Madras Cements Ltd. Vs Commissioner of Central Excise & Service Tax (CESTAT Hyderabad)
Summary: CESTAT Hyderabad partly allowed and partly remanded the appeal of Madras Cements Ltd. concerning Cenvat Credit of Rs. 52,44,388/- availed on clearing and forwarding services during March, 2008 to March, 2011. The Commissioner had disallowed the credit with interest and imposed an equivalent penalty under Rule 15(2) of the Cenvat Credit Rules, 2004. The appellant manufactured cement and cleared it from the factory as well as through depots/warehouses in different States. Clearing and forwarding agents handled receipt of cement from railway stockyards/transporter’s godowns, unloading, storage, handling, loading into transport vehicles and, in some cases, unloading at customers’ premises. The Department treated the factory or depot as the “place of removal” and denied credit on services considered to have been rendered beyond that point.
The Tribunal held that Section 4(3)(C) of the Central Excise Act, 1944 specifically includes a depot, premises of a consignment agent or other premises from where excisable goods are sold after clearance from the factory within the expression “place of removal”. Accordingly, where cement was stock-transferred to depots and thereafter sold, services relating to receipt, unloading, storage, handling and loading at those depots could not be regarded as services rendered beyond the place of removal. Such services had a direct nexus with the appellant’s manufacture and sale of cement and were eligible input services. For transportation, delivery and unloading after clearance from the depot, however, eligibility depended on whether the customer’s premises constituted the place of removal in the particular transaction. Applying the principles referred to in The Ramco Cement Ltd., Roofit Industries Ltd., Emco Industries Ltd., Bharat Fritz Warner Ltd. and CBEC Circular No. 1065/4/2018-CX dated 08.06.2018, the Tribunal held that the expression “FOR-destination” alone was not conclusive. Ownership and risk during transit, freight and insurance, treatment of freight in assessable value and whether delivery at the buyer’s premises was an essential condition of sale required examination.
