cannot be deducted. . 65. The claim pertains to the interest on value of finished goods from the date the stocks are cleared from the gate till the date of sale through the depots. The contention of the assessee is that inasmuch as this is an expense incurred subsequent t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese 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. 4.11 In view of the above discussion there is no justification for holding that the direct shop at Kolkata from where the bikes were finally sold by the appellant is not the place of removal as per Rule 2 (qa) of the CENVAT Credit Rules, 2004. In our view the expenses incurred on rent, repair and maintenance of the direct shop cannot be excluded from the assessable value for the payment of Central Excise Duty and for the same reason the service tax paid in respect of these services received at depot cannot be denied. 4.12 In the case of M/s Metro Shoes Pvt. Ltd. (supra) similar issue came up for consideration before the Mumbai Bench and following was held- 6. Considered the submissions made at length by both sides and perused the records. The issue involved in this case is regarding the denial of credit of the input service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lized by him for the manufacture of final product and clearance of the same from the place of removal. This would indicate that the services which are rendered by various service providers during the course of transportation of the final product from the appellant s factory premises to their own showrooms located in various place, for e.g. GTA, warehousing facilities, C F agents, insurance, internet services, security, courier services, telecom services, pest control services, bank services etc. and service tax paid on such services would be eligible as credit being the services used by the appellant directly or indirectly in or in relation to the final product and the clearance of the same from the place of removal. As such, we find that the credit of the service tax paid by the service providers and charged to appellant till the sale of the goods from the retail showroom, the appellant is eligible to avail said credit as input service credit. 7. The duty confirmed on the service directly and wholly attributable to the goods manufactured by the appellant and the demand pertaining to the credit of the service tax on the overhead expenses for running the retail outlets are eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace of storage, the expression services in relation to storage up to the place of removal used in the inclusive part of the definition to input services becomes meaningless and it is not reasonable to adopt such an interpretation. 4.14 The finding recorded by the Commissioner (Appeal) in para 5.5 to the effect that if the direct shop is owned and operated by the appellant itself and it is the appellant s own showroom, then question of charging rent by M/s Frostees Exports would not arise, is without any basis and merits. The appellants can always have a show room which they own and operate from the rented premises taken on rent from M/s Frostees Exports at Kolkata. The finding recorded is contrary to the facts available on record, that appellant had been paying rent in respect of the premises from where their shop is operating in Kolkata. 4.15 Thus, there is no justification for not allowing the credit in respect of input services received at the direct shop in Kolkata from where the goods are finally sold by the appellant after clearance from the factory. There is no merit in the impugned order and the same is set aside. As the demand for duty is set aside the demand for interest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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