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2016 (7) TMI 150 - CESTAT NEW DELHI

2016 (7) TMI 150 - CESTAT NEW DELHI - 2016 (46) S.T.R. 52 (Tri. - Del.) - Cenvat Credit of service tax paid on GTA services - outward transportation of goods - Held that:- the place of removal is to be considered as the buyer’s premises and, hence, this gets covered within the definition of input service under Rule 2 (l), since the outward transportation service is used by the manufacturer for clearance of the products up to the place of removal. Consequently the Cenvat credit will be allowable .....

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ainst the order-in-appeal passed by Commissioner (Appeals), Raipur dated 11/09/2014 in which he upheld the denial of Cenvat credit to the tune of ₹ 85,324/-. It was already confirmed by the Original Authority vide his order dated 28/05/2014. 2. The appellant is a manufacturer of excisable goods falling under Chapter 72, 73, 84 and 86 of the Central Excise Tariff. The appellant is also liable to pay service tax on transportation of goods by road service towards inward transportation of inpu .....

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cannot be considered as input service within the definition given in Rule 2 (l) of the Cenvat Credit Rules, 2004, since this Rule permits credit on service tax paid for outward transportation only up to the places of removal which in this case is the factory gate. It is also pertinent to note that the demand in this case pertains to the Cenvat credit taken in the month of March, 2011. 3. Heard Shri Abhishek Boob, learned Advocate for the appellant as well as Dr. S.K. Sheoran, learned DR for the .....

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which is as follows :- 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 of removal has not been defined in Cenvat Credit Rules. In terms of sub-rule (1) of Rule 2 of the said rules, if any words or expressions are used in the Cenvat Credit Rules, 2004 and are not defined therein but are defined in the Central Excise Act, 1944 or the Finance Act, 1994, they shall have the s .....

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lace 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, the eligibility to avail credit of the service tax paid on the transportation during removal of excisable goods would depend upon the place of removal as per the definition. In case of a factory gate sale, sale from a non-duty paid warehouse, or from a duty paid depot (from where the excisable goods .....

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er 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 .....

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credit. He also placed reliance on the following case laws : Ambuja Cements Ltd. vs. Union of India reported in 2009 (14) S.T.R. 3 (P&H) and ABB Ltd. vs. CCE & ST, Bangalore reported in 2009 (15) S.T.R. 23 (Tri. - LB). 4. The learned DR appearing for the Revenue brought it to my notice that the CBEC has issued further Circular No. 988/12/2014 - CX. dated 20/10/2014 which has touched upon the issue in the present dispute. He specifically drew my attention to para 3 and para 6 which reads .....

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n 2002 (143) E.L.T. 131 (Tri. Del.). This principle was upheld by the Honble Supreme Court in case of M/s Escorts JCB Limited vs. CCE, New Delhi reported in 2002 (146) E.L.T. 31 (S.C.). 6. It is reiterated that the place of removal needs to be ascertained in term of provisions of Central Excise Act, 1944 readwith provisions of the Sale of Goods Act, 1930. Payment of transport, inclusion of transport charges in value, payment of insurance or who bears the risk are not the relevant considerations .....

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the same as input service. He further relied upon the decision of the Hon ble High Court at Calcutta in CCE, Kolkata - VI vs. Vesuvious India Ltd. reported in 2014 (34) S.T.R. 26 (Cal.) in which it has been held that such credit is inadmissible. 6. Since the dispute revolves around the definition of input service, the said definition is reproduced below for ready reference :- The definitions as they stood before 01/4/2008 are as under :- Rule 2 (1) defines input service means any service (i) us .....

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age up to 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 up to the place of removal. [The word from was substituted by the word upto made effective from 01/04/2008 by Notification No. 10/2008-CE (NT) dated 01/3/2008]. 7. The place o .....

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er place or premises from where the excisable goods are to be sold after their clearance from the factory ; from where such goods are removed . 8. It is to be noted that the dispute pertains to the credit taken in the month of March 2011. Accordingly the definition of input service after its amendment 01/4/2008 is to be considered. The service tax paid on outward transportation up to the buyers premises will be eligible for Cenvat credit and input service in those cases where the place of remov .....

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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 ; 10. On a perusal of the purchase order I am convinced that it is indeed so. In Circular dated 20/10/2014 the CBEC has further suggested to determine the place of removal with reference to the Sale of Goods Act, 1930 as has been referred to at para 17 of the Associated Strips Ltd. vs. CCE, New Delhi [ .....

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ods Act, 1930. Section 19 of the Sale of Goods Act provides that where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. Intention of the parties are to be ascertained with reference to the terms of the contract, the conduct of the parties and the circumstances of the case. Unless a different intention appears; the rules contained in Section 20 to 24 are provi .....

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Such assent may be expressed or implied and may be given either before or after the appropriation is made. Sub-section (2) of Section 23 further provides that where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purposes of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract . Applying this to the pre .....

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