Commissioner Of Customs Central Excise ... vs M/S The Andhra Sugars Ltd.

2) For the sake of convenience, we may reproduce the events from Civil Appeal No. 11711 of 2011. The respondent M/s. Andhra Sugars Ltd. are the manufacturers of sugar, molasses etc. at their Tanuku, Taduvai & Bhimadole units and manufacturers of various inorganic chemicals at their Kovvur and Saggonda units. They were availing credit on inputs, capital goods and input services and utlising the same for payment of duty. It came to the notice of the Revenue that during the periods December, 2007, the respondent at their unit Saggonda, had taken credit of input services namely service tax paid on transportation charges upto the place of customers which according to the Revenue is inadmissible. Accordingly, show cause notice dated November 3, 2008 was issued to the respondent demanding the Cenvat Credit of Rs.3,87,763/- availed during the above mentioned period along with interest and proposing to impose penalty under Rule 15 of Civil Appeal Nos. 11711 of 2016 Page 2 of 10 the Rules, 2004. The aforesaid show cause notice was duly adjudicated by the Assistant Commissioner, Eluru Division vide Order-in-Original No. 01/2009 dated January 9, 2009 confirming the demands initiated in the aforesaid show cause notice.

3) The respondent being aggrieved by the Order-in-Original No. 01/2009 dated January 9, 2009 filed appeal before the Commissioner (Appeals), Guntur. Vide Order-in-Appeal Nos. 46/2011 (G) ST dated December 2, 2011, allowed the appeals by setting aside the Order-in-Original with consequential relief to the respondent. The Revenue challenged the Order-in-Appeal No. 46 of 2011 (G) ST dated December 2, 2011 by preferring appeal bearing Appeal No. E/510/2012-DB before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore. The CESTAT vide final Order No. 26346/2013 dated August 14, 2013 dismissed the appeal filed by the Revenue holding that the same is covered by the decision of the High Court of Karnataka in the case of Commissioner of Central Excise and Service Tax, Bangalore v. ABB Ltd., Vadodara1. Further, the CESTAT observed that the Revenue could not have filed appeals as per the instructions of the CBEC vide Circular F. No. 390/Misc./163/2010-JC dated August 17, 2011, as the amount 1 2011 (23) STR 97 (Kar) Civil Appeal Nos. 11711 of 2016 Page 3 of 10 involved is less than Rs.5 lakhs. Not satisfied with this outcome, the Revenue took the matter to the High Court in the form of Appeal No. 88/2014. The High Court vide its impugned judgment dated July 16, 2014 has dismissed the appeal filed by the Revenue holding that “on an identical issue, this Court dismissed Central Excise Appeal No. 31 of 2013. Hence, this appeal is also dismissed.”

5) We may also refer to Circular No. 97/8/2007-ST dated August 23, 2007 issued by the Central Board of Excise and Customs (CBEC) (hereinafter referred to as the ‘Board’) as per which the definition of ‘input service’ was clarified and the Circular also provided the conditions which are to be satisfied to cover the case within ‘place of removal’. The three conditions contained in the circular are (i) regarding ownership of the goods till the delivery of the goods at the purchaser’s door step; (ii) seller bearing the risk of or loss or damage to the goods during transit to the destination and; (iii) freight charges to be integral part of Civil Appeal Nos. 11711 of 2016 Page 5 of 10 the price of the goods.

6) As mentioned above, in these cases, the assessees are claiming Cenvat Credit in respect of service tax paid on outward transportation from their factory to the premises of customers. As per the Department, outward transportation engaged for removal of goods from factory to customer premises cannot be considered as an input service since premises of customer is not recognized as a place of removal under the Central Excise Act. To put it differently, the Department contends that the outward transportation provided beyond the place of removal is not eligible for input service for availing Cenvat Credit.

“place of removal” means-

(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;

9) We, thus, do not find any infirmity in the impugned judgment. Appeals are devoid of any merit and are accordingly dismissed.

FEBRUARY 05, 2018.

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