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Judgment
DILIP GUPTA
This appeal filed by M/s India Yamaha Motor Private Limited, the appellant seeks to assail the order dated 31.10.2016 passed by the Commissioner by which CENVAT credit has been denied to the appellant and an order for its recovery with interest and penalty has been passed.
The appellant is engaged in the business of manufacturing motor cycles, scooters and spare parts and availed the facility of CENVAT credit under the Cenvat Credit Rules, 2004, the 2004 Credit Rules. A show cause notice dated 14.09.2015 was issued to the appellant proposing to deny CENVAT credit on the input service for the period April 2010 to March 2015 for the reason that the direct sale points in Kolkata cannot be considered as place of removal for the goods manufactured in the factory premises. The appellant filed a reply and denied the allegations made in the show cause notice.
The Commissioner, by the aforesaid order dated 31.10.2016, held that the appellant was not entitled to avail CENVAT credit for the following reasons :-
“15.2 The case of the Assessee is that from the said direct shop at Kolkata, they are making the sale of motor cycles to their dealers and hence, the same is the direct sale points of their company, which should be treated as “place of removal” in the instant case. The Assessee has further submitted that the ‘place of removal’ of the goods shall be the place where the title in the goods passes on from the seller to the buyer, which in their case, is direct shop at Kolkata. In support of their contention, they have referred to the provisions of Section 4(3)(c) of the Central Excise Act, 1944 and also relied upon various judgments and circulars.
…
15.4 As per the above-definition, it is clear that either factory premises or warehouse or depot can be the “place of removal”. Hence, the issue is largely depending upon the facts of case, rather than of the interpretation of the provisions. What is required to be proved is that the “place of removal” in the instant case is the direct shop at Kolkata. Albeit the Assessee has submitted that the said direct shop at Kolkata is the “place of removal”, however, the Assessee has failed to establish as to whether such direct shop at Kolkata is the factory premises or any other place or warehouse or any other place or premises wherein the excisable goods have been permitted to be stored without payment of duty; or if the same is 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.
15.5 As per the facts on record, such direct shop at Kolkata is neither the factory premises nor a warehouse wherein the goods have been permitted to be stored without payment of duty; nor is a depot or a premise of a consignment agent as the said M/s Frostees Export India Pvt. Ltd. has, at no juncture, been said to be a consignment agent of the Assessee. Hence, in such a situation, such direct shop at Kolkata cannot be considered as the “place of removal” for the Assessee without cogent evidences and certification.
15.6 Moreover, the Assessee has also failed to bring it on record as to whether the said premises, i.e. direct shop at Kolkata is a registered premises duly notified to the Department as appropriate “place of removal” under the relevant provisions; whether any value addition is being done in the process of transporting goods from the manufacturing unit at Noida to the direct shop at Kolkata; whether such transportation cost and other such ancillary expenses are included in the transaction value of the said manufactured goods etc. Hence, in the absence of any such substantiation by the assessee, the said direct shop at Kolkata cannot be considered as “place of removal” for the assessee.
15.7 Since it has been concluded now that the said direct shop at Kolkata cannot be considered as the “place of removal” for the Assessee, hence, as a corollary, it implies that such Rent, Repair and Maintenance services cannot be said to have been used by the Assessee, directly or indirectly, in or in relation to the clearance of such final products upto “place of removal”. Consequently, the referred Judgments and Circulars cannot be made squarely applicable in the instant case based upon facts existing in the instant case as aforesaid”.
(emphasis supplied)
Shri Tanuj Hazari, learned counsel appearing for the appellant submitted that the view taken by the Commissioner in the impugned order that the direct shop at Kolkata is not the place of removal of the goods is not correct and in support of his contention, he place reliance upon a decision of the Tribunal rendered by Allahabad Regional Bench in the case of the appellant for the subsequent period from 2015 – 2017. The said decision is M/s India Yamaha Motor Pvt. Ltd. Versus Commissioner of Central Excise and CGST, Gautam Budh Nagar, Service Tax Appeal No. 70219 of 2020 decided on 04.10.2023.
Shri Vivek Kumar Jain, learned authorized representative appearing for the department, however, supported the impugned order and placed various paragraphs to contend that the place of removal would be the factory premises and not the direct shop at Kolkata.
The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered.
The issue as to whether the factory premises of the appellant or the direct shop at Kolkata would be the place of removal of the goods was the issue that arose for consideration before the Allahabad Regional Bench of the Tribunal in M/s India Yamaha Motor. The relevant paragraphs of the decision are reproduced below :-
“4.7 Thus it is settled position in law that in case of sale of goods from any premises other than at the factory gate the value of excisable goods for payment of duty is to be determined at the place of removal i.e. the depot/ direct shop, premises of consignment agent or by whatever name it is called.
4.8 Rule 2 (l) as noted above provides that the input service is the services used directly or in-directly, in or in relation to manufacture and clearance of the finished products up to the place of removal. Undisputedly, the place of removal in the present case is the direct shop in Kolkata and the claim of appellant that the duty is paid on the value determined on the basis of sale value from the direct shop is not disputed in the impugned order. While recording the submissions in the order in original, appellant submission to effect “v. The assessee has been discharging the Excise Duty on the bikes sold from direct shop at Kolkata at a value at which bikes are sold from Kolkata direct shop and not at any notional value at the time of dispatch of bikes from the factory gate.” However adjudicating authority has not given any finding on this submission.
4.9 Interestingly, Commissioner (Appeals) says in his order that adjudicating authority in his earlier order states that direct shop at Kolkata belongs to M/s Frostees Export India Pvt. Ltd. and for that reason it cannot be place of removal while doing so Commissioner (Appeals) has failed to examine the basic question whether the goods were sold by the appellant from the direct shop which may be owned by M/s Frostees Export India Pvt. Ltd. or any other person. Once it is established that the appellant were paying duty on the value at which the bikes were sold from the direct shop at Kolkata then there cannot be any reason for not allowing the Cenvat Credit in respect of the services received at depot”.
The Allahabad Bench then considered the decision of the Supreme Court in MRF Ltd., 1997 (92) E.L.T. 3 (S.C.) and the Circular No. 1065/4/2018 dated 08.06.2018 issued by the Board and observed as follows :-
“4.11 In view of the above discussion there is no justification for holding that the direct shop at Kolkata from where the bikes were finally sold by the appellant is not the place of removal as per Rule 2 (qa) of the CENVAT Credit Rules, 2004. In our view the expenses incurred on rent, repair and maintenance of the direct shop cannot be excluded from the assessable value for the payment of Central Excise Duty and for the same reason the service tax paid in respect of these services received at depot cannot be denied”.
The Allahabad Bench also examined the decision of the Mumbai Bench of the Tribunal in Metro Shoes Pvt. Ltd. Versus Commissioner of Central Excise, 2018 (10) S.T.R. 382 (Tri. – Mumbai) as also the decision of the Tribunal in DSCL Sugar versus Commissioner of Central Excise, Lucknow, 2014 (34) S.T.R. 58 (Tri. – Del.) and observed as follows :-
“4.14 The finding recorded by the Commissioner (Appeal) in para 5.5 to the effect that if the direct shop is owned and operated by the appellant itself and it is the appellant’s own showroom, then question of charging rent by M/s Frostees Exports would not arise, is without any basis and merits. The appellants can always have a show room which they own and operate from the rented premises taken on rent from M/s Frostees Exports at Kolkata. The finding recorded is contrary to the facts available on record, that appellant had been paying rent in respect of the premises from where their shop is operating in Kolkata.
4.15 Thus, there is no justification for not allowing the credit in respect of input services received at the direct shop in Kolkata from where the goods are finally sold by the appellant after clearance from the factory. There is no merit in the impugned order and the same is set aside. As the demand for duty is set aside the demand for interest and penalty imposed is also set aside”.
(emphasis supplied)
The factual position in the appeal decided by the Allahabad Bench and the present appeal is identical. In fact, the appellant in both the appeals is India Yamaha Motor Private Limited.
We see no good reason to take a different view from the view taken in Allahabad Bench of the Tribunal and, accordingly, hold that the place of removal would be the direct shop at Kolkata and not the factory premises.
The impugned order dated 31.10.2016 passed by the Commissioner is, accordingly, set aside and the appeal is allowed.
(Dictated and pronounced in open court.)