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M/s The Oudh Sugar Mills Ltd. Versus Commissioner of C. Ex., Lucknow

2016 (5) TMI 271 - CESTAT ALLAHABAD

Cenvat Credit - Procurement of molasses - Availed Cenvat credit on the duty paid on inputs and capital goods and service tax paid on input services - procured inputs for their distillery unit, being molasses, the main raw material - as per agreement service providers were appointed for performing liason works for the appellant to get allotment of molasses from the office of the Excise Commissioner and Controller of Molasses, Allahabad. - Held that:- as molasses are under the strict control o .....

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he ld. Commissioner (Appeals) have erred in observing that the service provider have only obtained the permit to procure molasses but not the molasses which is the actual raw material. Accordingly, the impugned order is set aside. - Decided in favour of appellant with consequential benefit - S.T. Appeal Nos.50716,50717/15 - Final Order Nos. A/70115-70116/2016-SM - Dated:- 11-3-2016 - MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) For the Petitioner : Shri Bipin Garg, Adv. For the Respondent : Shri Rajeev .....

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riod in dispute February, 2011 to August, 2011, the appellants have procured inputs for their distillery unit, being molasses, the main raw material. For procurement of the same, they have incurred service charges. The service provider charged service tax which was paid and Cenvat credit taken. SCN was issued as it appeared to revenue that credit on such is not allowable, accordingly, it was proposed to disallow the amount of ₹ 8,22,146.50+ ₹ 30,07,188/-. The SCN was adjudicated on c .....

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for performing liason works for the appellant to get allotment of molasses from the office of the Excise Commissioner and Controller of Molasses, Allahabad. The service of liason work provided by the said service providers to the appellant is not a taxable activity under service tax net. It was also observed that the so called contract for the liaisoning work for procurement of molasses at a consideration of ₹ 36/Rs.30 by Quintal appears to be speed money in the garb of commission/fee for .....

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ner to the controller specifying the purpose for which it is required. Sub-section (2) provides on receipt of an application under sub-section (1) and after making such inquiry in the matter as he may think fit, the Controller may make an order under section 8 subject to considerations like, (i) the general availability of molasses ; (ii) various requirements of molasses ; (iii) the better utilization to which molasses may be put in the public interest ; (iv) the extent to which the requirement .....

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d manner such, quantity of molasses to such person, as may be specified in the order, and the occupier shall, notwithstanding any contract, comply with the order. Further Section 8 that (1-a) provides - Notwithstanding anything contained in Sub-Section (1) the occupier of a sugar factory shall sell or supply forty per cent of the molasses produced in each quarter of a molasses year in the sugar factory to such chemical industries which are actual users of molasses and are granted licence under t .....

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purchase of molasses, or to whom molasses for captive consumption has been transferred or supplied, from the occupier of a sugar factory. Further, Rule 8 of the said Rules provides that (1) The Controller may specify the order in which storage tanks in a factory shall be filled or emptied and such direction shall be binding on the occupier of the sugar factory. Sub-rule 8 (2) further provides that  No molasses produced or stored in a factory in a particular molasses year shall be mixed with any .....

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olasses for captive consumption, shall be removed from the premises of a sugar factory until it has been weighed or measured and a pass in Form M.F.4 has been issued. This pass shall be issued in pentuplicate by the occupier of the factory or by an officer authorized by the Controller in this behalf. 4.2 The ld. Counsel stated that from the provisions of the State Govt. Act and Rules for molasses, it is evident that even the appellant cannot transfer the molasses from their sugar mill to the dis .....

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accordingly, the appellants have rightly taken the Cenvat credit. 4.3 The ld. Counsel also points out that from the definition of input service given in rule 2 (l) in clause (ii) of CCR, 2004, the inclusive part of the definition, procurement of input is also a service eligible for Cenvat credit. Clause (ii) further provides that the manufacturer who uses input service whether directly or indirectly in or in relation to the manufacture of final product and clearance of final products up to the .....

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Mills Ltd. to the appellant, vide allotment order dated 21/2/11, to be transported through road by truck/tanker. 4.4 The ld. Counsel also relies on the ruling of the Division Bench of this Tribunal in the case of ITC Ltd. versus CCE, Hyderabad : 2010 (17) STR 146 wherein the assessee had taken credit of service tax on services used for Plantation activity. Under the fact that ITC is manufacturing paper, from trees, being raw material and investment was made for improving the Plantation. It was .....

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