TMI Blog2007 (7) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... cases. Having found these submissions to be factually correct, we heard both sides on the stay application of M/s. IJLL on 5-6-2007 and posted the matter to the next day for orders. On 6-6-2007, we heard both sides on the stay application of M/s. SGGL. Both Sr. Advocate for the applicant and Ld. SDR for the Revenue argued extensively on the substantive issue which arose in the case, whereupon we felt that the appeal itself could be taken up along with the appeal of M/s. IJLL for hearing on the same day, to which both sides agreed. Accordingly, after dispensing with pre deposit, we took up both the appeals. 2. M/s. IJLL are manufacturers of lighting equipments for automobiles and these equipments are supplied as Original Equipments to customers like M/s. Maruti Udyog Ltd., M/s. Telco Ltd., M/s. Mahindra Mahindra etc. They availed CENVAT credit on inputs, capital goods and input services and utilized the same for payment of duty on the said Original Equipments (final products). During the period Nov'04 to Sept'05, IJLL availed credit of service tax paid on freight in respect of transportation of their final products from factory to buyers' premises, They utilized this credit, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... une'05 to Sept'06. M/s. SGGL are manufacturers of glass. They sell a major potion of their products to customers directly and the rest is cleared to their depot. They are also availing Cenvat credit on inputs, capital goods and input services under the CCR 2004. Credit of the service tax paid on freight incurred for the outward transportation of the final products from factory to customers' premises was availed and utilized for payment of duty on final products during the above period. As in the case of M/s. IJLL, this duty was determined on the basis of the price at factory gate, which did not include the above freight. In a SCN dated 27-11-2006, the department sought to recover the above credit amounting to Rs. 1,73,53,490/- along with Education Cess from M/s. SGGL for the above period as also to impose penalty on them. The proposals were con tested. In adjudication of the dispute, the Commissioner confirmed, the above demand against the assessee under Section 11A of the Central Excise Act, along with interest under Section 11AB of the Act and imposed on them penalty equal to tax + cess under Section 11AC of the Act. M/s. SGGL's appeal is against the Commissioner's decision. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in both the cases before us, is the factory. Ld Sr Advocate argued that the Goods Transport Service was used by the appellants in or in relation to clearance of final products from factory to customers' premises. Relying on P. Ramanatha Aiyar's ADVANCED LAW LEXICON, Govt. of India s decision reported in 1982 (10) E L T 517 and Tribunal s decision re ported in 1985 (21) E.L.T. 596, he equated "clearance" to "removal" and "removal to transportation' and argued that the outward transportation of the final products from factory to customers' premises fell within the ambit of "clearance of final products from the place of removal" and should be held to have been used in the clearance of final products from the place of removal. Alternatively, it could be held to have been used in relation to the clearance of final products from the place of removal In this connection ld counsel referred to the meaning of the expression "in relation to" as explained by the Apex Court in Doypack Systems case He also relied on the Tribunal s decision in Commissioner v CKP Mandal, 2006 (3) S.T.R. 449 (T) = 2005 (180) E.L.T 471 (Tri.-Mumbai), wherein the same expression occurring under Section 65(105)(m) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 618 (Comm. Appl.) = 2006 (204) E.L.T 189 (Comm. Appl.). He also cited a similar order passed by the Commissioner of Central Excise (Appeals), Mangalore, in the case of M/s. KTMS Engineering Pvt. Ltd. 6. Ld. SDR, at the outset, pointed out that the order passed by the Com missioner (Appeals), Indore in the case of NHK Springs India Ltd. had been set aside, on the substantive issue, by the Tribunal in CCE, Indore v. NKH Springs India Ltd., 2007 (7) S.T.R. 63 (Tri.) = 2007-TIOL-740-CESTAT-DEL. Ld. SDR also relied on Gujarat Ambuja Cements (supra). She pointed out that, in both the cases, outward transportation of final product from the place of removal was held not to be "input service" for the purpose of CENVAT credit. Ld. SDR referred to the definition of "final products" under Rule 2(h) of the CCR 2004 and argued that any "input service" for the purpose of availment of CENVAT credit by the manufacturer of final product must be one used in or in relation to the manufacture of the final product also. Goods Transport Service used by such manufacturer for delivering his goods at the customers' premises would not be "input service" because such service was not used in or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NCED LAW LEXICON, that "transport" also means to "remove". In this manner, ld. counsel has made an endeavour to bring outward transportation of final products from the factory to customers' premises, within the ambit of the expression "clearance" used in the definition of "input service". Counsel has also relied on an old decision of Govt. of India reported in 1982 (10) E.L.T. 517 and a similar decision of the Tribunal reported in 1985 (21) E.L.T 596 to buttress the point. In those cases, it had been observed that the word "clearance" had been used synonymously with "removal" throughout the Central Excise Rules, 1944. We are of the view that, where the Central Excise Act has clearly defined "place of removal" under Section 4(3)(c) thereof and this definition has been adopted into Rule 2(1) of the CCR 2004, it is not necessary to consult any Lexicon to understand the meaning of "removal". Section 4 of the Central Excise Act lays down the law of valuation of excisable goods for the purpose of levy of duty of excise. It provides that, "where the duty of excise is chargeable on any excisable goods with reference to their value, such value shall be the transaction value in a case where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amed there under or from the common parlance, the only possible view is that clearance of final products from the place of removal does not include outward transportation of the goods to customers' premises. 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. This appears to be the view taken by the learned President sitting single in the case of NHK Springs (supra). 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 from the view taken by us. In the result, it is held that the outward transportation of final products after their clearance from factory, in this case, is not a service used, directly or indirectly, in the clearance of the goods from the factory. 8.3 The question now arises as to whether such transportation can be said to be a service used, directly or indirectly, in relation to the clearance of the goods from the factory. This question does not appear to have been answered in Gujarat Ambuja Cements c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CER 1944 nor as inputs under Rule 57A. A doubt arose as to whether they should be considered as inputs or capital goods for MODVAT credit and this was cleared by a Larger Bench of the Tribunal [vide CCE, Meerut v. Modi Rubber Limited Others, 2000 (119) E.L.T. 197 (Tribunal-LB) = 2000 (38) RLT 718 (CEGAT-LB)] which held that such lubricants were to be considered as inputs used in relation to the manufacture of final products. This view was taken after noting that lubrication of machinery was essential for smooth conduct of the manufacturing activity. The lubricants did not enter into the process of manufacture and therefore there was no chance of their being contained in the in the final product. Nevertheless, it was found, they aided the manufacturing activity by lubricating the capital goods. There are also cases in which even effluent treatment chemicals used by certain, industries were held to be inputs for Modvat credit under Rule 57A. These chemicals were also held to have been used in relation to the manufacture of final products. Whenever any goods (other than capital goods) used by a manufacturer in his factory was found to have at least a remote relation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (directly or indirectly) in relation to the clearance of final products from the place of removal. The eye-catcher in this category is outward transportation, upto the place of removal. This expression, juxtaposed with "inward transportation of inputs or capital goods", can only mean outward transportation of final products upto the place of removal. Obviously, " inward transportation of inputs/capital goods" means transportation of these goods into the factory. "Outward" being the antonym of "inward", outward transportation can only mean transportation out of the factory. What is transported from factory to depot or warehouse (place of removal) for clearance is not input or capital goods but final product. Such transportation of final products only upto the place of removal has been recognized as "input service" under Rule 2(1) as held by the coordinate Bench in Gujarat Ambuja Cements case. 8.7 The learned counsel's opposition to taking aid from the inclusive part of the definition is not justifiable. Neither any rule of interpretation nor any judicial authority has tabooed it. Whether to take such aid for understanding the scope of the main part of the definition w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used in Rule 2(l)(ii). This argument is also not persuasive for more than one reason, viz. (a) an expression used in a definition (which may be expansive or restrictive depending on the requirements of the scheme of the statute) cannot have the same meaning as it has when used in a deeming provision (which is per se expansive); (b) an adjectival phrase and an adverbial one are not interchange able equivalents; (c) the General Clauses Act, 1897, has interchangeably used the phrases "in relation to" and "as respects" each intended to restrict the scope of the meaning of the word defined vide definitions of "Central Government" [Section 3(8)] and "State Government" [Section 3(60)]:- "(8) "Central Government" shall, — (a) in relation to anything done before the commencement of the Constitution, mean the Governor-General or the Governor-General in Council, as the case may be;" "(60) "State Government", — (a) as respects anything done before the commencement of the Constitution, shall mean, in a Part A State, the Provincial Government of the corresponding Province in a Part B State, the authority or person authorized at the relevant date to exercise executive Government in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as no popular meaning and might require external aid for its interpretation. 9. For the reasons recorded hereinbefore, we hold that goods transport service used by the appellants 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). 10. M/s IJLL have not contested any part of the demand on the ground of limitation. In the case of M/s. SGGL, it appears, a part of the demand raised on them is beyond the normal period of limitation. The assessee has contested this part of the demand by submitting that they had not suppressed any information and hence there was no reason to invoke the extended period of limitation. It is submitted that, hi a letter dated 8-8-2005 addressed to the jurisdictional Superintendent, they had furnished material information to the department. In this connection, we note the following observations in the ld. Commissioner's order : "In the purported letter it appears that the noticee has only informed that they are paying service tax on freight amount vide TR.-6 challan in the capacity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of law, it would not be just and fair to impose such a penalty on the party. But the case of M/s. SGGL is slightly different. We have already sustained the ground (suppression of facts) raised by the lower authority for recovering the wrongly availed/utilized Cenvat credit from them for a part of the period of dispute. Hence the party is prima facie liable for penalty under Section 11AC of the Central Excise Act. Under this provision, the Commissioner imposed the maxi mum penalty (equal to Tax + Cess), which is extremely harsh even on his own findings. 12. In the result, the order for recovery of Cenvat credit illegally availed and utilized by M/s. IJLL, with interest thereon, is upheld, but the penalty imposed on them is set aside. The order of the Commissioner against M/s. SGGL is set aside and the case is remanded to him for requantification of dPm2nd in terms of this order and fresh consideration of the question whether the party is liable for penalty under Section 11AC and, if so; to what extent. The said question may be addressed without regard to our observations. Needless to say, the assessee shall be given an effective opportunity of being heard also. Both the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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