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2015 (9) TMI 1161 - CESTAT MUMBAI

2015 (9) TMI 1161 - CESTAT MUMBAI - TMI - Denial of CENVAT Credit - outward transportation - whether during the period from 7/2006 to 3/2007 Cenvat Credit is admissible on service of outward transportation - appellant charged transportation charges in the sale bill from their customer. - Held that:- By the amendment made with effect from 1st April, 2008 substituting the word "from" by the word "upto" all that has been done is to clarify the issue. Neither the services rendered to the customer fo .....

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9 (5) TMI 48 - CESTAT, BANGALORE] which was upheld by the Hon ble Karnataka High Court reported in [2011 (3) TMI 248 - KARNATAKA HIGH COURT] distinguished.

Decisions in the case of CCE vs. Vesuvious India Ltd [2013 (12) TMI 1025 - CALCUTTA HIGH COURT] and India Japan Lighting Private Ltd. [2009 (7) TMI 1217 - MADRAS HIGH COURT] and Lafarge India Ltd. vs. CCE [2014 (10) TMI 297 - CHHATTISGARH HIGH COURT] and CCE vs. Lumino Industries Ltd. [2014 (1) TMI 1424 - CALCUTTA HIGH COURT] foll .....

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peal of the appellant except the order portion pertaining to penalty aspect. The issue involved in this case that whether during the period from 7/2006 to 3/2007 Cenvat Credit is admissible on service of outward transportation. The fact of the case is that the appellant availed Cenvat Credit in respect of outward transportation. The appellant charged transportation charges in the sale bill from their customer. 2. V. K. Godbole, Ld. Consultant for the appellant submits that in the transaction of .....

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gh Court reported in [2011-TIOL-395-HC-KAR-ST]. It is his submission that as per the fact of above case, though the freight was not included in the price of the goods, it is not necessary for allowing credit, freight should be integral part of the price. In view of the definition of input service prevalent at relevant time for service used for removal of the goods from place of removal there is no condition stipulated that value of service should be included in the value of the goods, therefore, .....

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. CCE [2013 (288) ELT A23 (Mad.)] (c) Lafarge India Ltd. vs. CCE [2014 -TIOL-1720-HC-CHHATTISGARH -CX] (d) CCE vs. Lumino Industries Ltd. [2014(35) S.T.R. 59 (Cal)] 4. I have carefully considered the submissions made by both sides and perused record. 5. I find that the Ld. Commissioner (Appeals) has given very detailed findings considering all the issues and settled legal position in various judgments, the findings is reproduced below: 4.0 I have gone through the case records including the submi .....

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es in as much as the same is no t considered as, input service's which are used in or in relation to the manufacture of final product. Whereas the appellant claims that as per Rule 2(1)(ii) of Cenvat Rules they are entitled to avail the credit of Service Tax paid towards freight on clearance of final product from their factory. They argued that according to the inclusive definition even the post manufacturing activity relates to business, they are entitled to avail the credit of Service Tax .....

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2007 in the case of India Cements & others vs. CCE, Hyderabad III. 4.1 Before going into the issue directly, I would like to produce the definition of input services as available under Rule 2(1) of the Rules:- 2(l) "input service" means any service,- (i) used by a provider of 1o [output service] 1o for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products up .....

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ervices, inward transportation of inputs or capital goods and outward transportation upto the place of removal." 4.2.0 Clause (ii) of Rule 2(1) is relevant in the present issue. According to the above definition "input service" means any service used by the manufacture of final product and clearance of final product form the place of removal. The main issue to be considered in the present appeal, is whether Service Tax paid towards freight on the clearance of final product from th .....

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'. This aspect has been considered by the Tribunal in the above case. In para 8.2, the Hon'ble Tribunal has held that "such transportation starts from where clearance ends and cannot be held to be a service used directly or indirectly in the clearance of final products from the place of removal. In the case of Gujarat Ambuja Cements (supra) the Division bench accepted the revenue's argument that transportation did not come within the scope of clearance, which is not different fr .....

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" It was further held in the same para where place of removal of final product is, say a depot, transportation of goods from the factory to the depot is an input service as it is used in relation to the clearance of the goods from the depot." The Hon'ble Tribunal, while considering whether the particular input service has been used directly or indirectly in relation to the clearance of final product, has held vide para 8.4 that "when it has to be determined whether a given ser .....

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e Tribunal has further held vide para 8.5 that "Had the 'place of removal' of final products been other than factory for purposes of Section 4 of the Central Excise Act, 1944, the transportation of the goods out of the factory upto the place of removal would have qualified to be "input service' under Rule 2(1) (ii) for, in such a situation, transportation is anterior to clearance from the place of removal and passes the test. The clearance of final products from the place o .....

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lant for transportation of their final products from factory to customer's premises cannot be considered to have been used, directly or indirectly, in relation to the clearance of the goods from the factory (place of removal)." 4.2.4 The above decision of the Hon'ble Tribunal has covered all the aspects raised in the present appeal and accordingly I hold that the appellant is not entitled to avail credit of Service Tax paid towards freight on the clearance of final product from the .....

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with respect to the Hon'ble Division Bench, unable to see how can it be said from the restrictive part of the definition that "the services received or rendered by the manufacturer from the place of removal till it reaches its destination falls within the definition of input service". 12. Yet another reasoning given by the Hon'ble Division Bench is as follows: "Therefore, it is clear that till such amendment made effective from 1-4-2008 notwithstanding the clarification is .....

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destination was covered by the definition of input service prior to 1st April, 2008, nor is the same covered after 1st April, 2008. If the definition provided in Section 2(l)(ii) is read as a whole, it would appear that outward transportation charges or taxes paid in regard thereto is claimable only with regard to those transports which were made from one place of removal to another place of removal. 14. We are, as such, of the considered view that the judgment rendered by the learned Tribunal c .....

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from place of removal, being activity posterior to clearance of goods, cannot be said to be used directly or indirectly in relation to clearance of final products from place of removal. Lafarge India Ltd. vs. CCE CONCLUSIONS 30. Our conclusions are as follows: (a) In case of sale at the place of destination, an assessee is only entitled to claim cenvat credit on service tax paid for the Goods Transportation Agency service provided amount paid was integral part of the price of the" goods; (b .....

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tward transport service used by the manufacturers for transportation of finished goods from the place of removal upto the premises of the purchaser is covered within the definition of "input service" provided in Rule 2(l) of the Cenvat Credit Rules, 2004." The Hon'ble Division Bench expressed their aforesaid opinion, but no reasons or appropriate reasons are ascertainable by us for the purpose of aforesaid proposition. b) There are more reasons. In paragraph 30, the Hon'bl .....

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9; deals with service used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products, it also includes clearance of final products from the place of removal. Therefore, services received or rendered by the manufacturer from the place of removal till it reaches its destination falls within the definition of input service." We are, with respect to the Hon'ble Division Bench, unable to see how can it be said from the restrictive part of the .....

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