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Commissioner of Customs Central Excise And Service Tax, Guntur Versus M/s. The Andhra Sugars Ltd.

2018 (2) TMI 285 - SUPREME COURT OF INDIA

CENVAT credit - input services - service tax paid on goods that are transported to the purchaser after the sale - place of removal - whether the expression ‘input service’ as defined in Rule 2(l) of the CCR, 2004, in the context of a service provider, would also include services which are used in or in relation to providing taxation output services described in the definition and the outward transportation to the purchaser would be treated as beyond the ‘place of removal’? - Held that: - As .....

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y the claimant of such credit that the sale and the transfer of property in goods occurred at the said place. - Once it is accepted that place of removal is the factory premises of the assessee, outward transportation ‘from the said place’ would clearly amount to input service. That place can be warehouse of the manufacturer or it can be customer’s place if from the place of removal the goods are directly dispatched to the place of the customer. One such outbound transportation from the plac .....

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identical. It pertains to Cenvat Credit in respect of service tax paid on goods that are transported to the purchaser after the sale. The question, therefore, which needs determination is as to whether the expression input service as defined in Rule 2(l) of the Cenvat Credit Rules, 2004 (hereinafter referred to as the Rules, 2004 ), in the context of a service provider, would also include services which are used in or in relation to providing taxation output services described in the definition .....

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same for payment of duty. It came to the notice of the Revenue that during the periods December, 2007, the respondent at their unit Saggonda, had taken credit of input services namely service tax paid on transportation charges upto the place of customers which according to the Revenue is inadmissible. Accordingly, show cause notice dated November 3, 2008 was issued to the respondent demanding the Cenvat Credit of ₹ 3,87,763/- availed during the above mentioned period along with interest an .....

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1, allowed the appeals by setting aside the Order-in-Original with consequential relief to the respondent. The Revenue challenged the Order-in-Appeal No. 46 of 2011 (G) ST dated December 2, 2011 by preferring appeal bearing Appeal No. E/510/2012-DB before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore. The CESTAT vide final Order No. 26346/2013 dated August 14, 2013 dismissed the appeal filed by the Revenue holding that the same is covered by the decision of the High .....

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e its impugned judgment dated July 16, 2014 has dismissed the appeal filed by the Revenue holding that on an identical issue, this Court dismissed Central Excise Appeal No. 31 of 2013. Hence, this appeal is also dismissed. 4) Before we proceed further, it would be necessary to take note of the definition of input service which was prevailing at the relevant period i.e. prior to April 1, 2008. This definition contained in Section 2(l) of the Rules, 2004 reads as under: Input Service means any ser .....

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earch, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation from the place of removal; 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 f .....

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ed by the Central Board of Excise and Customs (CBEC) (hereinafter referred to as the Board ) as per which the definition of input service was clarified and the Circular also provided the conditions which are to be satisfied to cover the case within place of removal . The three conditions contained in the circular are (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 th .....

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Central Excise Act. To put it differently, the Department contends that the outward transportation provided beyond the place of removal is not eligible for input service for availing Cenvat Credit. 7) Having regard to the definition of input service that was prevailing at the relevant time i.e. prior to April 1, 2008, the aforesaid contention of the Department cannot be accepted. As per the said definition, service used by the manufacturer of clearance of final products from the place of remova .....

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ssue has been examined in great detail by the CESTAT in the case of M/s Gujarat Ambuja Cements Ltd. vs CCE, Ludhiana [2007 (6) STR 249 Tri-D]. In this case, CESTAT has made the following observations:- the post sale transport of manufactured goods is not an input for the manufacturer/consignor. The two clauses in the definition of input services take care to circumscribe input credit by stating that service used in relation to the clearance from the place of removal and service used for outward .....

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s to bring about conflict to defeat the laws scheme. The purpose of interpretation is to find harmony and reconciliation among the various provisions . Similarly, in the case of M/s Ultratech Cements Ltd vs CCE Bhavnagar 2007-TOIL-429-CESTAT-AHM, it was held that after the final products are cleared from the place of removal, there will be no scope of subsequent use of service to be treated as input. The above observations and views explain the scope of the relevant provisions clearly, correctly .....

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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 .....

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nd 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 are sold, after their clearance from the factory), the determination of the place of removal does not pose much problem. However, there may be situations where the manufacturer /consignor may claim that the sale has taken place at the destination point because in terms of the sale contract /agreement (i) the ownership o .....

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