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Birla Corporation Ltd V/S Commissioner of Central Excise, Jaipur-II


Company & Directors' Information:- BIRLA CORPORATION LIMITED [Active] CIN = L01132WB1919PLC003334

    Final Order No. 51923/2017-WZB/AHD-EX(DB) in Appeal No. E/1259/2012-EX(DB)

    Decided On, 20 February 2017

    At, Customs Excise Service Tax Appellate Tribunal Principal Bench New Delhi

    By, THE HONORABLE JUSTICE: ASHOK JINDAL
    By, MEMBER AND THE HONORABLE JUSTICE: V. PADMANABHAN
    By, MEMBER

    For Petitioner: Rinky Arora, Advocate And For Respondents: H.C. Saini, DR



Judgment Text


1. The appellant is manufacturer of cement chargeable to Central Excise Duty. Period of dispute is from January, 2006 to December, 2009. The rate of duty on cement during this period was at specific rate. The point of dispute is whether during this period, the appellant were eligible for Cenvat credit and the service tax paid on GTA services availed for outward transportation of cement from the factory to the customer's premises. According to the appellant their sales were on FOR destination basis in the sense that during the transit the ownership of the goods was of the appellant, the [risk] of the loss of goods or damage to the goods was of the appellant, the freight charges upto the customer's premises was integral part of the price of the goods. However, the Department disputing this stand of the appellant was of the view that the appellant's sales are not on FOR destination basis and that it is the factory gate which is the place of removal and therefore, the appellant are not eligible for Cenvat credit. On this basis, show cause notice dated 12-1-2011 was issued to the appellant for recovery of allegedly wrongly availed credit amounting to Rs. 2,57,84,712/- along with interest in respect of GTA services availed on outward transportation of cement from the factory to the customer's premises. Show cause notice besides the recovery of wrongly taken Cenvat credit also sought to impose penalty on them. This show cause notice was adjudicated by the Commissioner vide order-in-original dated 17-2-2012 by which the Commissioner held that GTA services availed by the appellant for outward transportation is not input service and therefore, the Cenvat credit would not be admissible. Accordingly, he confirmed the above mentioned Cenvat credit demand along with interest and besides this imposed penalty of Rs. 2000/- on the appellant under Rule 15(3) of the Cenvat Credit Rules, 2004. Cenvat credit demand has been confirmed by invoking the proviso to Section 11A(1) of Central Excise Act, 1944. Against that order, this appeal is filed.

2. Heard both the sides.

3. The sole contention of the appellant is that they were required to sell the goods on FOR basis and they have complied with the conditions of the C.B.E. & C. Circular No. 97/8/2007-S.T., dated 23-8-2007 as they have incurred the cost of transportation in the assessable value of the goods in question and denial has been made at buyers place.

4. In the light of the decision of the Hon'ble High Court of Punjab and Haryana in the case of Ambuja Cements Ltd. v. UOI : 2009 (14) S.T.R. 3 (P & H), the appellant is entitled to avail Cenvat credit on outward goods transportation agency services. We further find that in the case of Madras Cements Ltd. v. Additional Commr., Bangalore : 2015 (40) S.T.R. 645 (Kar.), the Hon'ble High Court has further held as under:

"8. Having heard learned counsel for the parties and considering the facts and circumstances of this case, we are of the considered view that as long as the sale of the goods is finalized at the destination, which is at the doorstep of the buyer, the change in definition of 'input service' which came into effect from 1-4-2008 would not make any difference. A perusal of invoices makes it clear that the goods were to be delivered and sale completed at the address of the buyer and no additional charge was levied by the assessee for such delivery. From these facts it is clear that the sale was completed only when the goods were received by the buyer. The Circular dated 20-10-2014 issued by the Central Board of Excise and Customs also, in paragraph 6 makes it clear that 'payment of transport, inclusion of transport charges in value, payment of insurance or who bears the risk are not the relevant considerations to ascertain the place of removal.'

9. As per the said Circular, the place of removal has to be ascertained in terms of Central Excise Act, 1944 read with the provisions of the Sale of Goods Act, 1930 which has been dealt with in detail in the said Circular. According to the provisions of the Sale of Goods Act, 1930, the intention of the parties as to the time when the property in goods has to pass to the buyer is of material consideration. The record clearly shows that the intention of the parties was that the sale would be complete only after goods are delivered by the seller at the address of the buyer. The assessing officer as well as the appellate authority have held that the assessee would not be entitled to the benefit merely because no documentary evidence has been adduced to establish the fact of insurance coverage by the assessee. In our view, who pays for insurance or bears the risk of goods in transit would not be a material consideration. The same has also been made clear by the Central Board of Excise and Customs, Department of Revenue, Ministry of Finance, in its Circular dated 20-10-2014.

10. Sri C. Shashikantha, learned counsel for the respondents has submitted that he has received written instructions from the Commissioner of Central Excise and Service Tax, Bangalore, mentioning that in view of Rule 2(qa) of the Cenvat Credit Rules, 2004 and the clarification given in paragraphs of Board's Circular dated 20-10-2014, the contention of the appellant-assessee should not be accepted and as such, assessee would not be entitled to Cenvat credit on outward transportation of goods on the ground that the place where sale has taken place or property in goods have passed from the seller to the buyer is the relevant consideration to determine the "place of removal". In our view, the said instructions received by the learned counsel for the respondents are not based on sound reasoning. As we have already mentioned hereinabove, paragraph-6 of the Circular dated 20-10-2004, on which the respondents rely upon, would go in favour of the appellant-assessee and not the Revenue.

11. From the facts of the present case, it is clear from the invoices that title of the goods had passed on from seller to buyer only at the place of destination, which is the address of the buyer. As such, the buyer had no right over the goods till delivered to it. The Tribunal has not considered this aspect and has only relied on the amendment made to the definition of "input service" with effect from 1-4-20

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08 and rejected the claim of the appellant-assessee after that date. No further reason has been given by the Tribunal nor any finding has been recorded with regard to place of completion of sale of the goods." In the light of the decision of the Madras Cements Ltd. (supra) we hold that as goods have been supplied by the appellant on FOR basis to the buyers place and included the value of transportation in the assessable value of the goods. Therefore, appellant is entitled to avail Cenvat credit on outward goods transportation agency services. In this term, we do not find any merits in the impugned order, same is set aside and appeal is allowed with consequential relief, if any.
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