Sulekha Beevi C.S. ORDER
Sulekha Beevi C.S., Member (J)
1. Brief facts are that the appellants are engaged in the manufacturing of parts of Fuel Injection Pump/Valve Assembly and are registered with the Central Excise Department.
1.1. On verification of accounts, it was seen that the appellants had availed input Service Tax credit on Outward Transportation of Goods up to the buyer's premises. The Department was of the view that the place of removal can only be the factory gate and therefore, the Outward Transportation beyond the factory gate is not eligible for credit.
1.2. A Show Cause Notice dated 20.01.2017 was issued for the period from April 2013 to March 2016 proposing to recover the wrongly availed credit along with interest and also for imposing penalties. After due process of law, the Original Authority confirmed the demand along with interest and imposed equal penalty. In appeal, the Commissioner (Appeals) vide impugned order dated 22.11.2018 upheld the same. Hence, this appeal.
2.1. On behalf of the appellant, Ld. Counsel Ms. S. Sridevi submitted that the appellant had cleared the goods on FOR sale basis wherein the freight charges are included in the assessable value on which Excise Duty has been discharged by them. So also, the insurance has been borne by the appellants. This is clear from the purchase orders which were placed before the Department. These documents establish that the freight charges were included in the assessable value. Moreover, the appellants had obtained certificates from the buyers of the goods, in which it has been categorically stated that they have not paid any separate charges for the freight/transportation of the goods. Thus, the appellant has amply proved that the freight charges as well as the insurance has been borne by the appellant and that the sale is on FOR basis.
2.2. In such circumstances, the decision of the Hon'ble Apex Court in the case of Commissioner of Cus. & C. Ex., Aurangabad Vs. M/s. Roofit Industries Ltd. reported in MANU/SC/0483/2015 : 2015 (319) E.L.T. 221 (S.C.) is applicable. The Board vide its Circular No. 1065/4/2018-CX : MANU/EXCR/0004/2018 dated 08.06.2018 has clarified this aspect.
2.3. She further argued that the place of removal being the buyer's premises, the appellant is eligible for credit on Outward Transportation of Goods. She relied upon the decision of the Tribunal in the case of M/s. Ultratech Cement Ltd. Vs. C.C.E., Kutch (Gandhidham) reported in 2019 (2) T.M.I. 1487 - CESTAT AHMEDABAD
2.4. Ld. Counsel for the appellant clarified that the Hon'ble Apex Court in the case of C.C.E. Vs. M/s. Ultratech Cement Ltd. reported in MANU/SC/0065/2018 : 2018-TIOL-42-SC-CX had held that the credit on Outward Transportation of Goods up to the buyer's premises is not eligible when the factory gate is the place of removal.
3. Ld. AR Shri. B. Balamurugan, appearing on behalf of the respondent, supported the findings in the impugned order. He adverted to the discussions made in the order passed by the authorities below and argued that the appellants have not produced sufficient evidence to establish that freight charges have been included in the assessable value and that the buyer's premises is the place of removal. He relied upon the decision of the Hon'ble Apex Court in the case of M/s. Ultratech Cement Ltd. - MANU/SC/0065/2018 : 2018-TIOL-42-SC-CX (supra)
4. Heard both sides.
5. The issue is whether the appellant is eligible for the credit of Service Tax paid on Outward Transportation of Goods up to the buyer's premises.
6.1. On perusal of records as well as the purchase orders, it is seen that the sale is on FOR basis. The authorities below have disallowed the credit holding that there is no evidence to establish that the sale is on FOR basis. It is not necessary that there should be a separate contract for supply of goods. The parties can agree to the terms and conditions of the sale in the purchase orders itself. This becomes a concluded contract when the offer is accepted by the supplier/buyer. Therefore, when the purchase orders itself show that the condition for sale is FOR basis, the observations made by the authorities below that the appellant has failed to produce any evidence/contract establishing that they have borne the freight charges, insurance, etc., is without any factual basis and unacceptable.
6.2. Further, in the present case, letters/certificates have been obtained by the appellant from the purchasers of the goods showing that the purchasers have not paid any freight charges separately. This strongly implies that the appellants have borne the freight charges and have included it in the assessable value on which Excise Duty has been discharged by them.
6.3. From these facts, I am of the view that the decision of the Hon'ble Apex Court in the case of M/s. Roofit Industries Ltd. (supra) will apply and the place of removal is the buyer's premises. In such circumstances, the decision of the Tribunal in the case of M/s. Ultratech Cement Ltd. - 2019 (2) T.M.I. 1487 (supra) squarely applies. As rightly argued by the Ld. Counsel for the appellant, the Hon'ble Apex Court in the case M/s. Ultratech Cement Ltd. - MANU/SC/0065/2018 : 2018-TIOL-42-SC-CX (supra) has observed that credit on Outward Transportation of Goods will not be eligible beyond the place of removal. In the present case, the place of removal being the buyer's premises, the appellant is eligible for credit. The Tribunal in the case of M/s. Harita Fehrer Ltd. Vs. Commissioner of G.S.T. & Central Excise, Salem vide Final Order No. 40894/2019 dated 02.07.2019 has considered this issue and allowed the credit in favour of the assessee.
7. After appreciating the facts as well as the evidence and applying the case-laws as discussed above, I am of the view that the disallowance of credit is unjustified. The impugned order is set aside.
8. The appeal is allowed with consequential reliefs, if any, as per law.
(Dictated and pronounced in open court)
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