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2019 (12) TMI 110

..... nished by the appellant pertain to clearances of final products from the factory to the buyer’s premises - HELD THAT:- Undisputedly, cement has been sold in this case on FOR destination basis for delivery at the buyer’s premises by the supplier. Cenvat Credit Rules permit availment of Cenvat credit on GTA services up to the place of removal. The question is whether in such a case, whether Cenvat credit on outward transportation to the buyer’s premises is admissible. Identical issue was dealt with by the Hon’ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [2018 (2) TMI 117 - SUPREME COURT] where it was held that Cenvat Credit on goods transport agency service availed for transport of goods from place of removal to buyer’s premises was not admissible to the respondent. The learned adjudicating authority must be given an opportunity to examine the present case in the light of this judgment and also all the documents relied upon by the appellant to assert that they are entitled to Cenvat credit which has been denied to them as the purchase orders clearly indicate that sale was on FOR buyer’s prem .....

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..... d order is as follows: 26.4 I find that the case law of M/s Ultratech Cement Ltd vs CC, CE & ST, Hyderabad relied on by the assesses, Hon ble CESTAT, Hyderabad held that the sale is on FOR (Free on Road) basis, the price is inclusive of freight charges, ownership responsibility continues till goods are handed over to the customer property in the goods passes from the seller to the buyer at premises of the buyer and accordingly, place of removal is to be considered as the buyers premises and hence covered within the definition of input service under Rule 2(l) of CCR,2004 since the outward transportation service is used by the manufacturer for the clearance of the products upto the place of removal and hence Cenvat credit will be allowable. I find that the said case law relied on by the assessee is therefore squarely applicable to the facts of the present case. 4. Learned departmental representative submits that in Karnataka, on an identical issue in the case of Ultratech Cement Ltd, the original authority had denied the appellant Cenvat credit on GTA services availed for transport beyond the factory or depot to the buyer s premises where the goods were sold on FOR destination ba .....

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..... l products are cleared from the factory premises, extending the credit beyond the point of clearance of final product is not permissible under Cenvat Credit Rules and post clearance use of services in transport of manufactured goods cannot be input service for the manufacture of final product. Further, the Adjudicating Authority held that CBEC vide its Circular No. 97/8/2007-ST, dated August 23, 2007 has clarified the definition of place of removal. With respect to fulfillment of requirement of Circular dated August 23, 2007, it was held that the assessee has not produced any documentary evidence to prove that conditions laid down vide Circular dated August 23, 2007 has been fulfilled. Accordingly, the Adjudicating Authority passed the order as under: (i) Demanding the irregular Cenvat credit availed on outward transportation of goods amounting to ₹ 25,66,131/- under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A of Central Excise Act, 1944; (ii) Demanding interest under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AB of Central Excise Act, 1944 read with Section 75 of the Finance Act, 1994; (iii) Did not order for initiation of action under Rule 15(1) .....

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..... 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 upto the place of removal; 6. It is an admitted position that the instant case does not fall in sub-clause (i) and the issue is to be decided on the application of sub-clause (ii). Reading of the aforesaid provision makes it clear that those services are included which are used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal . 7. It may be relevant to point out here that the original definition of input service contained in Rule 2(l) of the Rules, 2004 used the expression from the place of removal . As per the said definition, service used by the manufacturer of clearance of final products from the place of removal to the warehouse or customer s place etc., was exigible for Cenvat Credit. This stands finally decided in Civil Appeal No. 11710 .....

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..... redit covers duty paid on input materials as well as tax paid on services, used in or in relation to the manufacture of the final product . The final products, manufactured by the assessee in their factory premises and once the final products are fully manufactured and cleared from the factory premises, the question of utilization of service does not arise as such services cannot be considered as used in relation to the manufacture of the final product. Therefore, extending the credit beyond the point of removal of the final product on payment of duty would be contrary to the scheme of Cenvat Credit Rules. The main clause in the definition states that the service in regard to which credit of tax is sought, should be used in or in relation to clearance of the final products from the place of removal. The definition of input services should be read as a whole and should not be fragmented in order to avail ineligible credit. Once the clearances have taken place, the question of granting input service stage credit does not arise. Transportation is an entirely different activity from manufacture and this position remains settled by the judgment of Honorable Supreme Court in the cases of .....

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..... redit by stating that service used in relation to the clearance from the place of removal and service used for outward transportation upto the place of removal are to be treated as input service. The first clause does not mention transport service in particular. The second clause restricts transport service credit upto the place of removal. When these two clauses are read together, it becomes clear that transport service credit cannot go beyond transport upto the place of removal. The two clauses, the one dealing with general provision and other dealing with a specific item, are not to be read disjunctively so as 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 v. CCE Bhavnagar - 2007-TOIL-429-CESTAT-AHM = 2007 (6) S.T.R. 364 (Tribunal), 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 and in accordance with the legal provisions. .....

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..... ssible if it can be established by the claimant of such credit that the sale and the transfer of property in goods (in terms of the definition as under Section 2 of the Central Excise Act, 1944 as also in terms of the provisions under the Sale of Goods Act, 1930) occurred at the said place. 11. As can be seen from the reading of the aforesaid portion of the circular, the issue was examined after keeping in mind judgments of CESTAT in Gujarat Ambuja Cement Ltd., 2007 (6) S.T.R. 249 (Tribunal) and M/s. Ultratech Cement Ltd., 2007 (6) S.T.R. 364 (Tri.- Ahd.). Those judgments, obviously, dealt with unamended Rule 2(l) of Rules, 2004. The three conditions which were mentioned explaining the place of removal as defined under Section 4 of the Act, there is no quarrel upto this stage. However, the important aspect of the matter is that Cenvat Credit is permissible in respect of input service and the Circular relates to the unamended regime. Therefore, it cannot be applied after amendment in the definition of input service which brought about a total change. Now, the definition of place of removal and the conditions which are to be satisfied have to be in the context of upto the place of re .....

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