SHREE EXTRUSION LTD VERSUS C.C.E. & S.T. RAJKOT

Excise Appeal No.10017 of 2021

(Arising out of OIA-RAJ-EXCUS-000-APP-099-2020 dated 23.09.2020 passed by Commissioner of Central Excise, Customs and Service Tax-RAJKOT)

 

SHREE EXTRUSION LTD

VERSUS

C.C.E. & S.T. RAJKOT

 

APPEARANCE:

Shri Pradeep Jain, Chartered Accountant appeared for the Appellant Shri Sanjay Kumar, Superintendent (AR) for the Respondent

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

 

RAJU

Final Order No. A/ 10356 /2023

DATE OF HEARING: 23.02.2023 DATE OF DECISION:23.02.202

 

This appeal has been filed by Shree Extrusion Ltd. against denial of cenvat credit of outward transportation charges..

2. Shri Pradeep Jain, learned Chartered Accountant appearing for the appellant submits that the goods been sold after payment of duty on a value which is inclusive of the outward freight.He produced certain invoices at page 129-131 of the appeal memorandum which indicate that the assessable value on which Central Excise duty has been paid is inclusive of the freight element. He also produced the Circular F.No. 116/23/2018-Cx dated 08.06.2018 wherein the CBIC has clarified on this
3. LearnedAuthorized Representative relies on the impugned 

He argued that the appellant has been recovering freight from the buyers and therefore, the benefit of cenvat credit on freight element cannot be allowed.

 

4. I have considered the rival submissions. It is noticed from the Order-in-Original that essentially credit has been denied on the grounds that the sale contractand the invoices do have the words “Door Delivery” or “FOR” mentioned on the said documents. It is seen that the only sample documents have been seen by the lower authorities and only sample documents have been produced before the Tribunal.
5. TheCBIC in the Circular dated 06.2018 has clarified as follows:

 

Circular No.1065/4/2018-CX

F.No.116/23/2018-CX-3

Government of India Ministry of Finance (Department of Revenue)

(Central Board of Indirect Taxes & Customs)

New Delhi, 8 June, 2018

To

The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners Commissioners of Central Tax and Central Excise (All)

The Principal Director Generals/Director Generals (All) Webmaster, CBEC

Subject: Place of Removal under Section 4 of the Central Excise Act, 1944, the CENVAT Credit Rules, 2004 and the CENVAT Credit Rules, 2017-reg.

Madam/Sir,

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), CCE vs Ispat Industries Ltd 2015(324) ELT670 (SC), CCE, Mumbai-III vs Emco Ltd 2015(322) ELT 394(SC) and CCE & ST

1. UltraTech Cement Ltd dated 1.2.2018 in Civil Appeal No. 11261 of 2016. In this regard, references have been received from field formations seeking clarification on implementation of aforesaid circulars of the Board in view of judgments of Hon’ble Supreme Court.
   2. In order to bring clarity on the issue it has been decided that Circular no. 988/12/2014-CXdated 10.2014 shall stand rescinded from the date of issue of this circular. Further, clause (c) of para 8.1 and para 8.2 of the circular no. 97/8/2007-CX dated 23.08.2007 are also omitted from the date of issue of this circular.
   3. GeneralPrinciple: As regards determination of ‘place of removal, in general the principle laid by Hon’ble Supreme Court in the case of CCE vs Ispat Industries Ltd 2015(324) ELT670 (SC) may be applied. Apex Court, in this case has upheld the principle laid down in M/s Escorts JCB (Supra) to the extent that place of removal is required to be determined with reference to ‘point of sale’ with the condition that place of removal (premises) is to be referred with reference to the premises of the manufacturer. The observation of Honb’le Court in para 16 in this regard is significant as reproduced below:

“16. It will thus be seen where the price at which goods are ordinarily sold by the assessee is different for different places of removal, then each such price shall be deemed to be normal value thereof Sub-clause (b) (iii) is very important and makes it clear that a depot, the 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 are all places of removal. What is important to note is that each of the premises is referable only the manufacturer and not to the buyer of excisable goods. The depot or the premises of the consignment agent of the manufacturer are obviously places which are referable to the manufacturer. Even the expression “any

 

other place of premises” refers only to a manufacturer’s place or premises because such place or premises is to be stated to be where excisable goods “are to be sold”. These are key words of the sub-section. The place or premises from where excisable goods are to be sold can only be manufacturer’s premises or premises referable to the manufacturer. If we were to accept contention of the revenue, then these words will have to be substituted by the words “have been sold” which would then possibly have reference to buyer’s premises.”

4. Exceptions:
   • The principle referred to in para 3 above would apply to all situations except where the contract for sale is FOR contract in the circumstances identical to the judgmentin the case of CCE, Mumbai-III vs Emco Ltd 2015(322) ELT 394(SC) and CCE vs M/s Roofit Industries Ltd 2015(319) ELT 221(SC). 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.
   • Clearance for export of goods by a manufacturer shall continue to be dealt in termsof Circular  999/6/2015-CX dated 28.02.2015 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. CENVATCredit on GTA Services ete: The other issue decided by Hon’ble Supreme Court in relation to place of removal is in case of CCE &ST  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 premises. The Apex Court has allowed the appeal filed by the Revenue and held that CENVAT Credit on Goods Transport Agency service availed for transport of goods from the place of removal to buyer’s premises was not admissible for the relevant period. The Apex Court has observed that after amendment of in the definition of ‘input service’ under Rule 2(1) of the CENVAT Credit Rules, 2004, effective from 01.03.2008, the service is treated as input service only “up to the place of removal”.
6. Factsto be verified: This circular only bring to the notice of the field the various judgments of Hon’ble Supreme Court which may be referred for further guidance in individual cases based on facts and circumstances of each of the  Past cases should accordingly be decided.
7. No extended period: Any new show cause notice issued on the basis of this circularshould not invoke extended period of limitation in cases where an alternate interpretation was taken by the assessee before the date of the Supreme Court judgment as the issue is in the nature of interpretation of 
8. Hindiversion of the circular will 

(Mayank Sharma) OSD (CX)

 

 

 

From the above circular, it is apparent that the essential criteria for allowing or disallowing the credit is if the Central Excise duty has been paid after including the freight element or otherwise. In case the Central Excise duty has been paid after including the freight element in the assessable value then the cenvat credit of the service tax paid on the freight element has to be allowed. Prima facie from the perusal of the sample documents produced by the appellant, it is noticed that the central excise duty has been paid after including the freight element.

 

However, since only sample documents have been produced, it is necessary that a detailed verification may be conducted by the lower authorities to ascertain if Central Excise duty on all the documents have been paid after inclusion of the freight element in the assessable value. In case the Central Excise duty have been paid after inclusion of the freight element in the assessable value then the cenvat credit of GTA paid on said freight element cannot be denied in terms of the aforesaid Circular.

6. In view of the above, the impugned order is set aside and the matter is remanded to the original adjudicating authority for fresh adjudication after following the aforesaid Circular issued by CBIC.

(Dictated & Pronounced in the open court)

 

 

 

 

 

 

 

Neha

(RAJU) MEMBER (TECHNICAL)