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,
- 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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