M/S. Triveni Engineering vs Commissioner Of Central Excise

[Arising out of Order-In-Appeal No. 281/CE/MRT I/ 2012 dated 25/09/2012 passed by Commissioner of Central Excise (Appeals), Meerut]

For approval and signature:

Honble Mr Ashok Jindal, 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?

M/s. Triveni Engineering Appellants

And Industries Ltd.

Vs.

Commissioner of Central Excise Respondent

& ST, Meerut

Appearance:

Shri R Krishnan, Advocate for the Appellants

Shri R K Mishra, AR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing : 16.06.2015

Date of decision: 25.06.2015

ORDER NO. FO/ 52015 /2015-Ex(SM)

Per Ashok Jindal :

The appellant is in appeal against the impugned order denying Cenvat Credit of Service Tax paid on transit insurance payment in respect of insurance of goods during transit from the factory to customers premises.

2. The facts of the case are that appellant is manufacturer of sugar who availed Cenvat Credit of duty paid on inputs and capital goods of Service Tax paid on input services. During the period 2006-2007 to 2010-2011, the appellant availed Cenvat Credit of service tax paid on transit insurance in respect of insurance of goods during transit from the factory to the customers premises. The Revenue is of the view that as place of removal is factory gate, therefore, appellant is not entitled to take Cenvat credit of insurance premium. Therefore, impugned proceedings were initiated against the appellant and Cenvat Credit on insurance premium was denied. Consequently, demand of duty was confirmed along with interest and equivalent amount of penalty was imposed. Learned Commissioner (Appeals) reduced the quantum of demand and penalty by dropping the demand for the period prior to 01.04.20 08. Aggrieved from the said order, appellant is before me.

3. Learned Counsel of the appellant submits that the sale of sugar by the appellant was on FOR destination basis. Therefore, the ownership of the goods remained with the appellant and they have complied with the condition of CBEC Circular No. 97/09/07 dated 23.8.07. As during transit of goods from the factory to the customers premises, the risk of loss of goods or damage to the goods was of the appellant and for the freight up to the customers premises was integral part of the price of goods as the sales were FOR destination basis. He further submits that in case of sales on FOR destination basis, the places of removal is customers premises. Therefore, he is entitled to take Cenvat Credit on insurance premium during transit. To support this contention, he relied on their own case wherein vide Final Order No. 50886/15 SM (BR) dated 17.3.15, this Tribunal has held that when the goods were sold on FOR destination basis, the place of removal is the destination of goods. He further submits that insurance charges reimbursed by customers does not bar the appellant to take cenvat credit on insurance charges. To support this contention, he relied on the decision of Tribunal in the case of Suzuki Motorcycle (I) Pvt. Ltd. vs. CCE, Delhi III [2015 (38) STR 209) (Tri-Del)].

4. On the other hand, learned AR opposed the contention of learned Counsel and submits that as the transit insurance premium is not a part of assessable value, therefore, appellant is not entitled to take Cenvat credit as held by Honble Chhattisgarh High Court in the case of Lafarge India Ltd. reported in [2014 (307) ELT 7 (Chhattisgarh)]. He also relied on decision of Apex Court in the case of M/s. Roofit Industries Ltd. reported in [2015-TIOL-87-SC-CX]. He took the shelter of decision of Kohinoor Biscuit Products reported in [2015 (37) STR 567 (Tri-Del)] which has been confirmed by Allahabad High Court as reported in [2015 (38) STR J 124 (All)].

5. I have considered the submissions of both the sides.

6. It is not in dispute that as per sale contract sugar was required to be delivered at the customers destination. Moreover, it is also a fact that rate of duty of sugar is specific. The stand of the Revenue is that when the insurance charges has been reimbursed to the appellant, they are not entitled to take cenvat credit thereon and to support this contention, shelter of decision of Lafarge India Ltd. (supra) and Kohinoor Biscuit Products (supra) was taken. In fact in the case of M/s. Roofit Industries Ltd. (supra), the issue of valuation was there wherein the Honble Apex Court held that in case of goods delivered at the customers place, the cost of transportation should be added in the assessable value, then it is entitled to take cenvat credit. Those goods are delivered to the customers place, in that case, transportation cost is to be added in the assessable value. But the Honble Apex Court has not decided the issue whether the assessee is entitled to take cenvat credit or not. Therefore, the said case law is not relevant to the facts of this case. Further, in the case of Lafarge India Ltd. (supra), the issue before the Honble High Court was that if under the terms of contract, the sales took place at destination, then place of removal and service tax paid on GTA service for transportation of goods upto the destination might be available for credit but in that case, also the Honble High Court has not decided the issue whether the appellant was entitled to take cenvat credit on transportation charges if same are reimbursed by the buyers.

And in that case the issue was of goods transportation service, issue of entitlement of input service credit on goods transportation service. Further in the case of Kohinoor Biscuit Products (supra) this Tribunal has given a clear cut finding that if manufacturer clears the goods to depots of some other persons, those persons cannot be treated as place of removal for the manufacture unless sales are on FOR destination basis. Admittedly, in the case in hand sales are on FOR destination basis. Infact decision of this case support the case of the appellant. Further, I find that a similar issue came up before the Tribunal in the case of Suzuki Motorcycle (I) Pvt. Ltd. reported in [2015 (38) STR 209 (Tri-Del)] wherein this Tribunal has observed that merely because the appellant stand reimbursed part of the advertisement expenses from their parent company, does not mean that appellant would become disentitled for the service tax actually paid by them and this Tribunal allowed the cenvat credit on advertisement expenses which has been reimbursed by the parent company. In this case, insurance expenses have been paid by the appellant for transportation of the goods upto the place of buyer and same has been reimbursed by the buyer of the goods.

Therefore, the facts of the case in hand are similar to the facts of Suzuki Motorcycle (PI) Pvt. Ltd. (surpa). In these circumstances, I hold that appellant is entitled to take cenvat credit of insurance premium charges paid by them when there is no dispute that the goods were delivered at the customers place. In these terms, I do not find any merit in the impugned order. Same is set aside. Appeal is allowed with consequential relief.

( Pronounced in the open court on 25.06.2015 )

( Ashok Jindal ) Member(Judicial)

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