2019 (9) TMI 461 - AT - Central Excise

CENVAT Credit - input services - outward freight up to the place of buyer - period October 2010 to March 2014 - amendment in the definition of input service - HELD THAT - Apparently and admittedly the cenvat credit has been availed on the service tax paid for the services as that of transportation which are used beyond the place of removal. Hon ble Apex Court in Ultra Tech Cement 2018 (2) TMI 117 - SUPREME COURT has clarified that the word up to signifies the terminating point putting an end to the transport journey - Prior the amendment in the definition of input service in the year 2008 the word from instead of the word up to was used which used to include the services even beyond the place of removal. That situation stands extinct since the amendment which came into effect from 01.03.2008. The amount paid on the freight for outward transportation of goods from the place of removal do not anymore qualify to be called as input service. Accordingly the amount in question is not eligible to be availed for credit in view of Rule 3(1) of CCR 2004. Credit cannot be allowed - appeal dismissed- decided against appellant-assessee.

Summary

Issues:
1. Failure of the appellant to appear for the hearing and successive adjournments.
2. Wrong availment of cenvat credit on service tax paid on outward freight.
3. Interpretation of the definition of "input service" under Rule 2(1) of the Cenvat Credit Rules, 2004.

Issue 1: Failure to Appear for Hearing
The appellant consistently sought adjournments except for one instance when the matter was adjourned due to the court not being held. Despite being duly served and granted condonation for a considerable delay in filing the appeal, the appellant failed to appear, leading the tribunal to proceed with the hearing in their absence based on the directive in the previous order.

Issue 2: Wrong Availment of Cenvat Credit
The appellant, engaged in the manufacture of poly bags, was found to have wrongly availed cenvat credit on outward freight up to the place of the buyer. This action was discovered during an audit, resulting in a show cause notice for recovery of the amount with interest and penalties. The original adjudicating authority confirmed the proposal, and the subsequent appeal was rejected, citing the appellant's incorrect availment of cenvat credit.

Issue 3: Interpretation of "Input Service" Definition
The tribunal analyzed the definition of "input service" under Rule 2(1) of the Cenvat Credit Rules, 2004, which includes services related to the manufacture and clearance of final products up to the place of removal. The definition specifies that the credit for transport services is limited to transportation up to the place of removal. The tribunal referred to a previous judgment clarifying that the term "up to" signifies the end point of transport, emphasizing that services beyond the place of removal do not qualify as input services for cenvat credit. Consequently, the tribunal upheld the decision that the appellant's availed credit on outward transportation beyond the place of removal was not eligible under Rule 3(1) of CCR, 2004, leading to the dismissal of the appeal.

This comprehensive analysis of the judgment highlights the issues of non-appearance by the appellant, incorrect availment of cenvat credit, and the interpretation of the "input service" definition, providing a detailed understanding of the tribunal's decision in each aspect.