Bisazza India Pvt. Limited VERSUS Commissioner of Central Excise & ST, Ahmedabad

EXCISE Appeal No. 10668 of 2021-SM

[Arising out of Order-in-Original/Appeal No AHM-EXCUS-003-APP-10-11-2021-22 dated

21.05.2021 passed by Commissioner of Central Excise, Customs and Service Tax

AHMEDABAD-I]

 

Bisazza India Pvt. Limited

VERSUS

Commissioner of Central Excise & ST, Ahmedabad

 

APPEARANCE :

Shri S.J. Vyas, Advocate, for the Appellant

Shri Tara Prakash, Assistant Commissioner (AR) for the Revenue.

CORAM: HON’BLE MR. RAJU, MEMBER (TECHNICAL)

DATE OF HEARING/ DECISION: 06.01.2023

FINAL ORDER NO. A/10024/2023

RAJU :

 

This appeal has been filed by M/s. Bisaza India Pvt. Limited against

denial of credit on input services of pre-shipment charges and terminal

handling charges in respect of export of goods. Pre-shipment service is

received after the Let export order by Customs. The second issue involved

is, if the appellant have right to choose an option to reverse the amount

under Rule 6(3) of Cenvat Credit Rules when they have not specifically

exercised any such option before such transaction. The third issue is if

second proviso to Section 11AC (1) of Central Excise Act, 1944 can be

invoked for the disputed period April 2016 to June 2017.

Learned Counsel pointed out that they have availed certain services

namely, terminal handing charges, pre-shipment inspection for export of

goods after the Let export order. He argued that the credit of said services

has been denied relying on the CBEC Circular No. 999/6/2015-CX dated

28.02.2015 which reads as under:-

“4. In most of the cases, therefore, it would appear that handing over of the goods

to the carrier/transporter for further delivery of the goods to the buyer, with the seller

not reserving the right of disposal of the goods, would lead to passing on of the property

in goods from the seller to the buyer and it is the factory gate or the warehouse or the

depot of the manufacturer which would be the place of removal since it is here that the

goods are handed over to the transporter for the purpose of transmission to the buyer.

It is in this backdrop that the eligibility to Cenvat Credit on related input services has to

determined.

…….

In the case of clearance of goods for export by manufacturer exporter, shipping

bill is filed by the manufacturer exporter and goods are handed over to the shipping

line. After Let Export Order is issued, it is the responsibility of the shipping line to ship

the goods to the foreign buyer with the exporter having no control over the goods. In

such a situation, transfer of property can be said to have taken place at the port where

the shipping bill is filed by the manufacturer exporter and place of removal would be

this Port/ICD/CFS. Needless to say, eligibility to CENVAT Credit shall be determined

accordingly.”

He argued that the said Circular presumes that after Let export order is

issued no further activity is required to be done by the exporter. He pointed

out that exporter had availed services of Terminal Handling Charges and

Pre-shipment inspection service after Let export order. He pointed out that

there are many decisions of Tribunal and also CBEC Circulars to the effect

that Port of Export is the place of removal for the purpose of export. In

these circumstances, Cenvat credit of services received after the Let export

order, cannot be denied.

The second issue involved is in respect of amount of Cenvat credit

required to be reversed for trading activity done by the exporter. A demand

under Rule 6(3)(i) has been against the appellant. The appellant however,

opted to reverse the credit under Rule 6(3)(ii) read with Rule 6(3AA). The

said option has been denied by the first Appellate Authority on the ground

that it is discretion of the Adjudicating Authority whether to allow or disallow

after the transaction is over. Learned Counsel submits that there is no

authority to support the claim that the Adjudicating Authority has any such

discretion in this regard. He argued that the Appellate Authority remanded

the matter to the lower authorities to quantify the amount to be reversed.

He argued that in the remand proceedings they should be allowed to choose

the option of their choice in compliance with Rule 6 of Cenvat Credit Rules,

  1. The third issue is not pressed by the learned Counsel.

Learned Authorised Representative for the Revenue relies on the

impugned order.

I have considered the rival submissions. I find that there are plethora

of judgments for the purpose of export the Port is place of removal. The

Circular relied on by the Revenue to deny credit on services used after Let

export order also recognizes the Port of export as place of removal. The

said Circular prescribes as under:

“6. In the case of clearance of goods for export by manufacturer exporter, shipping

bill is filed by the manufacturer exporter and goods are handed over to the shipping

line. After Let Export Order is issued, it is the responsibility of the shipping line to ship

the goods to the foreign buyer with the exporter having no control over the goods. In

such a situation, transfer of property can be said to have taken place at the port where

the shipping bill is filed by the manufacturer exporter and place of removal would be

this Port/ICD/CFS. Needless to say, eligibility to CENVAT Credit shall be determined

accordingly.”

It is seen from the above that Circular presumes that after the Let export

order there is no activity undertaken by the exporter and therefore no credit

is available. On this ground Cenvat credit on pre-shipment charges has

been denied. In the instant case the appellants continued possession even

after Let Export order as is apparent from the fact that they managed

Inspection and handling of goods. In view of above, the Circular is not

applicable. The appeal on this count is allowed.

The second issue involved is whether the Adjudicating Authority has

discretion to choose which method of compliance with the requirement of

Rule 6 of Cenvat Credit Rules, 2004 is to be followed by the assessee or not.

I find there is no authority in law which gives Revenue to exercise such

discretion. There is plethora of decisions which says that discretion of

choosing method of compliance with Rule 6 is exclusively with the assessee.

In these circumstances the impugned order on this count, cannot be

sustained. Therefore, the impugned order remanding the matter to the

lower authority to quantify the amount to be reversed is modified to the

extent that reversal will be done as per the choice of method of compliance

of the appellant in terms of Rule 6 of Cenvat Credit Rules, 2004.

As the third issue has not been pressed, the appeal on that count is

not allowed.

The appeal disposed of in the above terms.

(Order dictated and pronounced in the open court)

(Raju)

Member (Technical)

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