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OFFICE OF THE PRINCIPAL COMMISSIONER (APPEALS), CENTRAL GOODS & SERVICES TAX COMMISSIONERATE, CHANDIGARH CENTRAL REVENUE BUILDING, PLOT NO-19, SECTOR-17-C, CHANDIGARH
1. Whereas Central Board of Excise & Customs vide Order No. 09/2018- Service Tax dated 1 St August 2018, has assigned the appeals filed before 30th June 2017 under Section 35 of the Central Excise Act 1944 or Section 85 of the Finance Act 1994, as the case may be, the details of which are indicated in Columns (2) (3) and (4) of the Table in the Annexure to the said order, to the Central Excise officer whose particulars are indicated in Column (6) of the said Table for the purpose of passing Order- in-appeals under Section 35 of the Central Excise Act, 1944 and Section 85 of the Finance Act 1994, as the case may be. And the above mentioned appeal has been mentioned against my name in the Table to the Annexure of the order referred above. Now, therefore, I take up the said appeal for decision under Section 35 of the Central Excise Act, 1944.
1.2 Mis Surya Pharmaceuticals Limited, 85, HPIDC, Industrial Area, Baddi Distt. Solan (H.P.) (for brevity 'the appellant') had filed appeal bearing no. 507/CE/APPLI CHD-U2013 against Order-in-Original No. 25IDCICE/CHD(SML)/2013 dated 05.09.2013 (for brevity the "impugned order") passed by the Deputy Commissioner, Central Excise & Service Tax Division Chandigarh (for brevity 'the adjudicating authority'). I take up the appeal filed by the appellant vide no. 507/CE/APPLI CHD-I/2013.
2. The facts of the case are that the appellants are engaged in the manufacture and export and domestic clearances of Menthol (29061100), Menthone (33029090), Peppermint oil (33012400), De-mentholised Peppermint 011(33012590), Terpene (33012590) and various Organic chemicals falling under chapter sub-heading 2941 of the schedule of the Central Excise Tariff Act, 1985 (5 of 1986). The appellants are also registered with the department vide Registration no. AABCS3001KST002 and availing CENV AT Credit on inputs, capital goods and input services under CENV A T Credit Rules 2004.
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2.1 During the course of audit of the appellant it was observed that the appellant has paid service taxon outward freight and had taken input service credit amounting to Rs. 4,66,288/ for the period from October 2007 to March 20)~. Since it was not admissible the appellants were issued a show cause notice for disallowing the same for the period from October 2007 to March 2010.
2.2 This show cause notice was adjudicated vide Order-in-Original No. 25/DC/CE/CHD /(SML)'/2013 dated 05.09.2013. The adjudicating authority vide above said 0-1-0 disallowed the credit amounting to RsA,66.288/- under Rule 14 of the Cenvat Credit Rules 2004 read with Section llA of the Central Excise Act. 1944 and imposed equal penalty under Rule 15 ofCC Rules read with Section 11AC of the Central Excise Act. 1944. Grounds of appeal 3. Being aggrieved the appellants have filed this appeal on the following grounds interalia: 3.1 As per rule 2 (1) of the CENV AT Credit Rules 2004lnput Service means any service- (i) used by the provider of taxable service for providing an out put service; or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, fmancing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;
3.2 The definition of 'input service' is very wide. The term outward transportation up to the place of removal specifically mentioned in definition makes it clear that in case of FOR destination cases the outward transportation will be treated as input service. Therefore in export case as the rates are FOR thus the credit on outward transportation will be admissible and the noticee had rightly availed the credit on the same.
3.3 The Rule 2(t) of the Credit Rules provides that the words and expressions used in these rules and not defined but defined in the Excise Act or the Finance Act shall have the meanings respectively assigned to them in those Acts. The expression 'place of removal' is not defined under the said Credit Rules. Section 4 of the Central Excise Act 1944 defines 'place of removal' as
(i) A factory or any other place or premises of production or manufacture of excisable goods.
(ii) A warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited (without payment of duty)
(iii) A 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.
The property in the goods was never transferred to the purchaser and remained with the seller till the delivery of the goods at port of export or factory of the buyer as the case may be. That being so the place of removal in instant case is port of export! buyer's factory therefore the Appellant is entitled for the credit of the outward freight. The appellant
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enclosed copy of the purchase order.
The appellant submitted that as per the Circular No. 97/8/2007 dated 23.08.2007 the place of removal depend upon the facts as to whether the property or the ownership in the goods has passed on to the buyer or not. The relevant para of the Circular read as follows "However, there may be situations where the manufacturer/ consignor may claim that the sale has taken place at the destination point because in terms of the sale contract/agreement (i) the ownership of the goods and property in the goods remained with the seller of the goods till the delivery of the goods in acceptable condition to the purchaser at his door step; (ii) the seller bore the risk of loss of or damage to the foods during transit to the destination ; and (iii) the freight charges were an integral part 0 the price of goods. In such cases the credit of the service tax paid on the transportation up to such place of sale would be admissible "
It is submitted that the ownership remains with the appellant till the delivery of the goods as the transit risk is always of the Appellant and for this purpose the appellant had also taken the transit insurance to cover such risks. Thus the credit of Service tax on outward freight has been rightly taken by the Appellant.
Reliance is placed in the case of Mis Amhuja Cements Ltd Vs Union Of India 2009 (236) E.L.T 431(P & II) wherein it was held that "The input service has been defined to mean any service used by the manufacturer whether directly or indirectly and also includes, inter alia, services used in relation to inward transportation of inputs or export goods and outward transportation up to the place of removal. It has also remain un controverted that for transportation purposes insurance cover has also been taken by the appellant which further shows that ownership of the goods and the property in the goods has not been transferred to the seller till the delivery of the goods in acceptable condition to the purchaser at his door step. Accordingly, even the second condition that the seller has to bear the risk of loss or damage to the goods during transit to the destination stand fulfilled."
Reliance is also placed on the case of India Cements Limited V s C.C.E Tirupati 2007 (216) E.L.T 81 (Tri - Bang.) wherein the Court observed - a careful reading of the definition reveals that any service inter alia used by the manufacturer in or in relation to clearance of final products from the place of removal is an 'Input Service'. In other words, the outward transportation of the final products from the factory is an 'Input Service' and outward transportation of the final product from the depot is an 'Input Service'. Once these services are defined as 'Input Service', the credit cannot be denied. As regards the outward transportation of the final products from the factory to the depot is concerned, it is defined as 'Input Service' in view of the inclusive definition which reads as "outward transportation upto the place of removal". Once outward transportation upto the place of removal is defined as an 'Input Service' the credit has to be given. Therefore, what is to be understood and appreciated is the inclusive definition cannot limit the scope of 'Input Service' given in the first limb of the definition. It is made clear that the outward transportation from the factory to the depot is an 'Input Service' and an outward transportation from the factory and from the depot to the premises of the buyer is also an 'Input Service'. It follows that once it is an input service there cannot be any denial of the credit.
3.4 It is submitted that the Ld Adjudicating Authority though accepted that the sale has been done on FOR basis, confirmed the demand while erroneously observing that in none of the cases it has been mentioned that ownership of the goods will remain with the party till the goods have been received by the buyer.
3.5 Thus the present order is based on the misconceived facts and therefore, it is humbly prayed that the demand confirmed may be dropped.
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3.6 The appellant further submitted that the ownership of the goods remain with the appellant till the delivery ofthe goods.
3.7 Extended Period not Invokable
3.7.1 Appellant submit that the extended period is not invokable in the present case and the demand is time-barred.
As per the provisions of Section 11 A, the authorities can issue show cause notice in case duty has not been levied or paid or has been short - levied or short paid or erroneously refunded, within one year from the relevant date. "SECTION llA. Recovery of Duties not levied or not paid or short levied or short paid or erroneously refunded
(1) Where the Duty of Excise has not been levied or not paid or has been short levied or short-paid or erroneously refunded, the Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the Duty which has not been levied or paid or which has been short-levied or short-paid or the person to whom such refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any Duty of Excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of- (a) Fraud; or (b) Collusion; or (c) Wilful miss-statement; or (d) Suppression offacts; or (e) Contravention of any of the provisions of this Chapter or of the rules made there under With intent to evade payment of service tax, by the person chargeable with the Service Tax or his agent. the provisions of this sub-section shall have effect, as if, for the words "one year", the words ''jive years" were substituted. "
3.7.2 It is submitted that the extended period of limitation i.e. 5 years can be invoked only if the there is evasion of tax due to fraud; or collusion; or wilful miss-statement; or suppression of facts or contravention of any of the provisions of the Act or the rules made there under with intent to evade payment of Duty.
3.7.3 It is submitted that the Appellant had never suppressed any information from the Department. The Appellant had provided complete details of the Cenvat credit availed by them along with their Returns and also clearly mentioned the details of service tax credit taken in their books of accounts i.e. Balance Sheet to the Department. The Department could have scrutinized the return within one year and could have raised the demand if anything irregular was noticed.
3.7.4 In any case the extended period could not be invoked when the facts were within the knowledge of the Revenue. It is submitted that the facts came to the knowledge of the Revenue during the Audit of the Appellant. Given this, confirming the demand by invoking the extended period is erroneous and arbitrary.
The Hon 'hie Supreme Court in the case of CCE vs. Chemphar Drugs Liniments reported at 1989 (40) EL T 276 held that-
"In order to make a demand for period beyond 6 months and up to a period of 5 years, something positive other than mere inaction or failure on the part of the manufacturer or conscious or deliberate withholding of information is required to
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be established. Where the department had full knowledge about the facts and manufacturer's action or inaction is based on their belief that they were required or not required to carry out such action or inaction, the period beyond 6 months cannot be made applicable".
Reliance is also being placed on the following case law:
Pushpam Pharmaceuticals company vs. CCE, -1995(78) ELT 401 (SC) the Apex court held that-
"Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression".
Padmini Products vs. CCE -1989 (43) EL T 195 (SC), the Apex Court observed that- "mere failure or negligence on the part of the producer or manufacturer either not to take out a license in case where there was scope for doubt as to whether license was required to be taken out or where there was scope for doubt whether goods were dutiable or not, would not attract Section JJ-A of the Act. In the facts and circumstances of this case, there were materials, as indicated to suggest that there was scope for confusion and the appellant's believing that the goods came within the purview of the concept of handicrafts and as such were exempt. If there was scope for such a belief or opinion, then failure either to take out a license or to pay duty on that belief, when there was no contrary evidence that the producer or the manufacturer knew that these were excisable or required to be licensed, would not attract the penal provisions of Section JJ-A of the Act. "
Also, the Hon'ble Supreme Court in the case of TN. Dadha Pharmaceuticals \Is. CCE 2003 (55) R.L. T 20 has laid down three pre-requisites for invocation of larger period under proviso to Section 11 A namely (i) There must be short levy or short payment of dutv; (ii) such short levy or payment must be by reason of fraud, collusion. suppression or willful miss-statement; (iii) that the same has been done with intent to evade payment of duty. The Apex Court has further clarified that these pre-conditions are cumulative. In other words, to make out a case under proviso to Section llA all the three conditions must be satisfied simultaneously. In the present case, neither of the conditions laid down by the Apex Court is satisfied. Hence, extended period under proviso to Section 11 A of the Act has been wrongly invoked and the demand raised in the present show cause notice is time barred.
3.7.5 In the present case as submitted supra, the Appellant has not done anything with intent to evade payment of duty which is an essential ingredient for the invocation of extended period. Therefore, the demand based on the erroneous invocation of extended period is liable to be set aside
Penalty Not Impossible
3.8 The Respondent vide Order dated 15.09.2013 seeks to levy penalty under Rule 15 of the Cenvat Rules read with Section 11 AC of the Central Excise Act, 1944 for suppressing the availment of Cenvat credit on the disputed goods.
3.8.1 It is submitted that the provisions of section llAC are applicable only in cases where the central excise duty is not paid by reason of fraud; or collusion; or wilful rnis- statement; or suppression of facts; or contravention of any of the provisions of the Act or the rules made
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thereunder with intent to evade payment of duty.
3.8.2 In the present case, the Appellant had taken the credit as per law and therefore, intent to evade duty could not be attributed to the Appellant and hence, the penalty under section llAC cannot be imposed.
In Jl. Gandhi Silk Mills Vs Commissioner of Centra Excise, Surat 2009 (237) E.L. T. 103 (Tri. - Ahmd.) the Tribunal held that the penalty should not be imposed in an ordinary course, unless it can be shown that the Appellant had acted deliberately in defiance of law.
The Hon'ble Supreme Court in Hindustan Steel Ltd. Versus State of Orissa 1978 E.L. T. (J159) categorically observed that "penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so."
3.8.3 Since no act of suppression or fraud with intent to evade duty could be attributed to the Appellant, imposition of penalty upon the Appellant is not warranted specially in the absence of the essential ingredients for imposing penalty under Section lIAC.
3.8.4 That in the instant case, from the detailed submissions made herein above, it is clear that none of the exigencies envisaged under the central excise provisions is present and in consequence thereof provisions of section 11 AC are not invokable, which contention of the Appellant get support from the following judgements:
Rajasthan Spinning & Weaving Mills 2009 (238) EL T 3 (SC) J.R.Fabrics 2009(238) EL T 209 (P&H) Thirumala Alloys Castings 2009(238) EL T 226 (Mad) K.P. Pouches 2008(228) ELT 31 (Del)
The appellant further submitted that in the instant case none of the acts were backed up with ulterior motive or malafide intention to evade duty and therefore, imposition of penalty is incorrect and uncalled for based on the settled position on the issue.
That Hon'ble Punjab & Haryana High Court in the following decisions has categorically held that mens-rea is a mandatory requirement for imposition of penalty:
• UT Ltd - 2007 (207) EL T 27 (P&H)
• Kamal Kapoor - 2007 (5) STR 251 (P&H)
Given the above, the appellant submited that they were and are under a bonafide belief that the Cenvat credit is rightly available to them. Accordingly, no penalty is payable by them under Rule 15 of the Cenvat Rules read with Section llAC of the Act.
3.9 Interest not chargeable since credit not utilised
3.9.1 Section llAB of the Central Excise Act, 1944 provides for the interest on delayed payment of duty which reads as under:
Interest on delayed payment of duty. - (1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person who is liable to pay the duty as determined under sub-section (2), or has paid the duty under sub-section (2B), of section 11A, shall, in addition to the duty, be liable to pay interest at such rate not below ten per cent and not exceeding thirty-six per cent per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette, from the first date of the month succeeding the month in which the duty ought to have been paid under this Act, or from the date of such erroneous refund, as the case may be, but for the provisions contained
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in sub- section (2), or sub-section (2B), of section llA till the date of payment of such duty
(1) Provided that in such cases where the duty becomes payable consequent to issue of an order, instruction or direction by the Board under section 37B, and such amount of duty payable is voluntarily paid in full, without reserving any right to appeal against such payment at any subsequent stage, within forty-jive days from the date of issue of such order, instruction or direction, as the case may be, no interest shall be payable and in other cases the interest shall be payable on the whole of the amount, including the amount already paid.
(2) The provisions of sub-section (1) shall not apply to cases where the duty had become payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President.
Explanation 1. - Where the duty determined to be payable is reduced by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, the interest shall be payable on such reduced amount of duty.
Explanation 2. - Where the duty determined to be payable is increased or further increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, the interest shall be payable on such increased or further increased amount of duty.
The plain reading of section 11 AB clarifies that interest under the said section shall
be payable only where any duty of excise • has not been levied or • has not been paid or • has been short-levied or • has been short-paid or Erroneously refunded
Rule 14 of the Credit Rules states that "Where the CENVATcredit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of sections llA and 11AB of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries".
3.9.2 On perusal of this provision it is clear that this Rule is not applicable as the noticee had taken the credit as per law. Therefore Rule 14 of the Cenvat Credit Rules, 2004 cannot be invoked against the appellant to recover service tax credit.
3.9.3 The appellant prayed to set aside the Order in Original dated 05.09.2013 passed by the Deputy Commissioner of Central Excise to the extent it disallows the Cenvat Credit and allow the appeal with consequential relief to the Appellants. The appellant also requested to grant personal hearing.
Record of Personal Hearing:-
4. The personal hearing in the case was fixed for 9.10.2017 nobody appeared on behalf of the appellant, which was adjourned to 24.10.2017 but nobody appeared on behalf of the appellants. As the instant appeal was assigned to me vide Order No. 09/2018- Service Tax dated 1St August 2018 issued under F.No. 137/1312017 dated 01.08.2018 by the Deputy Commissioner & OSD (Service Tax), Central Board of Indirect Taxes and Customs, New Delhi, personal hearing was granted to the appellant on 29.03.2019 but no one appeared on behalf of the appellant. The matter was adjourned to 26.04.2019 but nobody appeared before
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me on behalf of the appellant. The matter was adjourned to 06.06.2019, but on this date also nobody appeared before me on behalf of the appellant. The matter was adjourned to 28.06.2019 as last opportunity but nobody appeared before me on behalf of the appellant. As enough opportunities have been granted to the appellant I take up the appeal for passing final order. Discussion and Findings:-
5. I have carefully gone through the case records and written submissions made on behalf of the appellants and observe that the issues for determination before me are as under.
(i) Whether the CENVAT Credit of Rs. 4,66,288/- availed by the appellant is admissible?
(ii) Whether the appellant is liable to penalty under Rule 15 of the CENV A T Credit Rules 2004 read with Section 11 AC the Central Excise Act. 1944.
(iii) Whether the appellant is liable to pay interest under Rule 14 of the CENV AT Credit Rules 2004.
(iv) Whether extended period is invoke able in this case.
5.1 Now I take up each issue separately.
First of all I would like to examine the issue vis-a-vis the provisions of law. The first issue is whether the CENVAT Credit ofRs. 4,66,288/- availed by the appellant is admissible to them.
5.1.1 The appellant has taken credit of the service tax paid by them on outward freight. The appellants have contested that place of removal is the place of delivery in their case, in view of the judgment of Punjab & Haryana High Court in the case of Mis Ambuja Cement Ltd., (supra) wherein it has been held that the issue has been clarified by the Board vide circular No. 97/8/2007-ST dated 23.08.2007 and the Circulars are binding on the department.
5.1.2 As per Rule 2(1) of the CENV AT Credit Rules 2004 "Input Service"means any service:- (i) used by a provider of taxable service for providing an output service; or
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;" [underlining emphasis supplied]
The place of removal is therefore very vital and needs to be determined in the facts of the case.
5.1.3 The phrase 'place of removal' has been defined under section 4 of the Central Excise Act, 1944. It states as under;
" 'place of removal' means-
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(i) a factory or any other place or premises of production or manufacture of the excisable goods;
(ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be stored without payment of duty;
(iii) a 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."
5.1.4 Thus the 'place of removal' cannot be a place which is not under the control of the manufacturer and has to be one of the places mentioned in Section 4 of the Central Excise Act, 1944 viz factory, warehouse where goods can be stored without payment of duty or depot etc. from where the excisable goods are sold. What is important to note is that each of the premises is referable only to 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.
5.1.5 Now I deal with the other contentions of the appellant i.e. the Board Circular and the decision of Punjab & Haryana High Court in Ambuja Cement case (supra). The appellant has relied upon the decision of the Hon'ble Punjab & Haryana High Court rendered in the case of Mis Ambuja Cement Ltd., Supra wherein the Hon'ble Court held that:
"The 'input service' has been defined to mean any service used by the manufacturer whether directly or indirectly and also includes, inter alia, services used in relation to inward transportation of inputs or export goods and outward transportation up to the place of removal. It has also remain un-controverted that for transportation purposes insurance cover has also been taken by the appellant which further shows that the ownership of the goods and the property in the goods has not been transferred to the seller till the delivery of the goods in acceptable condition to the purchaser at his door step. Accordingly, even the second condition that the seller has to bear the risk of loss or damage to the goods during transit to the destination stand fulfilled. 1/
5.1.6 Since the Hon 'ble High Court has laid great emphasis on Board Circular dated 23.08.2007, it will be proper to deal with it in detail. This Boards Circular No. 97/812007-CX. dated 23.08.2007 provides that
"the eligibility to avail credit of the service tax paid on the transportation during removal of excisable goods would depend upon the place of removal as per the definition. In case of a factory gate sale, sale from a non-duty paid warehouse, or from a duty paid depot (from where the excisable goods are sold, after their clearance from the factory), the determination of the 'place of removal' does not pose much problem. However, there may be situations where the manufacturer/consignor may claim that the sale has taken place at the destination point because in terms of the sale contract/agreement. ~ - 9
(i) the ownership of goods and the property in the goods remained with the seller of the goods till the delivery of the goods in acceptable condition to the purchaser at his door step; (ii) the seller bore the risk of loss of or damage to the goods during transit to the destination; and
(iii) the freight charges were an integral part of the price of goods. In such cases, the credit of the service tax paid on the transportation up to such place of sale would be admissible if it can be established by the claimant of such credit that the sale and the transfer of property in goods (in terms of the definition as under Section 2 of the Central Excise Act, 1944 as also in terms of the provisions under the Sale of Goods Act, 1930) occurred at the said place ".
The appellant is not eligible for the credit in terms of this circular for the following reasons;
(a) The conditions of the Circular are not complied with. (b) The Circular is not applicable post amendment in rule 2(1) of the Cenvat Credit
Rules 2004. (c) The Circular has been modified vide Board's Circular no. 1064/412018-CX
dated 08.06.2018 (a) The conditions of the Circular are not complied with:- The appellant has not submitted any cogent evidence to prove that:
(i) the ownership of goods and the property in the goods remained with the seller of the goods till the delivery of the goods in acceptable condition to the purchaser at his door step;
(ii) the seller bore the risk of loss of or damage to the goods during transit to the destination; and
(iii) the freight charges were an integral part of the price of goods.
On the contrary the purchase orders submitted by the appellant before the adjudicating the adjudicating authority observed tills:
- Sr. Purchase Order No. Buyer's Name Mis Conditions No. and date
01 SBPL1RMI0036/2009- Sparsh Bio- Tech Pvt. 1. Freight borne by supplier 10 dated 23.03.2010 Ltd., Jam Nagar 2. Insurance Borne by supplier
02. 4543000107 dated Flamingo 1. insurance paid 12.03.2010 Pharmaceuticals 2. Freight paid by the party
24.12.2009 Ltd., Faridabad 04. PDL-1/0910/1003351 Parabolic Drugs Ltd., 1. FOR
dated 09.11.2009 Dera Bassi 2.Insurance in our (Buyer) scope. 05. SUR9/039 dated B.C.M.Corporation 1. Trans Through Gatti
12.11.2009 2. Make Insurance at your (party) end.
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, 06. BP440 2009-10 dated Bal Pharma Ltd. Goods to be despatched through
07.07.2009 Indore lorry carriers given by us (Buyer) 07 GSKRMIOP/368 GSK Pharmaceuticals No condition mentioned.
dated 09.09.2009 Haridwar
5.1.6 The above said observations of the adjudicating authority have not been controverted by the appellant. In the absence of any cogent proof that;
(i) the ownership of goods and the property in the goods remained with the seller of the goods till the delivery of the goods in acceptable condition to the purchaser at his door step;
(ii) the seller bore the risk of loss of or damage to the goods during transit to the destination; and
(iii) the freight charges were an integral part of the price of goods.
(b) The Circular is not applicable post amendment in rule 2(1) of the Cenvat Credit Rules 2004:- The circular is not applicable post amendment in view of the Hon'ble Apex Court's judgment in the case of Commissioner of Central Excise and Service Tax Verses Ultra Tech Cement Ltd., 2018(9)G.S. T.L.337 (S.C.) wherein the Hon'ble Court has held that;
"However, the important aspect of the matter is that Cenvat Credit is permissible in respect of 'input service' and the Circular relates to the unamended regime. Therefore, it cannot be applied after amendment in the definition of 'input service' which brought about a total change. Now, the definition of 'place of removal' and the conditions which are to be satisfied have to be in the context of 'upto ' the place of removal. It is this amendment which has made the entire difference."
(c) The Circular has been modified vide Board's Circular no. 1064/4/2018-CX dated 08.06.2018:- The Circular has been modified vide Board's Circular 1064/4/2018-CX., dated 8.06.2018 wherein clause (c) of para 8.1 and para 8.2 of the Circular 97/8/2007-CX dated 23.08.2007 dated 23.08.2007 has been omitted.
5.1. 7 Keeping in view the above position of law and case law I hold that the place of removal in the instant case was factory premises and outward freight paid by the appellant does not qualify as in put service and credit availed by the appellant on the outward freight is not admissible to the appellant.
Extended Period:
5.2 Further I take up the issue whether extended period is invoke able in this case. I observe that the issue of wrongly availed CENV AT Credit came into notice of the department during the course of audit. Had the department not conducted audit the issue would have remained unnoticed. I observe that the appellant had taken inadmissible CENV AT Credit with the intent to evade payment of duty on their final product/service by utilizing the credit so availed. Therefore, I hold that extended period has rightly been invoked. Interest:
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5.3 Further I take up the issue whether the appellant is liable to pay interest under Rule 14 of the CENVAT Credit Rules 2004. As per Rule 14 of the CENV AT Credit Rules 2004; Where the CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of sections 11 A and 11 AB of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recovenes. 5.3.1 The liability of interest is consequential to the demand. Once demand is upheld, the Appellant shall be liable to pay interest under Section 75 of the Act.on the amount of demand confirmed/upheld. The above said reasoning finds support from the observations of the Hon'ble Apex Court made in the case of Commissioner of Central Excise, Pune Versus SKF India Ltd., reported as 2009(239) ELT 385(S.C). Thus, following the same analogy, the demand for interest is upheld. In the instant case the appellant has taken and utilized the inadmissible CENV AT Credit on the outward freight which did not qualify as the input service. Therefore I hold that the appellant is liable to pay interest on the Credit utilized by them.
Penalty 5.4 Further I take up the issue whether the appellant is liable to pay penalty under Rule 15 of the CENV AT Credit Rules 2004 read with Section 11 AC the Central Excise Act. 1944. As per Rule 15 (2) In a case, where the CENV AT credit in respect of input or capital goods or input services has been taken or utilised wrongly by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Excise Act, or of the rules made thereunder with intent to evade payment of duty, then, the manufacturer shall also be liable to pay penalty in terms of the provisions of section 11 AC of the Excise Act.
5.4.1 In the instant case the appellant has deliberately taken input service credit of the service tax paid on the service provided beyond the 'place of removal' with the intention to evade payment of duty on their final product/service by utilizing the credit so availed. Therefore, I hold that the appellant is liable to penal action under Rule 15 of the CENV AT Credit Rules 2004 read with Section 11 AC the Central Excise Act. 1944.
ORDER
6. In view of the discussion and findings foregone, I do not find any reason to interfere with the impugned order. The impugned order is, therefore, upheld and the appeal of the appellants is dismissed. ~
The Chief Commissioner, Goods and Service Tax Zone, Chandigarh. The Commissioner, Central Excise & CGST Commissionerate, Shimla. The Assistant Commissioner, Central Excise & CGST Division, Baddi. The Superintendent, Central Excise & CGST Range-I, Baddi. Guard file.
