Cenvat Credit : Where, as per tenders, price is inclusive of FOR destination delivery at cost of assessee and ownership is transferred only at place of buyer, 'place of removal' would be place of buyer and transportation upto that place would be input service
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[2014] 51 taxmann.com 38 (New Delhi - CESTAT)
CESTAT, NEW DELHI BENCH
Commissioner of Central Excise, Raipur
v.
Surya Wires (P.) Ltd.*
D.N. PANDA, JUDICIAL MEMBER
FINAL ORDER NO. 53139/2014
EXCISE CROSS/39/2009
EXCISE APPEAL NO. E/114/2009-EX(SM)
EXCISE CROSS/39/2009
EXCISE APPEAL NO. E/114/2009-EX(SM)
AUGUST 1, 2014
Rule 2(l) , read with rule 2(t) of the Cenvat Credit Rules, 2004 and section 4 of the Central Excise Act, 1944 - CENVAT Credit - Input Service - Place of Removal - Assessee-manufacturer availed Cenvat credit on GTA service in respect of delivery of goods with condition of FOR destination - Commissioner (Appeals) found that : (a) goods were delivered at place of buyer, (b) ownership of goods was with Assessee till place of buyer, and (c) as per tenders, price was inclusive of FOR destination delivery at cost of assessee; hence, in view of Circular No. 97/8/07-ST, dated 23-8-2007, place of removal was place of buyer and transportation upto place of buyer was eligible for credit - HELD : In view of reasoning given by above circular and evidence furnished in terms of tender, revenue's appeal was dismissed [Para 4] [In favour of assessee]
Circulars and Notifications : Circular No. 97/8/07-ST, dated 23-8-2007
B.B. Sharma, DR for the Appellant. Ms. Surabhi, Advocate for the Respondent.
ORDER
1. Ld. Commissioner (Appeal) relied on Board Circular No.97/8/07-ST dated 23.08.2007 dealing with the claim of Cenvat credit on GTA service availed by the assessee in respect of delivery of the goods with the condition of FOR destination. Upon examination of certain conditions, he came to the conclusion that the goods were delivered at the place of buyer carrying ownership of the goods with the manufacturer till the place of the buyer. Thus, the goods were removed at the place of buyer, not elsewhere. To this conclusion, there is no rebuttable evidence brought out by the Revenue in its appeal. Ld. Counsel submitting the tender document dated 14th September 2006 reiterates that the particulars that were fixed by condition No.2 of the tender document clearly brings out how excise duty was calculable and how the price was inclusive of FOR destination delivery at the cost of manufacturer (assessee). She further submits that when the property of goods was all along lying with the assessee and that was divested only at the place of buyer, it cannot be said that place of removal was other than the place of the buyer, where delivery of the goods occurred. In such a situation the Circular binds the Department to allow the appropriate Cenvat credit.
2. With the above preliminary submission, the respondent counters the grounds of appeal of the Committee of Commissioners submitting that those grounds have no substance and in absence of any evidence contrary to the principles enumerated in the circular, Revenue appeal shall be dismissed.
3. Revenue submits that order of the ld. Commissioner is erroneous on the ground that the place of buyer is not the place of removal of the goods. Therefore, the GTA service availed incurring the service tax shall not entitled the appellant to the credit of the said tax.
4. In view of the reasoning given by the above circular and elaborate argument of respondent supported by evidence, Revenue appeal is dismissed.
VINEET*In favour of assessee.
SAD Refund application cannot be rejected as time barred if the original application for refund was filed within time, though before wrong Authority
Singh International Vs. Commissioner of Customs (General), Mumbai and Polyglass Acrylic Mfg Co. Pvt. Ltd. Vs. Commissioner of Customs (Import), Mumbai [2014-TIOL-2369-CESTAT-MUM]
Singh International and Polyglass Acrylic Mfg Co. Pvt. Ltd. (the Appellants) filed refund claims of Special Additional Duty of Customs (SAD) paid under Section 3(5) of the Customs Tariff Act, 1975 at ICD, Dadri within a period of one year from the date of payment of SAD under Notification No. 102/ 2007-Customs dated September 14, 2007 (Notification No. 102).
However, the goods were imported at CFS, Mulund and SAD was paid there. But since, a bunch of claims was given to the consultant of the Appellants, both for Dadri and Mulund, by mistakes, their consultant filed the claims in question at Dadri. By the time the refund claims were forwarded by Customs Authorities at Dadri to the Authorities at Mulund, a period of over one year had lapsed from the time of payment of duty to the time of receipt of refund claims at CFS, Mulund.
Accordingly, the aforesaid refund claims were rejected on the ground of being time barred. Being aggrieved, the Appellant preferred an appeal before the Hon'ble CESTAT, Mumbai and relying upon the decision of the Hon'ble High Court of Gujarat in the case of Commissioner of Central Excise Vs. AIA Engineering Ltd. [Tax Appeal No. 2266 of 2009, decided on September 22, 2010] (AIA case) contended that since the original application for refund was filed within time, though before wrong authority, it cannot be said that the said application was barred by limitation.
On the other hand, the Revenue contended that benefit under Notification No. 102 shall be given effect only if the importer files a claim for refund of SAD with the jurisdictional Customs Officer.
The Hon'ble CESTAT, Mumbai also relied upon the AIA case and held that even though Notification No. 102 requires refund claim to be filed with the jurisdictional Customs Authorities, but when the original application for refund was filed within time, though before wrong authority, it cannot be said that the said application was barred by limitation.
Accordingly, the Hon'ble Tribunal decided the matter in favour of the Appellant.
Dear All,
The pronouncement of Allahabad High Court has been followed principally by the CBEC to amend rule 5A(2) and empower CAs/CMAs to conduct service tax audits.
Furthermore, earlier limit of 15 days for production of specified documents has now been replaced with the time limit specified by the concerned audit party/CAG/CAs/CMAs, as the case may be.
The relevant notification is enclosed.
Hope you find the update useful.
Can SEZ unit claim exemption from CVD when cleared to DTA based on an Exemption Notification
Can SEZ unit claim exemption from CVD when cleared to DTA based on an Exemption Notification issued under Section 5A of CEA'1944 although when there is specific bar under Section 5A for SEZ units?
Petitioner is a manufacturer of excisable goods in SEZ which is engaged in exports as well as domestic clearance to DTA subject to certain conditions. Section 30 of SEZ Act states any goods cleared from SEZ to DTA shall be chargeable to duties of Customs including CVD. But what if the same goods are exempted from whole of the excise duty vide Exemption Notification under Section 5A of CEA'1944 manufactured by local manufacturers. Will the same exemption notification applicable on SEZ?
As per the judgement of The Hon'ble Gujrat High Court in the case of Roxul Rockwool Insulation India Pvt Ltd vs. UOI [28th November,2014], the petitioner being a SEZ unit, though would ordinarily have the liability of payment of CVD on its clearances to DTA. But in view of the fact that local manufacturers are exempt from payment of excise duty vide Exemption Notification u/s 5A of the said Act, the petitioner cannot be saddled with such duty liability. Basically, CVD is imposed to balance the excise duty burden of the local manufacturers, and when the local manufacturers have no such liability in view of the exemption notification, the SEZ unit cannot be saddled with the liability of excise duty component in terms of CVD.
It would be pertinent to note that now all the issues relevant to SEZs are governed by the Special Economic Zones Act, 2005. The provisions were amended after enactment of the SEZ Act and currently Section 3(1) provides for levy of a duty of excise on all excisable goods which are manufactured in India, excluding goods produced or manufactured in SEZs. The reference to the goods manufactured in SEZ is omitted. Section 5A continues in the same form unamended. Thus, giving power of exempting duty of excise on any class of goods & the proviso continues to state that such exemption would not apply to any goods manufactured in free trade zone or SEZ and brought to any other place in India, unless specifically so provided. Emphasis shall be supplied that corresponding amendments have been made in Section 3 of the Central Excise Act exempting SEZ units from payment of central excise duty & merely because no amendment is made in Section 5A of the Central Excise Act, a liability which does not arise out of a charging provision cannot be fastened.
Thus, the entire legislative scheme has undergone a change by introduction of SEZ Act and the changes made in the Central Excise Act in this regard. As discussed earlier, legislative intention emerging is that a SEZ unit will have to liable to pay CVD, if the local manufacturer of like goods is exempt from payment of whole of such duty. Section 5A of the Central Excise Act, 1944 continues to contain a reference to a Special Economic Zone in the proviso providing that any exemption granted by a notification under Section 5A would not apply to any goods produced or manufactured in Special Economic Zone and brought to any other place in India. Thus, this omission to omit the reference to Special Economic Zone from said proviso of Section 5A appears to be a legislative oversight.
Aditya Singhania & Nischal Agarwal
Roxul Rockwool Insulation India Pvt Ltd vs. UOI ( Gujrat High Court), Dated-28th November,2014, SPECIAL CIVIL APPLICATION NO. 8869 of 2014
Rule 5A(2) of Service Tax Rules Re-introduced Via Notification No. 23/2014-ST after being held ultra-vires By High Court of Delhi
Anand Mishra,Advocate,Amlegals
It is pertinent to note that very recently , the Honourable High Court of Delhi in the case of Travelite (India) vs. UOI & Ors, while quashing Rule 5A(2) of the Service Tax Rules and the CBEC Instructions prescribing the manner of an audit and the records that can be called for by the authorities, held that
"Section 74A prescribes the conditions meriting such special audit compels the necessary inference that the Parliament did not intend to provide for a general audit that "every assessee" may be subjected to, "on demand". This Court is thus of the opinion that any attempt to include provision for such a general audit through the back-door, such as through the impugned rule, is ultra-vires the rule making power conferred under Section 94(1). Rule 5A(2) must consequently be struck down."
Before , it was struck down it read as below
Rule 5A (2) Every assessee shall, on demand, make available to the officer authorised under sub-rule (1) or the audit party deputed by the Commissioner or the Comptroller and Auditor General of India, within a reasonable time not exceeding fifteen working days from the day when such demand is made, or such further period as may be allowed by such officer or the audit party, as the case may be,-
(i) the records as mentioned in sub-rule (2) of rule 5;
(ii) trial balance or its equivalent; and
(iii) the income-tax audit report, if any, under section 44 AB of the Income-tax Act, 1961 ( 43 of 1961), for the scrutiny of the officer or audit party, as the case may be.''.
It compelled the Government to come out with an amendment in Rule 5A(2) of Service Tax Rules , 1994. The Rule 5 A (2) is re-introduced under Notification No. 23/2014-ST dated 05.12.2014.
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