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2020 ] SWEETY INDUSTRIES v. COMMISSIONER OF C. EX. & S.T., VADODARA-I 303
The following questions of law have been formulated in support of the ap-
peal :
“(1) Whether Tribunal was justified in denying the Cenvat credit
of service tax paid and freight paid by M/s. Parle on inward and
outward transportation (from the appellants’ factory to depots of
M/s. Parle) on the ground that depots of M/s. Parle cannot be the
‘place of removal’ and that freight charges were not borne by the
appellants but M/s. Parle?
(2) Whether the Cenvat credit of Service Tax paid on outward
freight paid to Goods Transport Agency (GTA) is deniable on the
ground that in case of finished goods governed by the provisions of
Section 4A of CEA, 1944, ‘place of manufacture’ is ‘place of remov-
al’ and Cenvat credit under Rule 2(l) is not admissible beyond the
place of removal, in a case, where, ‘Retail Sale Price’ under Section
4A is the maximum price inclusive of freight and transport charges
till the ultimate consumer?
(3) Whether Tribunal was justified in denying the Cenvat credit of
service tax paid on outward transportation up to the depots of M/s.
Parle, in a case where, for earlier period, in appellants’ own case, in
the same facts of the case, the Tribunal has allowed the credit?”
The facts are not in dispute. The appellant manufactures biscuits on raw
material supplied by Parle Biscuits at its factory. The finished goods are
cleared from the factory of the appellant to the Depot of Parle Biscuits on
payment of duty. The goods are cleared at the factory gate. Significantly,
both in the order of the Commissioner (Appeals) as well as in the order of
the Tribunal, it has been found that as a matter of fact the goods are not
cleared “FOR Destination”. The place of removal is the factory gate of the
appellant. The cost of freight for transportation of the finished goods is ad-
mittedly borne by Parle Biscuits. No amount towards freight has been
borne by the appellant, in terms of the agreement between the appellant
and Parle Biscuits.
On this admitted factual position the Commissioner (Appeals) had held
that the appellant was not entitled to Cenvat credit in respect of the service
tax paid on the GTA Services envisaging the transportation of the goods.
Rule 2(l) of the Cenvat Credit Rules, 2004 defines the expression “input ser-
vice” to mean any service (i) used by a provider of taxable service for
providing an output service; or (ii) used by a manufacturer, whether direct-
ly or indirectly, in or in relation to the manufacture of final products and
clearance of final products up to the place of removal.
The appellant sought to place reliance on the expression ‘place of removal’
as defined in Section 4(3)(c) of the Central Excise Act, 1944 to mean inter alia
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.
In the present case, the clear finding, which has been recorded both by the
Commissioner (Appeals) and by the Tribunal, is that the sale had not taken
place on an “FOR Destination” basis. Hence, the place of removal in the
present case is the factory gate of the appellant and not the Depot of Parle
Biscuits. As a matter of fact, as held by the Commissioner (Appeals), the li-
ability on account of freight is borne by Parle Biscuits. No amount was
borne by the appellant towards freight under the agreement with Parle Bis-
cuits. Hence, in this view of the matter, the Tribunal was justified in coming
to the conclusion that the Cenvat credit on Service Tax paid on GTA Service
GST LAW TIMES  16th April 2020  209