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TMI Blog2018 (2) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is also availing the benefit of Cenvat Credit facility under the Cenvat Credit Rules, 2004 ('Rules, 2004' for short). The assesseeherein gets finished goods (cement) from its parent unit on stock transfer basis and sells the same in bulk form and packed bags. The assessee during the period from January, 2010 to June, 2010 availed Cenvat Credit of service tax paid on outward transportation of goods through a transport agency from their premises to the customer's premises. According to the appellant/Revenue, the transport agency service used by the assessee for transportation of their final product from their premises to customers premises cannot be considered to have been used directly or indirectly in relation to clearance of goods from the factory viz., place of removal in terms of Rule 2(l) of the Rules and as such cannot be considered as input service to avail Cenvat credit. Accordingly, the Office of the Commissioner of Central Excise: Bangalore II Commissionerate issued show cause notice dated February 3, 2011 to the assessee inter alia stating that on scrutiny of ER-1 return submitted by the assessee for the period January, 2010 to June, 2010, it was noticed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s). The Commissioner (Appeals) vide Order-in-Appeal No. 57/2012-CE dated March 15, 2012 allowed the appeal and set aside the Order-in-Original holding that assessee is eligible for availment of service tax paid on GTA service on the outward freight from the factory to the customers' premises as per the Board's Circular 97/8/2007-Service Tax dated August 23, 2007. It was now the turn of the Revenue to feel aggrieved by the order. Accordingly, appeal was filed before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) by the Revenue which was rejected vide judgment dated May 1, 2015. Further appeal to the High Court preferred by the assessee has met the same fate as the said appeal has been dismissed by the High Court of Karnataka vide its judgment dated June 29, 2016, which is the subject matter of the present appeal. 4) As mentioned above, the assessee is involved in packing and clearing of cement. It is supposed to pay the service tax on the aforesaid services. At the same time, it is entitled to avail the benefit of Cenvat Credit in respect of any input service tax paid. In the instant case, input service tax was also paid on the outward transportation of the goods f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tire scenario. The benefit which was admissible even beyond the place of removal now gets terminated at the place of removal and doors to the cenvat credit of input tax paid gets closed at that place. This credit cannot travel therefrom. It becomes clear from the bare reading of this amended Rule, which applies to the period in question that the Goods Transport Agency service used for the purpose of outward transportation of goods, i.e. from the factory to customer's premises, is not covered within the ambit of Rule 2(l)(i) of Rules, 2004. Whereas the word 'from' is the indicator of starting point, the expression 'upto' signifies the terminating point, putting an end to the transport journey. We, therefore, find that the Adjudicating Authority was right in interpreting Rule 2(l) in the following manner: "... The input service has been defined to mean any service used by the manufacturer whether directly or indirectly and also includes, interalia, services used in relation to inward transportation of inputs or export goods and outward transportation upto the place of removal. The two clauses in the definition of 'input services' take care to circumscribe input credit by stating th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... val, there will be no scope of subsequent use of service to be treated as input. The above observations and views explain the scope of relevant provisions clearly, correctly and in accordance with the legal provisions." 8) The aforesaid order of the Adjudicating Authority was upset by the Commissioner (Appeals) principally on the ground that the Board in its Circular dated August 23, 2007 had clarified the definition of 'place of removal' and the three conditions contained therein stood satisfied insofar as the case of the respondent is concerned, i.e. (i) regarding ownership of the goods till the delivery of the goods at the purchaser's door step; (ii) seller bearing the risk of or loss or damage to the goods during transit to the destination and; (iii) freight charges to be integral part of the price of the goods. This approach of the Commissioner (Appeals) has been approved by the CESTAT as well as by the High Court. This was the main argument advanced by the learned counsel for the respondent supporting the judgment of the High Court. 9) We are afraid that the aforesaid approach of the Courts below is clearly untenable for the following reasons: 10) In the first instance, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words or expressions are used in the CENVAT Credit Rules, 2004 and are not defined therein but are defined in the Central Excise Act, 1944 or the Finance Act, 1994, they shall have the same meaning for the CENVAT Credit Rules as assigned to them in those Acts. The phrase 'place of removal' is defined under section 4 of the Central Excise Act, 1944. It states that,- "place of removal" means- (i) a factory or any other place or premises of production or manufacture of the excisable goods ; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be stored without payment of duty ; (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory; from where such goods are removed." It is, therefore, clear that for a manufacturer /consignor, the eligibility to avail credit of the service tax paid on the transportation during removal of excisable goods would depend upon the place of removal as per the definition. In case of a factory gate sale, sale from a non-duty paid warehouse, or from a duty paid depot (from where the excisable goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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