Madras High Court
The Commissioner Of Central ... vs M/S.Pricol Ltd on 27 January, 2021
C.M.A.No.2616 of 2017
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 27.01.2021
CORAM:
THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM
and
THE HONOURABLE MS.JUSTICE R.N.MANJULA
C.M.A.No.2616 of 2017
The Commissioner of Central Excise,
O/o the Commissioner of Central Excise,
Customs & Service Tax,
6/7, A.T.D. Street, Race Course Road,
Coimbatore-641 018. .. Appellant/Respondent
-vs-
1.M/s.PRICOL Ltd.,
702/7, Avinashi Road,
Coimbatore-641 037. .. 1st Respondent/Appellant
2.Customs, Excise & Service Tax Appellate Tribunal,
South Zonal Bench, Shastri Bhawan Annexe I,
1st Floor, 6, Haddows Road,
Chennai-600 006. .. 2nd Respondent/2nd Respondent
Appeal under Section 35G of the Central Excise Act, 1944 against the
order dated 05.01.2015 made in Final Order No.40006 of 2015 on the file of
1/10
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C.M.A.No.2616 of 2017
the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench,
Chennai.
For Appellant : Mr.A.P.Srinivas
For Respondents : R1 – Mr.M.Karthikeyan,
for Mr.S.Jaikumar
: R2 – Tribunal
JUDGMENT
(Judgment of the Court was delivered by T.S.Sivagnanam, J.)
This appeal by the appellant/Revenue under Section 35G of the Central
Excise Act, 1944 (hereinafter referred to as “the Act”), is directed against the
order dated 05.01.2015, made in Final Order No.40006 of 2015 on the file of
the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench,
Chennai (for brevity “the Tribunal”).
2.The appeal was admitted on 06.10.2017, on the following substantial
questions of law:-
“(1) Whether the Tribunal is correct in allowing the
CENVAT credit availed and distributed by the respondent
prior to getting registered as an input service Distributor
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C.M.A.No.2616 of 2017
under the Act;
(2) Whether the Tribunal is correct in setting aside
the imposition of penalty under erstwhile Rule 15(4) of
the CENVAT Credit Rules, 2004, on the facts and
circumstances of the case? and
(3) Whether Tribunal is correct in allowing the
CENVAT Credit on CHA services when the same is
availed after the goods has been cleared from the place of
removal?”
3.So far as the first and second substantial questions of law are
concerned, the issue has already been decided in the case of Commissioner
of Central Excise vs. Dashion Ltd., [2016 (41) S.T.R. 884 (Guj.)] wherein,
the Court held as follows:-
“7. The second objection of the Revenue as noted was
with respect of non-registration of the unit as input service
distributor. It is true that the Government had framed Rules of
2005 for registration of input service distributors, who would
have to make application to the jurisdictional Superintendent
of Central Excise in terms of Rule 3 thereof. Sub-rule (2) of
Rule 3 further required any provider of taxable service whose
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C.M.A.No.2616 of 2017
aggregate value of taxable service exceeds certain limit to
make an application for registration within the time
prescribed. However, there is nothing in the said Rules of
2005 or in the Rules of 2004 which would automatically and
without any additional reasons dis-entitle an input service
distributor from availing Cenvat credit unless and until such
registration was applied and granted. It was in this
background that the Tribunal viewed the requirement as
curable. Particularly when it was found that full records were
maintained and the irregularity, if at all, was procedural and
when it was further found that the records were available for
the Revenue to verify the correctness, the Tribunal, in our
opinion, rightly did not dis-entitle the assessee from the entire
Cenvat credit availed for payment of duty. Question No. 1
therefore shall have to be answered in favour of the
respondent and against the assessee.”
4.The above decision has been accepted by the Central Board of Excise
and Customs, vide Circular dated 16.02.2018. Therefore, the above questions
have to be decided against the Revenue and accordingly, decided so.
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C.M.A.No.2616 of 2017
5.So far as the third substantial question of law is concerned,
Mr.A.P.Srinivas, learned Senior Standing Counsel strenuously argued that the
Tribunal committed an error in allowing the CENVAT credit on Customs
House Agents (CHA) services. It is submitted that these services are not in
relation to the manufacturing activities of the assessee and these services are
with reference to the clearance of goods after they were moved out of the
factory and credit has been availed and utilized by the assessee all relate to
post manufacturing activity. In this regard, the learned counsel referred to
various decisions of the Tribunal and the decision of the High Court of
Gujarat in CCE vs. Gujarat Heavy Chemicals Ltd., [2011 (22) STR 616
(Guj.)] wherein, it was held that there is no connection between such service
as having direct and indirect relation to manufacture. In the said decision, the
Court relied upon the decision of the Hon'ble Supreme Court in M/s.Maruti
Suzuki India Ltd., vs. Commissioner, Central Excise Commissionerate,
Delhi-III [(2009) 240 ELT 641 (SC)]. The learned counsel has also referred
to the definition “input service” as defined under Rule 2(l) of the CENVAT
Credit Rules, 2004, as well as the definition of “place of removal” as defined
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C.M.A.No.2616 of 2017
under Rule 2(qa).
6.Mr.M.Karthikeyan, learned counsel for Mr.S.Jaikumar, learned
counsel for the 1st respondent/assessee submitted that the words “place of
removal” have been considered in several decisions and one such decision
being the case in Commissioner vs. Dynamic Industries Ltd., [2014 (307)
E.L.T. 15 (Guj.)] wherein, the substantial question of law in respect of the
three category of services, viz., Customs House Agents Services, Shipping
Agents and Container Services and Services of Overseas Commission were
answered in favour of the assessee. Further, the learned counsel referred to
the circular issued by Central Board of Excise and Customs dated 28.02.2015
wherein, it has been clarified as follows:-
“6. In the case of clearance of goods for export by
manufacturer exporter, shipping bill is filed by the
manufacturer exporter and goods are handed over to the
shipping line. After Let Export Order is issued, it is the
responsibility of the shipping line to ship the goods to the
foreign buyer with the exporter having no control over the
goods. In such a situation, transfer of property can be saic to
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C.M.A.No.2616 of 2017
have taken place at the port where the shipping bill is filed by
the manufacturer exporter and place of removal would be this
Port/ICD/CFS. Needless to say eligibility to CENVAT Credit
shall be determined accordingly.”
7.The above circular dated 28.02.2015, has been reiterated in Circular
No.1065/4/2018-CS, dated 08.06.2018, wherein it has been clarified as
follows:-
“4.Exceptions:
(i) The principle referred to in para 3 above would
apply to all situations except where the contract for sale is
FOR contract in the circumstances identical to the judgment
in the case of CCE, Mumbai-III vs. Emco Ltd., 2015 (322)
ELT 394 (SC) = 2015-TIOL-163-SC-CX and CCE vs.
M/s.Roofit Industries Ltd., 2015 (319) ELT 221 (SC) = 2015-
TIOL-87-SC-CX. To summarise, in the case of FOR
destination sale such as M/s.Emco Ltd., and M/s.Roofit
Industries where the ownership, risk in transit, remained with
the seller till goods are accepted by buyer on delivery and till
such time of delivery, seller alone remained the owner of
goods retaining right of disposal, benefit has been extended
by the Apex Court on the basis of facts of the cases.
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C.M.A.No.2616 of 2017
(ii) Clearance for export of goods by a manufacturer
shall continue to be dealt in terms of Circular no.999/6/2015-
CX dated 28.02.2015 as the judgments cited above did not
deal with issue of export of goods. In these cases otherwise
also the buyer is located outside India.”
8.After we have elaborately heard the learned counsels for the parties
and carefully examined the correctness of the order passed by the Tribunal,
we find that there were no material facts and evidences available on record on
this aspect as to whether this CHA services rendered to the assessee could
also be availed for the purpose of CENVAT credit. Therefore, the Tribunal
has granted relief to the assessee. Hence, we are of the considered view that
there is no substantial question of law arises for consideration on this issue,
viz., with regard to allowing CENVAT credit on CHA services and therefore,
we are not inclined to interfere with the order passed by the Tribunal.
However, we leave the substantial question of law open.
9.In the result, the appeal is dismissed. Substantial question of law
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C.M.A.No.2616 of 2017
Nos.1 and 2 are answered against the Revenue, in favour of the assessee and
substantial question of law no.3 is left open, as the Tribunal granted relief to
the assessee on the ground that there was no material evidence and therefore,
we are of the view that this issue cannot be a substantial question of law in
this appeal. No costs.
(T.S.S., J.) (R.N.M., J.)
27.01.2021
abr
Index :Yes/No
Speaking Order/Non-Speaking Order
To
The Customs, Excise & Service Tax Appellate Tribunal,
South Zonal Bench, Shastri Bhawan Annexe I,
1st Floor, 6, Haddows Road,
Chennai-600 006.
T.S.Sivagnanam, J.
and
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C.M.A.No.2616 of 2017
R.N.Manjula, J.
(abr)
C.M.A.No.2616 of 2017
27.01.2021
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