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Manish K.Gandhi
Superintendent
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It appears that Manufacturer of Goods attracting Specific duty, Tariff Value or MRP based valuation,
are availing Input service credit for services freight, Storage & other services used for stock transfer
of goods to their Depot, Branch, godown, warehouse, or any other place from which the said goods
is being removed for further delivery to effect sale, on the basis of CBEC Circular No. F.No.
137/3/2006-CX.4 dated 02.02.2006 and para 8.2 of CBEC Master Circular No. 97/8/2007 dated
23.08.07. Relevant para of both the circulars are reproduced as under.
Para- 4: In view of the above, the undersigned is directed to state that, in case of depot
sales of goods, the credit of service tax paid on the transportation of goods up to such depot
would be eligible, irrespective of the fact, whether the goods were chargeable to excise
duty at specific rates or ad valorem rates on the basis of valuation under section 4 or 4A
of the Central Excise Act.
(This circular was withdrawn by Master Circular No. 97/8/2008 dated 23.08.2007 and aspect
was covered in master circular)
1 of 6 27-Mar-19, 2:13 AM
Input service credit-place of removal is factory,sec.4 cea - Excise Forum https://www.caclubindia.com/forum/input-service-credit-place-of-remova...
that the sale has taken place at the destination point because in terms of the sale
contract/agreement (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.”
2. The above both circulars were issued considering erstwhile definition of “input service”
given at Rule 2(l) of the CCR’2004 having phrase “clearance of final products from the place of
removal” in its main part, which is already is substituted since 01.04.2008 with the phrase
“clearance of final products upto the place of removal”. Also, the phrase “activities relating to
business, such as” as referred in inclusive part of definition of “Input service” has been omitted
since 01.04.2011. Hence, in terms of amended definition of “input service”, Para 8.2 of Master
Circular No. 97/8/2007 dated 23.08.07 has lost its significance and have no effect, though the said
circular with Para 8.2 is in force, till date.
In the case of Vesuvious India Ltd. Vs. CCE, Kolkata-VI [2014 (34) S.T.R. 26 (Cal.)], the Hon’ble
Kolkata High Court held that,
“Cenvat credit - Input service - Service Tax paid for outward transportation of goods upto the
point of delivery to the customer - Outward transportation charges or taxes paid in regard
thereto claimable only with regard to transports made from one place of removal to another
place of removal and not to destination - C.B.E. & C. Circular No. 97/8/2007-S.T., dated
23-8-2007 does not provide for the allowance for all cases, made relaxation in some cases
having factual background - Rule 2(l)(ii) of Cenvat Credit Rules, 2004. - By the amendment
made w.e.f. 1-4-2008 substituting the word “from” by the word “upto” all that has been done
to clarify the issue. Neither the services rendered to the customer for the purpose of
delivering the goods at the destination was covered by the definition of input service prior to
1-4-2008, nor is the same covered after 1-4-2008. [paras 5, 13]”
3. Also there are judgments wherein specific issue of availability of Cenvat Credit for service
used till place of removal in respect of goods when the duty on the finished goods is at specific rate
or is chargeable at ad–valorem rate on the tariff value fixed under section 3 (2) or on value
determined under section 4 A in which cases the definition of “place of removal‟ in Section 4 (3)(c)
is not relevant. Though the same judgments are related to Stay and not final order, the discussion
of Cenvat provisions is concrete and we may adopt and implement the clarification.
(A) Lafarge India Pvt. Ltd.Vs. CCE, Raipur [2012 (285) E.L.T. 390 (Tri. - Del.)]
Stay/Dispensation of pre-deposit - Cenvat credit - Input services - Prima facie, C.B.E. & C.
Circular No. 137/3/2006-CX., dated 2-2-2006 prescribing that Cenvat credit of Service Tax
paid on transportation upto depot would be admissible even if goods attract duty at specific
rate, found to take incorrect view as Section 4(3) of Central Excise Act, 1944 makes it clear
that definitions of various terms therein are only for purpose of Section 4 - Also, definition of
“place of removal” in Section 4(3)(c) ibid is relevant only for determining assessable
value.
“From the very first sentence of Section 4 it is clear that the provisions of this Section are
attracted only when the duty on the goods is at an ad valorem rate and for this purpose, the
“assessable value” on which duty at ad valorem rate is to be calculated has to be
determined.”
(B) Ultratech Cement Ltd.Versus CCE., Chandigarh [2013 (30) S.T.R. 220 (Tri. - Del.)]
HELD : Though Board vide Circular No. 97/8/2007-ST-CX., dated 23-8-2007 had clarified
Post Reply
that in cases where the sales are on FOR destination Post New
basis, it is buyer’s Topic which is
premises,
2 of 6 27-Mar-19, 2:13 AM
Input service credit-place of removal is factory,sec.4 cea - Excise Forum https://www.caclubindia.com/forum/input-service-credit-place-of-remova...
to be treated as the place of removal for the purpose of availing Cenvat credit of GTA
service, in case of cement chargeable to specific rate of duty, the definition of ‘place of
removal’ provided for in Section 4(3) of Central Excise Act, 1944 “for the purpose of this
Section only” (i.e. for the purpose of Section 4 ibid only) cannot be adopted for the purpose
of Cenvat Credit Rules, 2004 - The place of removal in such cases would be the place on
removal from which duty is payable on the goods, which in this case would be the factory
gate [paras 7, 8]
(C) M/s Ultratech Cement Ltd. Vs. CCE, Raipur [2013 (4) ECS (104) (Tri – Del)]
“Therefore, when the “place of removal‟ has been defined under section 4(3)(c) for the
purpose of determining value under section 4, in our view the definition of “place of
removal‟, cannot be adopted for Cenvat Credit Rules, 2004 when the duty on the finished
goods is at specific rate or is chargeable at ad–valorem rate on the tariff value fixed under
section 3 (2) or on value determined under section 4 A in which cases the definition of “place
of removal‟ in Section 4 (3)(c) is not relevant.” [Para 9.6]
“We, therefore, hold that for the period w.e.f. 01.04.2008, while Cenvat Credit of service tax
paid on the GTA Service availed for transportation of the finished goods up to the “place of
removal‟ would be admissible, the definition of “place of removal‟, as given in section 4
(3)(c) would be applicable only in the cases where the rate of duty on the finished goods is
chargeable at ad-valorem rate on the value determined under section 4 and in other cases
the “place of removal‟ would be the factory gate.”[Para 9.7]
“Where the rate of duty is specific, the “place of removal‟ would be the factory gate and as
such there would be no question of permitting Cenvat Credit of service tax paid on GTA
Service availed for outward transportation of the Cement from the factory to Depot /Dump or
the Customers‟ Premises.” [Para 11]
5. From the above judgments, it is clear that “Place of Removal” is factory gate for the Goods
attracting Specific duty, Tariff Value or MRP based valuation, hence Cenvat credit of any services
received after their clearance from factory gate is not admissible.
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Manish K.Gandhi
Superintendent
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18 851
I correct that judgment of Vesuvious India Ltd. Vs. CCE, Kolkata-VI [2014 (34) S.T.R. 26 (Cal.)],
applicable for general subject "input service credit after clearance from factory" and not exactly
related to above subject. hence kindly ignore.
Reply
3 of 6 27-Mar-19, 2:13 AM
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Manish K.Gandhi
Superintendent
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18 851
Recently The Apex Court, in Civil Appeal No. 11261 of 2016 in case of CCE, ST Vs.Ultratech
Cement Ltd, in judgment dated 01.02.2018 held that Cenvat Credit of Service tax paid on service
used after clearance beyond factory gate (Place of Remove) not allowed after amendment of
definition of 'input service given in Rule 2(l) of CCR made in year 2008. hence judgment/circular
issued for pre-amendment regime don't applicable for post-amendment regime.
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