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M/s. Vijay Cements Versus CCE, Trichy

Denial of CENVAT Credit - Determination of place of removal - Inclusion of freight - Held that:- High Court of Madras in the cases of CCE, Chennai Vs. M/s. Borg Warner Morse TEC Murugappa Pvt. Ltd. (2015 (4) TMI 254 - MADRAS HIGH COURT), has relied on the decision of the Hon’ble Karnataka High Court in the case of CCE, Bangalore Vs. ABB Ltd. [2011 (3) TMI 248 - KARNATAKA HIGH COURT] which was rendered on the appeal filed by the Department as against the decision of the Larger Bench of the Tribun .....

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e Board s Circular has elaborately dealt with the issue of determination of place of removal and as per the terms of the purchase order delivery is upto the place of destination and freight was paid by the appellants, they are eligible for availing input service credit on outward transportation. - Impugned order is set aside - Decided in favour of assessee. - Appeal No. E/318/2011 - Final Order No. 40988 / 2015 - Dated:- 14-8-2015 - Shri P.K. Choudhary, Judicial Member ,J. For the Appellant : Sh .....

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ssued a Show Cause Notice dated 13.10.2009 stating that they were not eligible for the CENVAT credit of service tax of ₹ 8,14,658/- paid on the freight for the outward transportation of goods beyond the place of removal for the period April 2007 to September 2009. Appellants vide their reply to notice dated 2.11.2009 stated that the SCN is time-barred and further they submitted that all their dispatches are on FOR destination basis, and the sale takes place at the place of the customer whe .....

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ion 11A(1) of the Central Excise Act, 1944 and imposed penalty of equal amount under Rule 15 of CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act and also demanded appropriate interest. The Commissioner (Appeals) rejected the appeal of the assessee and upheld the order of the adjudicating authority by stating that the decision of the Larger Bench of the Tribunal in the case of ABB Ltd. Vs. CCE & ST is not accepted by the Department and they have filed appeal before th .....

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rt of Madras in the case of CCE, Chennai Vs. M/s. Sundaram Industries Ltd. vide order dated 25.2.2014 in CMA No. 547/2012 and the definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004. Further, he relied on Circular No. 988/12/2014-CX dated 20.10.2014 5. The learned AR for Revenue reiterated the findings of both the lower authorities and submits that the goods have been cleared from the depot to the place of destination and the Board s Circular is not applicable to the fac .....

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d. 2011 (23) STR 97 (Kar.) which was rendered on the appeal filed by the Department as against the decision of the Larger Bench of the Tribunal and it was held that whether services availed by the manufacturer of outward transportation of final products from the place of removal should be treated as an input service in terms of Rule 2(l)(ii) of the CENVAT Credit Rules, 2004 and thereby enabling the manufacturer to take credit of the service tax on the value of such services. The Hon ble High Cou .....

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outward transportation of final products from the place of removal should be treated as an input service in terms of Rule 2 (l) (ii) of the CENVAT Credit Rules, 2004 and thereby enabling the manufacturer to take credit of the service tax on the value of such services, held as follows: "30. The definition of 'input service' contains both the word 'means' and 'includes', but not 'means and includes'. The portion of the definition to which the word means applie .....

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e manufacturer from the place of removal till it reached its destination falls within the definition of input service. What are the services that normally a manufacturer would render to a customer from the place of removal? They may be packing, loading, unloading, transportation, delivery etc,. Though the word transportation is not specifically used in the said section in the context in which the phrase 'clearance of final products from the place of removal' is used. It includes the tran .....

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n of 'input service'. However, as the legislature has chosen to use the word 'means' in this portion of the definition, it has to be construed strictly and in a restrictive manner. After defining the 'input service' used by the manufacturer in are restrictive manner, in the later portion of the definition, the legislature has used the word 'includes'. Therefore, the later portion of the definition has to be construed liberally. Specifically what are the services w .....

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ing with inward transportation, they have specifically used the words 'inputs' or 'capital goods'. But, while dealing with outward transportation those two words are conspicuously missing. The reason being, after inward transportation of inputs or capital goods into the factory premises, if a final product emerges, the final product has to be transported from the factory premises toll the godown before it is removed for being delivered to the customer. Therefore, 'input servi .....

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