TMI Blog2024 (4) TMI 817X X X X Extracts X X X X X X X X Extracts X X X X ..... service 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 place of removal would be a depot or any other place of premises from where the excisable goods are to be sold after the clearance from the factory - prior to 11.07.2014 it was section 4(3)(c) of the Central Excise Act that defined place of removal and w.e.f. 11.07.2014 rule 2(qa) of the 2004 Rules itself defines place of removal . A perusal of the aforesaid judgment of the Supreme Court in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [ 2018 (2) TMI 117 - SUPREME COURT] would indicate that the Supreme Court did not lay down the principles for ascertaining the place of removal in the context of admissibility of CENVAT credit on GTA services and the judgment only dealt with the change brought about by the amendment made in rule 2(l) of the 2004 Rules on 01.03.2008. In COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. [ 2015 (4) TMI 857 - SUPREME COURT] , the Supreme Court noticed that the place of removal becomes a determinative factor for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of the 2004 Rules. The appellant claims, and which fact is not disputed by the department, that the appellant sells its final products to the customers on FOR destination basis and consequently remains responsible for getting the goods delivered till the premises of the buyers. The appellant further claims that it bears the risk of loss while the goods are in transit and the property in the goods passes from the seller to the buyer at the customers place when the sale takes place. It is for this reason that the appellant claims that it availed CENVAT credit of service tax paid on such GTA services for outward transportation of the final products from the factory or the depots of the appellant to the premises of the buyer. 3. A show cause notice for the period from January 2008 to September 2008 was issued the appellant proposing to recover the alleged inadmissible CENVAT credit amounting to Rs. 28,61,265/- under rule 14 of the 2004 Rules read with section 11A of the Central Excise Act, 1944 [the Central Excise Act] with interest and penalty on the ground that the place of removal in the present case would be the factory gate of the appellant and so CENVAT credit on out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CCR, 2004. 6.7 Further, it is noticed that the definition of input service was amended w.e.f. 01.04.2008 vide Notification No. 10/2008-CE(NT) dated 01.03.2008 whereby the aforesaid expression from the place of removal is substituted by into the place of removal . Thus, from 01.04.2008, with the aforesaid amendment, the Cenvat Credit is available only upto the place of removal. xxxxxxxxx. From the above, it is cleared that the GTA service used for the purpose of outward transportation of goods from the factory/depot to customer s premises is not covered within the ambit of Rule 2(l) of the CCR, 2004. xxxxxxxxxxx 8. I further find that the present issue has already been decided by Hon ble Supreme Court in relation to place of removal is in case of CCE ST vs. Ultra Tech Cement Ltd. 2018 (9) G.S.T.L. 337 (S.C.), dated 1-2-2018 in Civil Appeal No. 11261 of 2016 on the issue of CENVAT Credit on Goods Transport Agency Service availed for transport of goods from the place of removal to the buyer s premises. By following the decision of the Hon ble Supreme Court in the cited case, I concluded that the appellant has wrongly availed cenvat credit of service tax of Rs. 1,27,70,269/- paid on ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Mapal India Private Limited vs. The Commissioner of Central Tax, Bangalore [2022 (7) TMI 352 Karnataka High Court]. Learned counsel also placed reliance on the decision of the Tribunal in Ultratech Cement Ltd. vs. C.C.E. Kutch (Gandhidham) [2019 (2) TMI 1487 CESTAT Ahmedabad] as upheld by the Gujarat High Court in Commissioner, Central Goods and Service Tax vs. M/s. Ultratech Cement Ltd. [2020 (3) TMI 1206 Gujarat High Court] ; and (ii) The Commissioner (Appeals) committed an illegality in confirming the imposition of penalty and recovery of interest. 11. Shri Rakesh Agarwal, learned authorised representative appearing for the department, however, supported the impugned order and made the following submissions: (i) The valuation of goods on FOR basis is governed by rule 5 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 [the 2000 Valuation Rules]. However CENVAT credit eligibility is decided in terms of the 2004 Rules; (ii) The 2004 Rules did not define place of removal until 11.07.2014 when clause (qa) was inserted in rule 2 of the 2004 Rules, though place of removal was defined under section 4(3) of the Central Excise Act; (iii) Thus, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words and expressions used in these rules and not defined but defined in the Excise Act or the Finance Act shall have the meanings respectively assigned to them in those Acts. 20. Section 4(3)(c) of the Central Excise Act defines place of removal as follows: (c) place of removal 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 deposited 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. 21. Thus, in view of rule 2(t), the definition of place of removal in section 4(3)(c) of the Central Excise Act would apply to the 2004 Rules also. 22. What, therefore, follows is that input service would mean any service 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 place of removal would be a depot or any other place of premises from where the exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the warehouse or customer s place would be exigible for CENVAT credit, but in view of the amendment made in the definition of input service from 01.03.2008 replacing the word from by the word upto , it would only be upto the place of removal that service could be treated as input service . The relevant observations of the Supreme Court in Ultratech Cement are as follows: 7. It may be relevant to point out here that the original definition of input service contained in Rule 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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. ***** 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. (emphasis supplied) 29. A perusal of the aforesaid judgment of the Supreme Court in Ultra Tech Cement would indicate that the Supreme Court did not lay down the principles for ascertaining the place of removal in the context of admissibility of CENVAT credit on GTA services and the judgment only dealt with the change brought about by the amendment made in rule 2(l) of the 2004 Rules on 01.03.2008. This is how the Larger Benches of the Tribunal in The R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 33. It would, therefore, be appropriate to reproduce the relevant portion of the Circular dated 08.06.2018 and it is as follows: Circular No. 1065/4/2018-CX., dated 8-6-2018 F. No. 116/23/2018-CX-3 Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes Customs, New Delhi Subject : Place of Removal under Section 4 of the Central Excise Act, 1944, the CENVAT Credit Rules, 2004 and the CENVAT Credit Rules, 2017 - Regarding. Attention is invited to Boards circular no. 97/8/2007-CX dated 23.08.2007, 988/12/2014-CX dated 20.10.2014 and 999/6/2015-CX dated 28.02.2015. Attention is also invited to the judgment of Hon ble Supreme Court in the case of CCE vs M/s Roofit Industries Ltd. 2015 (319) ELT 221 (SC) = 2015-TIOL-87-SC-CX, CCE vs Ispat Industries Ltd 2015 (324) ELT 670 (SC) = 2015-TIOL-238-SC-CX, CCE, Mumbai-III vs Emco Ltd 2015 (322) ELT 394 (SC) = 2015-TIOL-163-SC-CX and CCE ST vs. Ultra Tech Cement Ltd dated 1.2.2018 in Civil Appeal No. 11261 of 2016 = 2018-TIOL-42-SC-CX. In this regard, reference have been received from field formations seeking clarification on implementation of aforesaid circulars of the Board in view of judgments of H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces identical to the judgment in the case of CCE, Mumbai-III v. Emco Ltd. - 2015 (322) E.L.T. 394 (S.C.) and CCE v. M/s. Roofit Industries Ltd. 2015 (319) E.L.T. 221 (S.C.). To summarise, in the case of FOR destination sale such as M/s. Emco Ltd. and M/s. Roofit Industries where the ownership, risk in transit, remained with the seller till goods are accepted by buyer on delivery and till such time of delivery, seller alone remained the owner of goods retaining right of disposal, benefit has been extended by the Apex Court on the basis of facts of the cases. (ii) Clearance for export of goods by a manufacturer shall continue to be dealt in terms of Circular No. 999/6/2015-CX., dated 28-2-2015 as the judgments cited above did not deal with issue of export of goods. In these cases otherwise also the buyer is located outside India. 5. CENVAT Credit on GTA Services etc.: The other issue decided by Hon ble Supreme Court in relation to place of removal is in case of CCE ST v. Ultra Tech Cement Ltd., dated 1-2-2018 in Civil Appeal No. 11261 of 2016 on the issue of CENVAT Credit on Goods Transport Agency Service availed for transport of goods from the place of removal to the buyer s premise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, loading, transportation, transit risk and unloading charges, etc. Even transit damage/ breakage on the assessee account which would clearly imply that till the goods reach the destination, ownership in the goods remain with the supplier namely the assessee. As per the terms of payment clause contained in the procurement order, 100% payment for the supplies was to be made by the purchaser after the receipt and verification of material. Thus, there was no money given earlier by the buyer to the assessee and the consideration was to pass on only after the receipt of the goods which was at the premises of the buyer. From the aforesaid, it would be manifest that the sale of goods did not take place at the factory gate of the assessee but at the place of the buyer on the delivery of the goods in question. 14. The clear intent of the aforesaid purchase order was to transfer the property in goods to the buyer at the premises of the buyer when the goods are delivered and by virtue of Section 19 of Sale of Goods Act, the property in goods was transferred at that time only. Section 19 reads as under: 19. Property passed when intended to pass. - (1) Where there is a contract for the sale o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant observations are as follows: 33. xxxxxxxxxx. When the goods were handed over to the transporter, the respondent had no right to the disposal of the goods nor did it reserve such rights inasmuch as title had already passed to its customer. On facts, therefore, it is clear that Roofit s judgment is wholly distinguishable. 38. The Karnataka High Court in Bharat Fritz Werner also considered the judgment of the Supreme Court in Ultra Tech Cement and the Circular dated 08.06.2018 of the Board and held that the Tribunal was not justified in rejecting the claim of the assessee for availing CENVAT credit on GTA service merely for the reason that an amendment had been made in rule 2(l) of the 2004 Rules w.e.f. 01.04.2008, as what was important to notice was that the title of the goods had passed from the seller to the buyer at the place of destination, which was the address of the buyer. In such circumstances the High Court granted relief to the assessee. The relevant portion of the judgment is as follows: 13. The CESTAT, in the case of Bharat Fritz Werner Ltd. v. C.C., C.E. S.T-Commissioner of Central Tax [CEA 56/2019], has recorded in paragraph No. 5 that as per the purchase orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and these appeals merit consideration. Hence, the following: ORDER (a) The questions of law framed by this Court in CEAs No. 56/2019 and 71/2019 are answered in favour of the assessee holding that the Tribunal s view is unsustainable in law; (b) CEA No. 56/2019 is allowed and impugned order vide Final Order Nos. 21960-21962/2018, dated 31-12-2018 passed in Appeal Nos. E/21756/2017-SM, E/21757/2017-SM and E/21758/2017-SM are set aside; and (c) CEA No. 71/2019 is allowed and impugned order vide Final Order No. 20224/2019, dated 27-2-2019 passed in Appeal No. E/20302/2018-SM is set aside. (emphasis supplied) 39. A Division Bench of the Ahmadabad Tribunal in Ultratech Cement decided on 25.02.2019 also examined a case where the cement directly dispatched cement to the customers from the factory or the depot and CENVAT credit was availed on the service tax paid on GTA for transportation of cement from the factory or depot to the premises of the buyer. The Tribunal, after referring to the Circular dated 08.06.2018 issued by the CBEC and the decision of the Supreme Court in Roofit Industries , distinguished the decision of the Supreme Court in Ultratech Cement and the relevant portion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill that point will be admissible. 4.5 We also note that the issue is no longer res-integra and Mumbai bench has in case of M/s CEAT Ltd, [Final Order No A/86173/2022 dated 19.10.2022]] decided the issue following the said circular. 4.6 We thus do not find any merits in the impugned order. 4.7 Appeal is allowed. 42. It is not possible to accept the contention of the learned authorised representative of the department that sale value is included in the case of FOR sale, but it cannot be presumed that it will also result in availment of CENVAT credit since place of removal was not defined in the 2004 Rules till 11.07.2014. Prior to 11.07.2014, place of removal was defined in section 4(3)(c) of the Central Excise Act, which definition would be applicable to the 2004 Rules by virtue of rule 2(t) of the 2004 Rules. With effect from 11.07.2014, place of removal has been defined in the 2004 Rules. 43. Thus, in view of the aforesaid discussion, it has to be held that the appellant would be entitled to avail CENVAT credit of the service tax paid on GTA service from the factory or the depot of the appellant to the premises of the buyers since the sales are on FOR basis. 44. The order dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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