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2016 (4) TMI 189 - CESTAT CHENNAI

2016 (4) TMI 189 - CESTAT CHENNAI - 2016 (43) S.T.R. 418 (Tri. - Chennai) - Cenvat credit of the service tax paid on transportation of goods - Whether Cenvat Credit is admissible in respect of service tax paid on transportation of the goods cleared from the places for delivery at the place of the buyer as per the terms of the contract of sale between the parties prior to 01.04.2008 and thereafter? - “from the place of removal” and “upto the place of removal” - Held that:- In substance, the servi .....

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does not disentitle the tax payer to the Cenvat credit of the service tax paid in respect of transport service availed to make delivery of goods at the destination which otherwise would make the rule of cascading effect otios and export shall be taxable. That is not permitted. Even for this reason also the assessees are entitled to Cenvat credit. - So far as the export of goods are concerned, following the aforesaid rationale, the service tax paid availing transportation service shall be adm .....

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ty concerned shall dispose of claims of the appellants on the issues of Cenvat credit granting fair opportunity of hearing to them and examining relevant evidence in each case following aforesaid guidelines shall pass reasoned and speaking order. If there are any other claims other than the Cenvat credit , C&F and CHA service, such issues shall be dealt by the authority in accordance with law considering pleadings, evidence and law. - E/41540/2013, E/42303/2013, E/42443/2013, - Final Order No. 4 .....

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chu Mariam Punoose, Adv., Shri N. Viswanathan, Adv., Shri M. Kannan, Adv., Shri S.R. Sankareshwaran, Adv., Ms. K. Ramya, Adv., Ms. Kamna Shrikanth, Adv., Shri S. Kannapan, Cons., Shri R. Parthasarathy, Cons., Shri K. Suresh Rao, Cons., Ms. R. Krithika, Adv. For the Respondent : Shri B. Balamurugan, AC (AR) ORDER Learned counsels appearing for the respective appellants agree that if following two questions are answered that shall serve the purpose of the present appeals on a common issue and all .....

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le the appellants to the Cenvat credit of the service tax paid on transportation of such goods from any of the above places or such tax refundable under Rule 5 of the Cenvat Credit Rules, 2004 wherever the Cenvat credit is not adjustible; and (ii) Whether Cenvat Credit is admissible in respect of service tax paid on transportation of the goods cleared from the places in question (i) above for delivery at the place of the buyer as per the terms of the contract of sale between the parties prior to .....

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portation service so availed was input service for export. But that was denied by Revenue. Further, wherever such tax was not adjustable towards Cenvat credit; refund thereof was claimed under Rule 5 of Cenvat Credit Rules, 2004. Such claims were denied by the department without any basis of law. 2.2 Appellants submitted that the law relating to input service as was in force prior to 01.04.2008 enacted in Rule 2 (l) of the Cenvat Credit Rules, 2004 read as under: Rule 2(l) of Cenvat Credit Rul .....

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dvertisement 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; [Emphasis supplied] 2.3 Appellants pleaded that transportation service is taxed on reverse ch .....

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nvat Credit Rules, 2004 in place of the term from the place of removal after 01.04.2008 and such term continues to be in statute book, which reads as under:- Rule 2(l) of Cenvat Credit Rules, 2004 (l) input service means any service,- (i) used by a provider of taxable service for providing an output service; or (ii) used by a 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 .....

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or capital goods and outward transportation upto the place of removal; 2.5 Appellants submitted that with the above background of law relating to input service , as appearing in statute book, the place where actual delivery of goods takes place occasioning transfer of property in goods thereat, the transport service should be construed to have been provided upto the place of removal . After 11.07.2014, the concept of place of removal was defined by Rule 2(qa) of Cenvat Credit Rules, 2004 to read .....

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ven the new definition of the term place of removal has not altered the common law relating to sale. Therefore, appellants are still entitled to get the Cenvat credit of the service tax paid on transport service availed to deliver their good at any place of delivery under the terms of the contract. 3. Supporting all the adjudications, Revenue says no Cenvat credit can be granted or refund thereof made when goods are delivered at the port of export or place of buyer. It was also the contention .....

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ovision of Central Excise Act, 1944 read with the provision contained in Rule 2(l) of Cenvat Credit Rules, 2004. Thereafter with effect from 11.07.2014 such expression has been defined by the Rule 2(qa) of Cenvat Credit Rules, 2004. At all times, the whole question boils down to what is called place of removal . That question can be answered with reference to Section 19 of Sale of Goods Act, 1930. For convenience of reading, the said section is reproduced as under:- Section 19 of Sale of Goods A .....

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ons 20 to 24 are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer. 6. Keeping in view the basic structure of the common law as to ownership of the goods, property therein and transferability thereof, the CBE&C vide its Circular No.999/6/2015-Cx., dated 28.02.2015 came out with guideline as to how to construe the meaning of the term place of removal . So far as the export is concerned, answer is given in para 6 of th .....

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turer exporter and place of removal would be this Port/ICD/CFS. Needless to say, eligibility to CENVAT Credit shall be determined accordingly. [Emphasis supplied] 7. So far as the normal domestic sale is concerned, the answer is given by para 3 of the circular as under:- 3. The matter has been examined. It is seen that section 23 of the Sale of Goods Act, 1930 provides that where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether na .....

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nd the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not for the purpose of transmission to the buyer, or delivery of the goods to a wharfinger for safe custody, is prima facie deemed to be a delivery of the goods to the buyer. [Emphasis supplied] 8. It is further observed that Board Circular number 988/12/2014-Cx., dated 20.10.2014 has clarified the issue dealing with the judicial pronouncements as to the place of removal as under:. (3) The operative part .....

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131 (Tri.-Del.)]. This principle was upheld by the Hon ble Supreme Court in case of M/s. Escorts JCB Limited v. CCE, New Delhi [2002 (146) E.L.T. 31 (S.C.)]. [Emphasis supplied] 9. Added to the above, the Boards Circular No.97/8/2007-ST., dated 23.08.2007 has dealt the issue of place of removal in para 8.2 reading as under:- 8.2 In this connection, the phrase place of removal needs determination taking into account the facts of an individual case and the applicable provisions. The phrase place .....

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al means - (i) a factory or any other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be stored 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.- It is, therefore, clear that for a manufacturer/consignor .....

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m 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 ser .....

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12/2004-Cx., dated 28.10.2014 and Circular No.999/6/2015, dated 28.02.2015 follow the concept that when property in goods is transferred under the Sale of Goods Act, 1930 as is envisaged by Section 19 thereof, at that point only, removal of the goods from the control of the seller is said to have occurred. Seller parts has right at that point to buyer at that time and detaches detaching himself from his right over the goods. His right accordingly extinguishes. The situations are:- (1) Where th .....

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s as to the time at which the property in the goods is to pass to the buyer. 11. Precisely, sales is outcome of contract of sale of specific or ascertained goods. The property therein is transferred to the buyer at such time as the parties to the contract intend to do so. This is mandate of Section 19 (1) of the Sale of Goods Act, 1930. The intention of the parties is elucidated by sub-section (2) thereof. That can be ascertained having regard to the terms of the contract, the conduct of the par .....

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refore, there should not be any ambiguity by the Adjudicating Authority to understand the concept of sale where that takes place and the intention of the parties entitling the seller of the goods to the Cenvat credit of the service tax paid on transportation of the goods to the place of export or for delivery thereof at the place agreed between the parties. 13. It may further be stated that Rule 2 (r) of Cenvat Credit Rules, 2004 1994 read with Rule 2 (1)(d) of the Service Tax Rules, 1994 explai .....

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