C.C.E. & S.T. Indore vs M/S Man Trucks India Pvt. Ltd

[Arising out of Order-In-Appeal No. IND/CEX/000/APP/79/2014 dated: 30.04.2014 passed by CCE Indore]

For approval and signature:

Hon'ble Mr. S.K. Mohanty, Member (Judicial)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

C.C.E. & S.T.  Indore ...Appellant

Vs.

M/s Man Trucks India Pvt. Ltd. Respondent

Appearance:

Mr. G R Singh, DR for the Appellants

Mr. Bharat Raichandani, Advocate for the Respondent

CORAM:

Hon'ble Mr. S.K. Mohanty, Member (Judicial)

Date of Hearing.22.05.2015

FINAL ORDER NO. 52999 /2015

Per S. K. Mohanty (for the Bench):

The Revenue is in appeal against the impugned order dated 13.05.2014 passed by the Commissioner (Appeals) Indore, wherein Cenvat Credit of service tax paid on the freight amount was allowed in favor of the respondent. The grievance of Revenue in this appeal is that service tax paid on the freight charges for transportation of goods from the depot of the respondent to its buyers premises will not be eligible for Cenvat benefit, because as per Section 4(3)(c) of Central Excise Act, 1944, in case of a manufacturer of excisable goods, the place of removal is either the factory gate, or the depot from where the goods are sold to the customer; and not the buyers premises where the title/ ownership of goods passed on.

2. The Ld. DR appearing for the Revenue reiterates the submissions recorded in the grounds of appeal and further submits that with regard to Commercial Invoices bearing nos. 45186444 to 45186448 all dated 31.03.2010 issued from the depot, the respondent had recovered the transportation charges from the consignee and such charges since been not borne by the respondent, taking of Cenvat Credit of service tax paid on such charges is not eligible for Cenvat Credit. To support his above stand, the Ld. DR has cited the judgment of Honble Kolkata High Court in the case of CCE Kolkata VI vs Vesuvious India Ltd. reported in 2014 (34) STE 26 (Cal).

3. Per contra, Ld Advocate appearing for the Respondent submits that as per the agreement entered into between the respondent and the buyer, the goods had been delivered on FOR basis at the premises/site of the buyers and all the charges including the transportation and central excise duty are integrated in the assessable value, on which the central excise duty liability has been discharged by the respondent. According to the Ld. Advocate, since, the transit insurance, freight charges have been borne by the respondent and the ownership of the goods transferred to the buyers at their end, the service tax paid on the transportation charges is eligible for Cenvat Credit in terms of Rule 2(l) of the Cenvat Credit Rules, 2004 read with Circular No. 97/8/2007-ST dated 23.8.2007 issued by the CBEC. In response to the above submissions of the ld. DR, the ld. Advocate submits that the respondent have not taken any Cenvat Credit wherever the freight charges have been recovered from the buyers.

4. Heard, the Ld. Counsels for both the sides and perused the records.

5. Rule 3 of the Cenvat Credit Rules, 2004 entitles a manufacturer to take Cenvat Credit of Service Tax paid on input taxable services received by the manufacturer or service provider. The term Input Service defined in Rule 2(l) of the said rules, takes within its ambit, the outward transportation charges up to the place of removal for the purpose of taking Cenvat Credit. The term place of removal has not been defined in the said rules. The said term has been defined in Section 4(3)(c) of the Central Excise Act, 1944 to mean a factory, depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearances from the factory. Reading of the underlined portion makes the position clear that other than the place of removal indicated in Section 4(3)(c) of the Act, the buyers premises, where the ownership of the goods is transferred, should also be considered as the place of removal.

6. In the present case, the available records/documents clearly depict that the ownership of goods have been transferred from the respondent to the buyers at their site; the respondent bore risk of damage to the goods during transit; and that the freight charges were an integral part of the price of goods sold by the respondent to its buyers .Therefore, in this situation, the buyers premises will qualify as place of removal for the purpose of taking Cenvat Credit of service tax paid on transportation of goods.

7. I find that upon proper analysis of the Cenvat provisions, Central Excise statute and the interpretation placed by various judicial forums on such statutory provisions, the CBEC vide Circular dated 23.8.2007 has clarified that customers site where the ownership of the goods have been transferred, should be considered as place of removal for the purpose of taking cenvat credit. The relevant portion of the said circular is extracted herein below:

However, there may be situations where the manufacturer/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.

8. I find that the case of the respondent is squarely covered by the decision of this Tribunal in the case of Palco Metal Ltd. vs CCE, Ahmedabad reported in 2012 (280) ELT 299 and CCE, Panchkula vs Jamuna Auto Industries Ltd. reported in 2013 (31) STR 587 (Tri. Del) wherein, the issue decided pertains to the post amended definition of the input service. The judgment cited by the Ld. DR in the case of Vesuvious India Ltd. (supra) has no application to the facts of the present case inasmuch as the issue decided therein is with regard to transportation up to the place of removal, which is not the issue in the present case, since the present case relates to eligibility of Cenvat Credit on the transportation charges paid on the goods, where the ownership transferred at the buyers end. Hence, the cited judgment is distinguished.

9. In view of above, I do not find any infirmity in the impugned order, and as such, the appeal filed by the Revenue is dismissed. The cross objection filed by the respondent is also stands disposed of.

(Dictated and pronounced in open court)

(S.K. Mohanty)

Member(Judicial)

Neha

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