Karnataka High Court

Mapal India Private Limited vs The Commissioner Of Central Tax on 30 June, 2022

Bench: P.S.Dinesh Kumar, Anant Ramanath Hegde

                                       C.E.A No.56/2019
                                   C/W C.E.A No.71/2019
                          1


  IN THE HIGH COURT OF KARNATAKA AT BENGALURU

        DATED THIS THE 30TH DAY OF JUNE, 2022

                      PRESENT

   THE HON'BLE MR. JUSTICE P.S. DINESH KUMAR

                        AND
THE HON'BLE MR. JUSTICE ANANT RAMANATH HEGDE

                C.E.A No.56 OF 2019
                        C/W
                C.E.A No.71 OF 2019
IN C.E.A No.56 OF 2019

BETWEEN :

BHARAT FRITZ WERNER LTD
OFF. TUMKUR ROAD
YESHWANTHPUR POST, PEENYA
BENGALURU-560 022
REPRESENTED BY MR. SUJOY DASGUPTA
CHIEF FINANCIAL OFFICER                   ... APPELLANT

(BY SHRI. K.S. RAVI SHANKAR, SENIOR ADVOCATE FOR
    SHRI. N. ANAND, ADVOCATE)

AND :

THE COMMISSIONER OF CENTRAL TAX
NORTH WEST COMMISSIONERATE
2ND FLOOR, SOUTH WING
BMTC COMPLEX
SHIVAJINAGAR
BANGALORE-560 051                        ... RESPONDENT

(BY SMT. K.R. VANITHA, ADVOCATE)

[THROUGH VIDEO CONFERENCE]
     THIS CEA IS FILED UNDER SEC.35G OF THE CENTRAL
EXCISE ACT, ARISING OUT OF ORDER DATED 31.12.2018
                                        C.E.A No.56/2019
                                   C/W C.E.A No.71/2019
                          2


PASSED IN FINAL ORDER NOS. 21960-21962/2018, PRAYING
TO (A) ALLOW THE APPEAL OF THE APPELLANT BY SETTING
AS THE IMPUGNED ORDER VIDE FINAL ORDER NOS. 21960-
21962/2018 DATED 31.12.2018 PASSED IN APPEALS NOS.
E/21756/2017-SM, E/21757/2017-SM AND E/21758/2017-
SM VIDE ANNEXURE-G; (B) HOLD AND DECIDE THE
QUESTIONS OF LAW INVOLVED IN THE CASE IN FAVOUR OF
THE APPELLANT; (C) PASS SUCH OTHER ORDERS,
DIRECTIONS AND MANDATES AS THIS HON'BLE HIGH
COURT MAY DEEM FIT IN THE FACTS AND CIRCUMSTANCES
OF THE CASE, AND IN THE INTERESTS OF JUSTICE,
INCLUDING THE COSTS OF THIS APPEAL.

IN C.E.A No.71 OF 2019

BETWEEN :

MAPAL INDIA PRIVATE LIMITED
PLOT NO.307 & 308, 5TH MAIN
4TH PHASE, PEENYA INDUSTRIAL AREA
BENGALURU-560 058
(REPRESENTED BY SRIPATHY T)                ... APPELLANT

(BY SHRI. K.S. RAVI SHANKAR, SENIOR ADVOCATE FOR
    SHRI. N. ANAND, ADVOCATE)

AND :

THE COMMISSIONER OF CENTRAL TAX
BANGALORE NORTH WEST COMMISSIONERATE
2ND FLOOR, BMTC COMPLEX
SHIVAJINAGAR BUS STAND
BANGALORE-560 051                 ... RESPONDENT

(BY SMT. K.R. VANITHA, ADVOCATE)

[THROUGH VIDEO CONFERENCE]


     THIS CEA IS FILED UNDER SEC.35G OF THE CENTRAL
EXCISE ACT, ARISING OUT OF ORDER DATED 27.02.2019
PASSED IN FINAL ORDER NO.20224/2019 PASSED IN
APPEAL NO.E/20302/2018-SM, PRAYING TO (A) ALLOW THE
                                                   C.E.A No.56/2019
                                              C/W C.E.A No.71/2019
                                   3


APPEAL OF THE APPELLANT BY SETTING AS THE IMPUGNED
ORDER VIDE FINAL ORDER NO.20224/2019 DATED
27.02.2019 PASSED IN APPEAL NO. E/20302/2018-SM VIDE
ANNEXURE-G; (B) HOLD AND DECIDE THE QUESTIONS OF
LAW INVOLVED IN THE CASE IN FAVOUR OF THE
APPELLANT; (C) PASS SUCH OTHER ORDERS, DIRECTIONS
AND MANDATES AS THIS HON'BLE HIGH COURT MAY DEEM
FIT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, AND
IN THE INTERESTS OF JUSTICE, INCLUDING THE COSTS OF
THIS APPEAL.

     THESE CEAs, HAVING BEEN HEARD AND RESERVED
FOR JUDGMENT ON 24.05.2022 COMING ON FOR
PRONOUNCEMENT OF JUDGMENT, THIS DAY, P.S.DINESH
KUMAR J, PRONOUNCED THE FOLLOWING:-


                          JUDGMENT

These two appeals have been admitted by this

Court to consider the following question of law:

"Whether in the facts and circumstances of the case, the Tribunal was right in denying the cenvat credit availed by the appellant in respect of GTA services received for clearance of goods "upto the place of removal" as envisaged in Rule 2(1) of the Cenvat Credit Rules, 2004 for the period in dispute?"

2. Hence, they are heard together and

disposed of by this common order.

3. Heard Shri. K.S. Ravi Shankar, learned

Senior Advocate for the appellant and C.E.A No.56/2019 C/W C.E.A No.71/2019

Smt. K.R. Vanitha, learned Standing Counsel for the

respondent.

Facts in CEA 56/2019

4. Appellant is a Public Limited Company

manufacturing CNC Machines. As per the purchase

orders, it has sold and delivered the final product at

buyers premises. It availed CENVAT1 credit of

service tax paid on Outward Goods Transport

Agency (GTA) service used for transporting final

product to customer's place. A show cause notice

was issued calling upon the appellant as to why the

credit availed should not be demanded under

Section 11A of the Central Excise Act read with Rule

14 of CENVAT Credit Rules; and interest and

penalty should not be imposed. Appellant

contested the show cause notice. The adjudicating

authority passed the Order in Original

No.25/ADC/YPR/BIII/2014 dated 13.10.2014

Central Value Added Tax C.E.A No.56/2019 C/W C.E.A No.71/2019

disallowing and confirming the demand of CENVAT

Credit amounting to Rs.16,26,589/-. A penalty of

equal sum was also imposed. The appeal2 filed

thereon, also stood rejected.

5. The appeal3 filed before the CESTAT4

challenging the order passed by the Appellate

Authority has been disposed of, holding that there

was no infirmity in the order demanding CENVAT

Credit. However, the CESTAT has set-aside the

penalty holding that there was no intention to

evade payment of duty.

Facts in CEA 71/2019

6. Appellant is a Private Limited Company

engaged in manufacture of Special Boring Bars and

Tools Holding Systems. As per the purchase orders,

it has delivered the final product at buyer's place.

Appeal No.229-231/2017 CT rejected on 18.09.2017

E/21756/2017-SM, E/21757/2017-SM, E/21758/2017-SM Disposed of on 31.12.2018

Customs, Excise & Service Tax Appellate Tribunal C.E.A No.56/2019 C/W C.E.A No.71/2019

7. It availed CENVAT credit of service tax

paid on Outward Goods Transport Agency (GTA)

service used for transporting final product to

customer's place. A show cause notice was issued

calling upon the appellant as to why the credit

availed should not be demanded under Section 11A

of the Central Excise Act read with Rule 14 of

CENVAT Credit Rules; and interest and penalty

should not be imposed. Appellant contested the

show cause notice and the adjudicating authority

passed the Order in Original C.No.

V/84/15/82/2015/Adjn.BII dated 29.02.2016

confirming the demand of Rs.20,48,961/-, interest

of Rs.20,48,961/- and penalty of Rs.1,50,000/-. In

appeal, A No.83/2016 B-II, vide order dated

19.12.2017, the Appellate Authority allowed the

credit of Rs.7,245/- and confirmed the remaining

demand of Rs.20,41,716/- and penalty of

Rs.1,50,000/-.

C.E.A No.56/2019 C/W C.E.A No.71/2019

8. The appeal5 filed before the CESTAT6

challenging the order passed by the Appellate

Authority has been disposed of holding that there is

no infirmity in demanding the CENVAT Credit

availed by the appellant with regard to GTA.

However, the CESTAT has set-aside the penalty

holding that there was no intention to evade

payment of duty.

9. Shri. Ravishankar, learned Senior

Advocate, submitted that:

• the issue involved in these two appeals is

covered by the decision of this Court in

Madras Cements Ltd., Vs. Additional CCE7;

• the Tribunal has upheld the demand by

placing reliance on Central Excise Vs.

Ultratech Cement8. The said authority is not

E/20302/2018 - SM disposed of on 27.02.2019

2015 (40) STR 645 (KAR)

2015 (40) STR 645(KAR))

2018 (9) GSTL 337(SC) C.E.A No.56/2019 C/W C.E.A No.71/2019

applicable to the facts of this case because, as

per the purchase order, appellants were

required to deliver the goods at the site of the

purchaser and this fact has been recorded by

the CESTAT;

• the issue involved in these appeals is also

covered by the decision of the Hon'ble

Supreme Court of India in Commissioner of

Customs and Central Excise, Aurangabad Vs.

Roofit Industries Ltd.9, and Commissioner of

Central Excise, Mumbai III Vs. EMCO Ltd.10;

and

• that the Ministry of Finance, Department of

Revenue has issued Circular No.1065/4/2018-

CX dated 08.06.2018 clarifying the definition

of 'Place of Removal'.

10. In substance, Shri. Ravi Shankar

submitted that the goods manufactured by the

2015 (319) ELT 221(SC)

2015 (322) ELT 394 (SC) C.E.A No.56/2019 C/W C.E.A No.71/2019

appellants have been delivered at purchaser's site.

Therefore, appellants are entitled for the CENVAT

Credit on GTA services.

11. Smt. Vanitha, argued opposing the

appeal.

12. We have carefully considered rival

contentions and perused the records.

13. The CESTAT, in the case of Bharat Fritz

Werner Ltd. Vs. C.C., C.E.& S.T-Commissioner of

Central Tax11, has recorded in paragraph No.5 that

as per the purchase orders, appellant was required

to supply the goods at the buyer's premises and the

price of goods would include 'outward freight'.

Similarly, in the case of MAPAL India Pvt. Ltd.12, the

CESTAT has recorded a similar finding.

CEA 56/2019

CEA 71/2019 C.E.A No.56/2019 C/W C.E.A No.71/2019

14. It is clear that as per Section 4(3)(c)(iii)

of Central Excise Act, 1944, the definition of 'Place

of Removal' means the premises from where the

excisable goods are to be sold after their clearance

form the Factory.

15. The 'Input Service' defined in Rule 2 (1)

of CENVAT Credit Rules, 2004, includes any service

in relation to 'Outward Transportation' up to the

'Place of Removal'.

16. This Court in the case of Madras

Cements Ltd., has held as follows:

"11. From the facts of the present case, it is clear from the invoices that title of the goods had passed on from seller to buyer only at the place of destination, which is the address of the buyer. As such, the buyer had no right over the goods till delivered to it. The Tribunal has not considered this aspect and has only relied on the amendment made to the definition of "input service" with effect from 1-4-2008 and rejected the claim of the appellant-assessee after that date. No further C.E.A No.56/2019 C/W C.E.A No.71/2019

reason has been given by the Tribunal nor any finding has been recorded with regard to place of completion of sale of the goods.

12. Since we are of the opinion that the sale had concluded only after the delivery of the goods was made at the address of the buyer, in the facts of the present case the appellant-assessee would be entitled to the benefit of Cenvat credit on Service Tax paid on outward transportation of goods by the assessee even after 1-4-2008. The appellant- assessee would thus be entitled to such benefit for the period 1-4-2008 to 31-7-2008 which has been denied to it by the authorities below.

13. For the forgoing reasons, this appeal stands allowed. The question of law is answered in favour of the assessee and against the Revenue. The order of the Tribunal to the extent of disallowing Cenvat credit to the appellant for the period after 31-3-2008 is quashed."

17. The Ministry of Finance (Department of

Revenue) Central Board of Indirect Taxes and

Customs, New Delhi, has issued Circular dated

08.06.2018 and clarified the definition, 'Place of

Removal'. In para 5 of the Circular, the Ministry

has referred to the judgment in the case of CCE & C.E.A No.56/2019 C/W C.E.A No.71/2019

ST Vs. Ultra Tech Cement Ltd.13 and stated that, in

that case, the Apex Court has held that CENVAT

Credit on GTA Service from the place of removal to

the buyer's premises is not admissible.

18. In the instant cases, the place of

removal is buyer's premises. Therefore, the