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2019 (12) TMI 110

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..... authority must be given an opportunity to examine the present case in the light of this judgment and also all the documents relied upon by the appellant to assert that they are entitled to Cenvat credit which has been denied to them as the purchase orders clearly indicate that sale was on FOR buyer’s premises basis and decide the entitlement of Cenvat credit - thus, without passing any remarks on the merits of the case, the impugned order is set aside and the matter is remanded to the adjudicating authority to pass a fresh order after considering this judgment and following principles of natural justice. Appeal allowed by way of remand. - Excise Appeal No. 30303 of 2019 - A/31063/2019 - Dated:- 14-11-2019 - HON'BLE MR. P. VENKATA SUBBA RAO, MEMBER (TECHNICAL) Shri M.S. Nagaraja, Advocate for the Appellant. Shri A. Rangadham, Authorized Representative for the Respondent. ORDER PER: P.V. SUBBA RAO. 1. This appeal is filed by the appellant against Order-in-Original No. TTD-EXCUS- 000-COM-08-18-19 dt.30.01.2019. 2. The appellant manufactures cement and sells it from the factory and also from their depots to customers. In cases where the appellant supplied the goods to custome .....

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..... earned departmental representative submits that in Karnataka, on an identical issue in the case of Ultratech Cement Ltd, the original authority had denied the appellant Cenvat credit on GTA services availed for transport beyond the factory or depot to the buyer s premises where the goods were sold on FOR destination basis. In that case, on appeal the Commissioner (Appeals) allowed the CENVAT credit and the decision was also upheld by the Hon ble CESTAT and Hon ble High Court of Karnataka as reported in 2016 (44) STR 227 (Kar.). Revenue s appeal in the matter was decided by the Hon ble Apex Court in the case of CCE & ST vs Ultratech Cement Ltd [2018 (9) GSTL 337 (SC)] specifically holding that the Cenvat credit beyond the factory or depot to the buyer s premises is not permissible even in case of sale on FOR destination basis. A review petition filed against this decision of the Hon ble Apex Court was dismissed as reported in 2018 (13) GSTL J101 (SC) in the following words Delay condoned. The instant review petition is filed against order dated 01.02.2018 whereby the aforementioned appeal was allowed. We have carefully gone through the review petition and connected papers. We fi .....

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..... under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A of Central Excise Act, 1944; (ii) Demanding interest under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AB of Central Excise Act, 1944 read with Section 75 of the Finance Act, 1994; (iii) Did not order for initiation of action under Rule 15(1) of Cenvat Credit Rules, 2004 read with Rule 25 of Central Excise Rules, 2002; (iv) Imposed penalty of ₹ 25,66,131/- under Rule 15(3) of Cenvat Credit Rules, 2004; (v) Imposed penalty of ₹ 1,00,000/- under Rule 25 of Central Excise Rules, 2002. 3. Aggrieved by the Order-in-Original No. 24/2011, dated August 22, 2011, respondent/assessee preferred an appeal before Commissioner (Appeals). The Commissioner (Appeals) vide Order-in-Appeal No. 57/2012-C.E., dated March 15, 2012 allowed the appeal and set aside the Order-in-Original holding that assessee is eligible for availment of Service Tax paid on GTA service on the outward freight from the factory to the customers premises as per the Board s Circular 97/8/2007-Service Tax, dated August 23, 2007. It was now the turn of the Revenue to feel aggrieved by the order. Accordingly, appeal was filed before the Custo .....

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..... 2(l) of the Rules, 2004 used the expression from the place of removal . As per the said definition, service used by the manufacturer of clearance of final products from the place of removal to the warehouse or customer s place etc., was exigible for Cenvat Credit. This stands finally decided in Civil Appeal No. 11710 of 2016 (Commissioner of Central Excise Belgaum v. M/s. Vasavadatta Cements Ltd.) vide judgment dated January 17, 2018. However, vide amendment carried out in the aforesaid Rules in the year 2008, which became effective from March 1, 2008, the word from is replaced by the word upto . Thus, it is only upto the place of removal that service is treated as input service. This amendment has changed the entire scenario. The benefit which was admissible even beyond the place of removal now gets terminated at the place of removal and doors to the Cenvat credit of input tax paid gets closed at that place. This credit cannot travel therefrom. It becomes clear from the bare reading of this amended Rule, which applies to the period in question that the Goods Transport Agency service used for the purpose of outward transportation of goods, i.e. from the factory to customer s premi .....

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..... not be fragmented in order to avail ineligible credit. Once the clearances have taken place, the question of granting input service stage credit does not arise. Transportation is an entirely different activity from manufacture and this position remains settled by the judgment of Honorable Supreme Court in the cases of Bombay Tyre International - 1983 (14) E.L.T. 1896 (S.C.), Indian Oxygen Ltd. - 1988 (36) E.L.T. 723 (S.C.) and Baroda Electric Meters - 1997 (94) E.L.T. 13 (S.C.). The post removal transport of manufactured goods is not an input for the manufacturer. Similarly, in the case of M/s. Ultratech Cements Ltd. v. CCE, Bhatnagar - 2007 (6) S.T.R. 364 (Tribunal), it was held that after the final products are cleared from the place of removal, there will be no scope of subsequent use of service to be treated as input. The above observations and views explain the scope of relevant provisions clearly, correctly and in accordance with the legal provisions. 8. The aforesaid order of the Adjudicating Authority was upset by the Commissioner (Appeals) principally on the ground that the Board in its Circular dated August 23, 2007 had clarified the definition of place of removal and th .....

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..... .T.R. 364 (Tribunal), it was held that after the final products are cleared from the place of removal, there will be no scope of subsequent use of service to be treated as input. The above observations and views explain the scope of the relevant provisions clearly, correctly and in accordance with the legal provisions. In conclusion, a manufacturer/consignor can take credit on the Service Tax paid on outward transport of goods up to the place of removal and not beyond that. 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 (t) 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 same meaning for the CENVAT Credit Rules as assigned to them in those Acts. The phrase place of removal is defined under Section 4 of the Central Excise Act, 1944. It states that, - place of removal means - (i) a factory or any other place or prem .....

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..... of input service and the Circular relates to the unamended regime. Therefore, it cannot be applied after amendment in the definition of input service which brought about a total change. Now, the definition of place of removal and the conditions which are to be satisfied have to be in the context of upto the place of removal. It is this amendment which has made the entire difference. That aspect is not dealt with in the said Board s circular, nor it could be. 12. Secondly, if such a circular is made applicable even in respect of post amendment cases, it would be violative of Rule 2(l) of Rules, 2004 and such a situation cannot be countenanced. 13. The upshot of the aforesaid discussion would be to hold that Cenvat Credit on goods transport agency service availed for transport of goods from place of removal to buyer s premises was not admissible to the respondent. Accordingly, this appeal is allowed, judgment of the High Court is set aside and the Order-in- Original dated August 22, 2011 of the Assessing Officer is restored. 6. I find that the learned adjudicating authority must be given an opportunity to examine the present case in the light of this judgment and also all the documen .....

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