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M/s Graphite India Ltd Versus The Commissioner of Central Excise, Bangalore.

Cenvat Credit - input services - upto the place of removal - service tax paid on transportation and freight charges in respect of transportation of finished goods from the factory up to the customers' premises as well as to the port in case of export of final products. - The contention of the appellant is that if opportunity is given to him he can produce the documents which will help the learned Commissioner (Appeals) to arrive at the correct finding. - Held that:- The order set aside - ma .....

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SHRI S.S GARG, JUDICIAL MEMBER Mr. Krishna Murthy, Adv, For the Appellant Mr. Ajay Saxena, A.R., For the Respondent ORDER PER : S.S GARG The present appeals is directed against order of the Commissioner (Appeals) dated 14.4.2011 vide which the Commissioner(Appeals) has rejected the appeal of the appellant by denying him the credit of service tax paid on GTA services. 2. Briefly the facts of the present case are that the appellants are the manufacturers of graphite electrodes and nipples and gra .....

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e notice and the adjudicating authority vide order dated 14.12.2010 disallowed the credit and thereafter the appeal was filed before the Commissioner (Appeals) who upheld the order of the adjudicating authority and rejected the appeal and hence the present appeal. 3. Heard both sides. 4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the learned Commissioner (Appeals) has failed to consider the documents and submissions made by the appellant as w .....

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e said that the place of removal is the buyers premises and port of export where up to such places the appellants were responsible and owners of the goods and they covered the risk of transport up to the said places through insurance etc. and hence such service tax paid on the transport cost could be taken as CENVAT Credit. 5. On the other hand learned A.R. (Commissioner) reiterated the findings of the Commissioner (Appeals) and submitted that the appellant has failed to produce the requisite d .....

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he other terms of contract are Carriage paid to (CPT), Cost Issuance & Freight (CIF), Delivered Duty Unpaid (DDU), Delivered Duty Paid (DDP) etc which requires the seller/buyer to bear the costs towards freight, insurance and such other incidental charges depending on the place of removal. Accordingly, the place of removal has to be determined on a case to case basis and the same can be considered only with relevant documents as per Boards circular No. 97/8/2007-ST dated 23.08.2007. Even fo .....

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be considered to have been made at the factory gate and they are not eligible for services tax credit availed by them on outward freight. I find from records that the original authority has disallowed cenvat credit in respect of service tax paid on outward freight charges from the factory premises to the customers premises on the ground that the appellants have not fulfilled the conditions under para 8.2 of Boards circular no 97/8/2007-ST dated 23.08.2007. Boards circular mentioned above conf .....

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ition as under section 2 of the Central Excise Act, 1944 as also in terms of the provisions under the Sale of Good Act, 1930) occurred at the said place. 6.1 This contention of the appellant cannot be accepted, because the appellant has not put forth any concrete evidence of contract/agreement, of the seller and the buyer, to prove that the seller is the owner of the goods beyond the factory gate and also upto the place of buyer. It is not shown categorically that freight charges were integral p .....

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e is the sole consideration, and form the transaction value; that the cost of transportation of goods to the customers premises and the insurance premium paid on the goods are borne by the appellants and as such forms part of the cost; that these costs are not recovered from the customers; I find that the said certificate was not furnished in respect of the Appeals bearing 3 & 5 of 2010 filed in respect of the earlier impugned orders and further that the appellants had not earlier come up wi .....

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re though the terms of contract are indicated as F.O.R. basis, wherein R.O.R. means that the seller will not bear the risk of loss or damage to the goods during transit to the destination. This situation as clearly explained by the original adjudicating authority at para 15 of the impugned order is not in fulfillment of condition No (ii) of aforementioned Board s Circular i.e., seller bore the risk of loss or damage to the goods during transit to the destination. The terms of sale contract if it .....

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In the presence of clear findings of the adjudicating authority, I am not under any obligation to accept the contention of the appellants that they have fulfilled all the requisites of Boards Circular. The reliance placed by the Hon ble Tribunal on the decision of Punjab and Haryana High Court in the case of Gujarat Ambuja Cements Vs UOI [2009(14)STR 3 (P&H)] is not applicable to the present dispute as the facts involved are clearly distinguishable in this case. 6.3 On the other hand, the a .....

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aid components to the assessable value for the purpose of payment of Central Excise Duty. In the absence of which I am not inclined to accept the appellants contention that freight & insurance have been included for the purpose of arriving at the assessable value on which Central Excise Duty has been discharged. Whereas, in this case the purchase order placed on the assessee talks about price as Ex-works, Bangalore etc. and the price is not FOR destination, Therefore, the ratio of the deci .....

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re binding on quasi judicial authorities. As contended to by the appellants from para 12 to para 21, it is emphasized that Cenvat Credit on outward freight as an input service is available only up to the place of removal. In the case of the appellants, the place of removal being the factory gate, Cenvat Credit availed for service beyond the place of removal is not admissible. The various decisions cited therein by the appellants are not squarely applicable to the case on hand in view of the abov .....

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n and as the issue under the knowledge of the department, nominal penalty (in lieu of the mandatory penalty] has been imposed under rule 15(3) ibid. I am of the opinion that the order issued by the original authority is a well reasoned one which does not warrant any interference. The Honble Punjab & Haryana High Court, observing that the Boards Circulars are binding on the department held that revenue is precluded from challenging correctness of their own circular even on the ground of it .....

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factured goods is not an input for the manufacturer/consignor. The two clauses in the definition of input services take care to circumscribe input credit by stating that service used in relation to the clearance from the place of removal and service used for outward transportation upto the place of removal are to be treated as input service. The first clause does not mention transport service in particular. The second clause restrict transport service credit upto the place of removal. When these .....

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tion among the various provisions. Learned counsel for the appellant further submitted that the terms of the contracts are FOB in respect of goods cleared for export and consequently as per the purchase orders, the goods were to be delivered at customers places. He also submitted that appellant has got all the evidence in his possession including the agreement between him and the buyers to prove that the seller is the owner of the goods beyond the factory gate and up to the place of buyers. Appe .....

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