TMI Blog2016 (7) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... is port and not factory gate. Therefore, in the present case, M/s MSPL Ltd. are entitled to the Cenvat credit for all the input services for bringing the goods upto the port of shipment. Revenue's appeal dismissed - Assessee's appeals accepted - Decided in favor of assessee. - ST/224/2008-DB, ST/411/2008-DB, ST/483/2009, ST/484/2009 & ST/485/2009-DB - Final Order Nos. 20332 to 20336/2016 - Dated:- 20-1-2016 - Shri M.V. Ravindran, Judicial Member and Shri Ashok K. Arya, Technical Member Mr. M.S. Nagaraj, Advocate - For the Assessee/Appellants Mr. N. Jagdish, A.R. - For the Appellant/ Respondent ORDER There are total five appeals; Appeals Nos. ST/483 to 485/2009 filed by M/s MSPL Ltd. E.O.U. I II and appeals Nos. ST/224/2008 and ST/411/2008 filed by the Department - Revenue. The subject matters in all these appeals are related; therefore, these are being decided by this common order. Brief details of these appeals are given in the Tables 1 2 below : Table 1 - Appeals filed by M/s MSPL Ltd. UNIT IMPUGNED ORDER APPEAL Nos. CENVT/ST PENALTIES (RS) PER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued as follows : The Appellants submit that they have taken CENVAT Credit on Sampling Analysis and Testing service, Audit Service, Commercial Industrial Construction Service, Manpower Supply, Security Service, Maintenance and Repair of plant and machineries, CHA service, Port Service, Cargo Handling Service and Goods Transport Agency service received and used in the EOU and for export of iron ore. The Commissioner has disallowed the cenvat credit on the following grounds: (i) The activity of extraction, crushing, grinding, screening, sorting, washing, grading, etc of iron ore undertaken by the EOU does not amount to manufacture under Section 2 (f) of the Central excise Act, 1944 and no duty of excise would be payable under Section 3 of the CEA, 1944. (ii) Iron ore falling under CHH 2601 attracts Nil rate of duty under Notification No 4/2006 CE dated 1.3.2006 and therefore, the provisions of Rule 6 of the CENVAT Credit Rules, 2004 are applicable and the contention that Notification No 4/2006 CE dated 1.3.2006 is not applicable to EOU is not acceptable. (iii) The contention that FOB Value is the transaction value, the exporter is the owner of the export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product having a distinctive name, character or use and shall include processes such as refrigeration, re-packing, polishing, labelling, re-conditioning, repair, remaking, refurbishing, testing, calibration, re-engineering. Manufacture, for the purpose of FTP, shall also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining. 4.5. The definition of manufacture as given in the FTP issued under the Foreign Trade (Development and Regulation) Act, 1992 governing the 100% EOUs for the purpose of manufacture and export of goods comes within the inclusive definition of manufacture under Section 2 (f) of the Central Excise Act, 1944. 4.6. The Appellants rely on: (i) Tirumala Impex Vs CCE, Visakhapatnam [2010 (251) ELT 240 (T)] (ii) Hewlett Packard India Sales (P) Ltd Vs CCE, Bangalore [2009 (241) ELT 545 (T)] 4.7 . Goods produced in EOU are not exempted goods: The SCN and the impugned orders state that iron ore classifiable under CH 26.01 are exempt under Notification No 4/2006 CE dated 1.3.2006. The Appellants submit that Notification No 4/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere M/s MSPL Ltd. argue that the Hon ble Supreme Court in the case of CCE Vs Accurate Meters Ltd. - 2009 (235) ELT 581 (SC) in the context of interpretation of place of removal as defined in Section 4 (3) (c) of the Central Excise Act, 1944 has held that indisputably, a place where the excisable goods are sold can be a place of removal. 5.1.2. The transaction of sale is thus at the port where the goods cross the customs frontiers. 5.2. With reference to the place of removal , the appellants rely on CBEC Circular No 97/8/2007 ST dated 23.8.2007 in the context of CENVAT Credit of service tax paid on the GTA service. The Board has clarified that the manufacturer/consignor may claim that the sale has taken place at the destination point 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 delivery of the goods in acceptable condition to the purchaser at his door step; (ii) the seller bore the risk of loss of damage to the goods during the transit to the destination; and (iii) the freight charges were an integral part of the price of the goods. In such cases the credit of service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.2008 sanctioning refund of CENVAT credit of ₹ 18,43,805/- and ₹ 21,38,534/- along with interest to MSPL EOU I. The said order has not been set aside and has attained finality. With implementation of the directions and order of the Commissioner (Appeals), the Appeal filed by the Revenue is infructuous and is required to be dismissed summarily. Similarly, the Assistant Commissioner of Central Excise,Bellary has passed Order-in-Original No 30/2008 dated 26.4.2008 sanctioning refund of CENVAT credit of ₹ 53,533/- to MSPL EOU-I. The Appellants submit that the orders sanctioning refunds have not been challenged and have attained finality. Therefore, the Appeals filed by the Department are infructuous and is required to be dismissed. 7. In case of appeals Nos. ST/483 to 485/2009, the Revenue s main stand is that the credit of service tax paid on various input services like sampling and analysis audit service , security agency supply maintenance and repair , technical testing calibration , commercial or industrial construction and transportation of goods by road by a goods transport agency services cannot be allowed in the light of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subject matter in all the orders passed by the Commissioner of Central Excise. In fact, many of the services appear to be not covered under the definition of input service and the assesee are not eligible to take credit of service tax paid by them. The Commissioner (Appeals) ought to have taken into consideration that all the services mentioned may not be eligible to be treated as input service as defined under Cenvat Credit Rules, 2004. The Commissioner (Appeals) was to remand the case back to the original adjudicating authority to quantify the admissible refundable amount in respect of the qualifying input services only. 8. We have carefully considered all the facts as available on record in these five appeals and the submissions of both the sides. 9. In all these five appeals, the subject matters are inter-related. The Revenue (Department) is in appeal (Nos. ST/224 411/2008) and is pleading to deny the refund of Cenvat credit to M/s MSPL Ltd. where Commissioner (Appeals) allowed the Cenvat credit to M/s MSPL Ltd. M/s MSPL Ltd. have filed three appeals (Nos. ST/483 to 485/2009) where Cenvat credit has been disallowed and duty demand along with in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocure their raw materials on payment of duty also. As a trade facilitation measure, it has been decided to allow EOUs (including STP/EHTP units) an option either to procure the goods from DTA without payment of duty under CT-3 procedure or to procure the goods on payment of duty and avail CENVAT credit. The credit could be utilized by them as per the Cenvat Credit Rules, 2004, including payment of duty on their DTA sales. 5. The EOUs can also take credit of the 5. Service Tax borne by them which will in effect provide them relief from Service Tax [Para 6.1) of the FTP]. 6. For availing CENVAT Credit, the procedure 6. and provisions as specified in CENVAT Credit Rules, 2004, will apply. However, as regards job work, the EOU/EHTP/STP shall not be allowed to send the goods directly to the job worker without bringing the goods to the units (as the goods will then not acquire the status of EOU goods) and will be governed by Board s existing Circulars on this issue relating to EOU/EHTP/STP. 7. Rule 17 of the Central Excise Rules, 7. 2002, has been amendment suitably by Notification No. 18/2004-C.E. (N.T.), dated 6-9-2004, to allow EOU/EHTP/STP uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Credit Rules, 2004 (emphasis supplied). The relevant portion of Rule 6(6)(v) reads as under : (6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either - (i) ..... (ii) ..... (iii) ..... (iv) ..... (v) cleared for export under bond in terms of provisions of the Central Excise Rules, 2002 . (emphasis supplied) The petitioners had manufactured both dutiable and exempted final product (packaged software and printed books respectively). The petitioner has taken credit on input used in the manufacture of dutiable as well as exempted final products. If the exempted products are exported outside India the provisions of Rule 6(6)(v) of the Cenvat Credit Rules are applicable. Therefore, the bar provided under Rule 6(1) and the liability created under Rule 6(3)(b) of the Cenvat Credit Rules, 2004 are not attracted. By denying to the petitioner from exporting the printed books under bond what the respondents want to do is in fact to levy 10% on the sale price of the printed books in te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r alia in respect of the excisable goods removed without payment of duty for export under bond in terms of Central Excise Rules, 2002. Considering the language of Rule 6(6)(v) of the Cenvat Credit Rules, 2004 the petitioners are entitled to avail Cenvat credit in respect of the inputs used in the manufacture of the final products being exported irrespective of the fact that the final products are otherwise exempt. 8. xxx xxx 9. ... Rule 6(6) is precisely needed only when the final products are exempt from payment of duty. In this context the Revenue itself has accepted that under the provisions of Cenvat Credit Rules, 2002 there were provisions for removal of exempted goods under bond but the same was not available with effect from 9th September, 2004 under Cenvat Credit Rules, 2004. We may reproduce Rule 6(5) of the Cenvat Credit Rules, 2002 (emphasis supplied) which reads as follows : (5) The provisions of sub-rule (1), sub-rule (2), sub-rule (3) and sub-rule(4) shall not be applicable in case the exempted goods are either - (i) cleared to a unit in a free trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licy of the Government that the benefit of duty paid on input is available as credit in respect of certain exempted goods as well as the exempted goods exported under bond. The minor change in the wordings of Rule 6(6) of the Cenvat Credit Rules, 2004 by using the term excisable goods instead of exempted goods is that the term exempted goods may not cover the dutiable goods which are exported under bond. Therefore, in order to widen and cover both dutiable and exempted goods exported under bond, Rule 6(6) of Cenvat Credit Rules, 2004 uses the expression excisable goods . As an illustration, if a car which is dutiable is exported under bond without payment of duty there may be doubt as to whether credit on the inputs will be available, since the car is cleared without payment of duty under Rule 6(5) of Cenvat Credit Rules, 2002. It could be argued that it covers only the exempted goods exported and not dutiable goods exported. In order to cover such a situation also, Rule 6(6) of Cenvat Credit Rules, 2004 used the expression excisable goods which is wider to include both dutiable as well as exempted goods. 10.4.2. In addition to above quotes and the decisions of the Jud ..... X X X X Extracts X X X X X X X X Extracts X X X X
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