Shree Cables & Conductors Pvt. Ltd vs C.C.E & S.T.-Bhopal

Date of Pronouncement: 29/09/2015

Appeal No. E/55204/2014-EX(SM), E/55205/2014, E/55206/2014

(Arising out of OIA No. BPL No. EXCUS-000-APP-069-14-15 dated 27.6.2014, BPL No. EXCUS-000-APP-070-14-15 dated 27.6.2015, BPL No. EXCUS-000-APP-071-14-15 dated 27.6.2014, BPL No. EXCUS-000-APP-072-14-15 dated 27.06.2014 Passed By Commissioner (Appeals) Customs, Central Excise & Service Tax, Bhopal, M.P.)

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

2. Whether it would 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 Department Authorities?

Copper Strips Pvt. Ltd.

Madhya Pradesh Cupro Metals Pvt. Ltd.

Shree Cables & Conductors Pvt. Ltd. Appellant

Vs.

C.C.E & S.T.-Bhopal Respondent

Appearance:

Present for the Appellant: Shri B.S. Rajesh Agrajit, Advocate

Present for the Respondent: Shri M.R. Sharma, DR

Coram: Honble Ms. Sulekha Beevi C.S., Member (Judicial)

Final Order No. 52989-52991/2015

Per: Sulekha Beevi C.S.

1. The issue involved in the above appeals being the same, they were heard together and are disposed by this common order.

2. Brief facts are as under:

2.1 The appellant is manufacturer of Articles of Copper and different types of Copper Components. They hold Central Excise registration and are availing Cenvat credit. During audit, it was observed that appellants have wrongly availed credit on service tax paid on GTA Services in respect of outward transportation services. Therefore show cause notices were issued, which after adjudication confirmed the disallowance of credit and ordered for recovery of the same alongwith interest and imposed equal amount of penalty. In appeal the same was upheld. Aggrieved, the appellants are before the Tribunal

3. On the side of the appellant, the learned Counsel for appellant submitted that prices on which the goods are sold are FOR destination basis and that appellants are under contractual obligation to deliver the manufactured products at the door of the customer and the cost of transport of the final product upto the door of the customer is borne by the appellants. That the contract / transaction is complete only on safe delivery of the products at the customers door step. That ownership in goods remain with appellants till delivery and they are also responsible for the security/insurance of the goods till the goods are delivered to the customer at the door. Therefore, that central excise duty is paid on the value of goods at the door step of the customer, and being so, the outward freight upto destination is input service for which they are eligible for credit. To fortify his arguments, the learned counsel has noted the judgments in Commissioner of Excise & Customs Vs. Parth Poly Wooven (P) Ltd. 2012 (25) STR 4 Guj. rendered by the High Court of Gujarat. It was also argued by the Counsel that the Commissioner (Appeal) in the case of M/s Shree Cable & Conductor (P) Ltd for the period September 2009 to October 2010 following the judgments of Gujarat High Court held that credit is admissible on out ward transport services after discussing FOR destination character of the transportation services undertaken by appellants, allowed the appeal. Though this order dated 15.01.2013 was brought to the notice of the first appellate authority, the Commissioner has refused to apply the same and instead has rejected the appeal.

4. Against, this the learned DR supported the impugned order and argued that the Commissioner has rejected the appeal by following the dictum laid in Central Excise, Kolkatta Vs. Vesuvious India Ltd  2013-TIOL-HC-KOL-ST, where it was held that the services rendered to the customer for the purpose of delivering the goods at the destination is neither covered by the definition of input service prior to 1.4.2008, nor is it covered after 1.4.2008. That credit has been rightly disallowed.

5. On perusal of records, it is correct that for the period from September 2009 to October 2010, in the case of M/s Shree Cable & Conductor (P) Ltd who is appellant in E/55206/2014-EX(SM) herein, the Commissioner (Appeals) has allowed the credit on outward transportation services. The present appeal of M/s Shree Cable & Conductor related to the period October 2011 to July 2012. Undisputedly the transactions are FOR destination and the value of the goods include cost of transportation upto destination plus insurance. The Board has issued a Circular No. 97/6/20C-7-ST dated 23.8.2007, wherein it is clarified that the GTA service availed for outward transportation of the goods from the factory/depot to the customers premises would be treated as input service only when the place of removal of the goods is the customers premises or in other words the sale transaction is on FOR destination basis. As per this Circular for treating a transaction as on FOR basis, the under mentioned conditions are to be satisfied.

(i) the ownership of goods and the property in the goods remain with the seller of the goods till the delivery of the goods in good condition to the door step of the purchaser

(ii) the seller bears the risk of loss of or damage to the goods during transit to the destination; and

(iii) the freight charges are integral part of the price of goods.

Thus as per the clarification, if assessable value of the goods on which duty is paid is the FOR destination price, the credit on the service tax paid on freight upto buyers door step would be admissible.

6. The Honble High Court in the case of CCE Vs. Parth Poly Wooven (P) Ltd, (supra) has categorically held that the outward transport service used by the manufacturers for transportation of finished goods from the place of removal upto the premises of the purchaser is covered within the definition of input service provided in Rule 2(1) of the Cenvat Credit Rules, 2004. In Vesuvious India Ltd. (supra) the Honble High Court of Calcutta has taken the view that credit for outward transportation charges or taxes paid in regard thereto is claimable only with regard to those transports which were made from one place or removal to another place of removal. In the said case, the Honble High Court has not made nay discussion as to when freight charges are included in the assessable value and is therefore distinguishable. The Honble Court has therein observed that Circular of the Board dated 23.8.2007 gives relaxation in this regard and when Board has made relaxation, the assessee is certified to take the benefit thereof.

7. In view thereof, the dictum laid in CCE Vs. Parth Poly Wooven (P) Ltd squarely covers the case in hand, the facts being similar. Following the ratio laid in the said judgment I am of the considered opinion that credit is admissible.

8. In the result, the impugned orders are set aside. Appeals are allowed with consequential reliefs if any.

(Pronounced on 29/09/2015)

(Sulekha Beevi C.S.)

Member (Judicial)

K. Gupta

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