M/s Ultratech Cement Ltd. Vs C.C.E. Kutch (Gandhidham) (CESTAT Ahmedabad)
We find that the Chartered/ Cost Accountant has certified that the goods were sold on FOR basis by the Appellant and the freight/ damages in transit was responsibility of Appellant till the goods reaches the doorstep of the Customers. Also we find that the consignment notes were raised upon the Appellant and they did not charge any amount except price of the goods from the customers. Thus in the light of above circular we find that as the ownership of the goods remained with the Appellants till the goods reached to the customer’s doorstep and the freight charges as well as damage (insurance) to the goods till destination were borne by the Appellant, they are eligible for the credit of service tax paid by them on outward freight.
It is clear from the Apex court judgment in the case of CCE & CU Vs. Roofit Industries Ltd. 2015 (319) ELT 221 (SC) that till the goods are handed over to the buyer, the cost is borne by the assessee or in other words where the goods are cleared on FOR basis the freight paid on outward transportation would qualify as “Input Service”.
FULL TEXT OF THE CESTAT JUDGMENT
The present appeals has been filed by M/s Ultractech Cement Ltd. against Order-in-Original No. KCH-EXCUS-000-COM-01-14-15 passed by Commissioner, Central Excise, Gandhidham, Kutch.
1.1 The brief facts leading to the dispute is that the appellant are engaged in manufacture of cement which is sold on MRP Basis as well non MRP basis. They are making MRP based sale to Dealers/ Stockist etc in case of which MRP is mentioned on bags and Non MRP sale is made to users e.g. Industrial consumers and institutional customers in case of which no MRP is mentioned on bags. The cement is directly dispatched to the customers from the factory or to the Depot and they are availing services of Goods Transport Agency for transportation of cement. The appellant were issued show cause notice for the period 2009-10 to 2013-14 proposing to deny cenvat credit availed on service tax paid on outward transportation. The demand was confirmed by the adjudicating authority holding that the credit of GTA service is available on input service only up to place of removal after 01.04.2008 in terms of Rule 2 (I) of Cenvat Credit Rules, 2004. He held that in terms of Section 4 (3) (c) of the Central Excise Act. ‘place of removal’ means factory or any other place or premises of production or manufacture of the excisable goods; warehouse or any other place or premises wherein the excisable goods have been permitted to be stored without payment of duty; depot, 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; from where such goods are removed”. That as per Board’s circular Nos. 37B order No. 59/1/2003 dt. 03.03.2003 and no. 97/8/2007 dt. 23.08.2007 stated that the place where the sale takes place, is the place of removal. Further CBEC vide Circular No. 988/12/2014 –CX dt. 20.10.2014 has stated that the place where the sales take place is the place where the transfer in property of goods takes place from seller to buyer. He held that the Appellant has not produced any evidence showing the details such as name of depot/ dumpyard, quantity/ value of goods sent to their depots/ dumpyard and credit involved therein. For being eligible to avail credit one has to establish that the conditions of Board Circular of 98/7/2007 – ST dt. 23.08.2007 has been satisfied. That the Appellant has not produced evidence to this effect and hence the credit is not available to the Appellant. Being aggrieved, the Appellant have filed the present appeal.
2. Shri Jigar Shah, ld. Counsel appearing for the Appellant submits that they have cleared the goods on MRP basis to their Dealers/ Stockist by makingvaluation under Section 4A. That in case of clearance to institutional consumers the Valuation under section 4 was adopted. In the facts of this case, the goods are cleared on FOR basis and all the expenses upto delivery of goods including damage to the goods and transportation uptill the buyers doorstep is borne by the Appellant. The price charged to the customer is inclusive of freight and insurance charges. Hence the credit of service tax paid on freight amount is available to them. He also takes us through the invoices issued to this effect showing that no freight over and above the invoice value is charged from the customers. In case of clearances of goods to the industrial and institutional consumers the valuation was made under Section 4 of the Act and the goods were cleared on FOR basis. He also submits that the contracts for sale clearly states that the freight has to be borne by the Appellant. He submits that the adjudicating authority has merely held that appellants would be eligible for credit of service tax paid on transportation of goods from factory to dump yard/ depot (if that was the place of removal) but the Appellant has not produced any evidence showing the details as name of depot, quality, value of goods sent to their depots and credit involved therein. He submits that the findings of the adjudicating authority are cryptic as the demand calculation sheets to the show cause notice itself states that the goods were sent to dumpyards/ depots and other buyers premises. That the same is absolutely clear from the excise invoice cum gate pass and hence the contention of the adjudicating authority is wrong. He also invited our attention to the copies of gate passes cum excise invoices in case of the Appellant on which clearances were made to depots/ stockists as well as institutional consumers. He also invites our attention to certificate issued by the Chartered/ Cost Accountant certifying that the goods were cleared on FOR basis by the Appellant and the freight charges are part of assessable value. He also relies upon the Board Circular No. 1065/4/2018- CX dt. 08.06.2018 wherein the CBEC has viewed that the “place of removal” is required to be determined with reference to “point of sale”. That in the present case since the liability of freight and damages to goods uptill doorstep of buyers is of Appellants, the point of sale is that where the ownership of the goods changed hands i.e doorstep of buyers. He alternatively submits that the Cenvat Credit availed by the appellant on the outward transport charges cannot be recovered as the appellants have already discharged higher duty amount on the said services. Since, the service charges was included in the assessable value of the final product cleared on payment of duty. He submits that if the Revenue is of the opinion that the factory gate is the place of removal in the said case the outward transportation charges is also not includible in the assessable value of the final product and consequently the same will not suffer excise duty. The excise duty so paid on the element of outward freight charges is much more than the Cenvat Credit availed on the outward GTA for the obvious reason that the Cenvat Credit on the outward transportation is only on the abated value of 25% whereas the entire 100% transportation was included in the assessable value of the final product. Therefore, for this reason the recovery on account of Cenvat Credit cannot be made. In this regard, he prepared a calculation and submitted in their written submissions which shows that the excise duty on the element of freight charges is much more than the element of Cenvat Credit availed of GTA. In this support, he placed reliance on judgment in the case of CCE Vs. Telco Limited-2016 (196) ELT 308 (T). As regard, withdrawal of the Circular dated 22.12.2014 and relevant para of Circular dated 23.08.2007 the same cannot have the retrospective effect for the reason that the Hon’ble Supreme Court in the case of Suchitra Vs. CCE -2007 (208) ELT 321(SC) held that beneficial Circular to be applied retrospectively while oppressive Circular applicable prospectively.
2.1 He further submits that the demand is hit by limitation as there is no suppression of fact on the part of the appellant. The issue of admissibility of Cenvat Credit on outward GTA involved matter of grave litigation in various judgments at various judicial forums, therefore, it cannot be said that the appellant suppressed any fact. Shri Jigar Shah Ld. Counsel also relied upon following judgments:
