2018 (7) TMI 99 – CESTAT NEW DELHI – TMI – CENVAT Credit – input services – outward freight paid beyond the place of removal – Rule 2(l) of Cenvat Credit Rules, 2004 – time limitation – Held that:- The Cenvat Credit on goods transport agencies availed for transport of goods from place of removal to buyer’s premises was not admissible to the Appellant – demand upheld.
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Extended period of limitation – Held that:- Vide the impugned Show Cause Notice the demand for refunding the Cenvat Credit already availed by the Appellant for the period with effect from 2011 till 2015 has been claimed. The Show Cause Notice is of January 2016. Apparently, it is beyond the period of one year for the demand till the year 2014 – Since the fact of availment of such irregular credit was not disclosed to the Department, the Commissioner has rightly held it to be a clear case of suppression of relevant facts warranting invocation of extending period and imposition of mandatory penalty under Section 78 –
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ions of Cenvat Credit Rules, 2004. However, during the course of audit of records of the Appellant for the period 2011-12 and 2014-15, the Appellant was found to have availed the Cenvat Credit of the impugned value on outward freight paid beyond the place of removal of input services. Accordingly, a Show Cause Notice No. 11/ST/Audit-I/IND/AC/2016 dated 20.01.2016 was served upon the Appellant. 2. While adjudicating upon the said Show Cause Notice, the first adjudicating authority had dropped the demand as was raised by the said Show Cause Notice. Revenue being aggrieved, filed the appeal thereof and the impugned order confirming the demand of Show Cause Notice has been filed and the Appellant is here before us. We have heard both the parties at length. It is impressed upon for the Appellant that the Appellant has been taking the Cenvat Credit on the outward freight in accordance of the definition of place of removal as given in the Act and since the place where excisable goods sold can
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he extended period of five years as enshrined under Section 78 of the Act. The order is, accordingly, prayed to be set aside. The demand being barred by time, appeal is allowed. 4. While rebutting these arguments, learned D.R. has relied upon the position of the Hon ble Supreme Court in the case of Commissioner of Central Excise & Service Tax vs. Ultratech Cement, 2018 (9) GSTL 337 (SC) to impress upon that the Apex Court has settled that the goods transport agency service used for the purpose of outward transportation of goods from the factory to the customer s premises is not an input service. Hence, the Cenvat Credit claimed against such services is a wrong claim. Since the claim has already been disbursed to the Appellant, he is liable to refund thereof along with the interest. With respect to the plea of limitation, it is submitted that there is apparent suppression of facts on the part of the Appellant. Hence, the Department has rightly invoked Section 78 of the Act. The orde
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nal products upto the place of removal and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, shortage 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; 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 of customer s place etc., was exigible for Cenv
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of Rules, 2004. Whereas the word from is the indicator of starting point, the expression upto signifies the termination point, putting an end to the transport journey. It becomes clear that transport services credit cannot go beyond transport upto the place of removal. Credit availability is in regard to inputs . The credit 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 regar
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of service to be treated as input. 5. From the above discussion, it becomes clear that the Cenvat Credit on goods transport agencies availed for transport of goods from place of removal to buyer s premises was not admissible to the Appellant. Accordingly, we do not find any infirmity to this extent with the order under challenge. 6. Now, coming to the aspect of Show Cause Notice being barred by time, it is observed and held that no doubt vide the impugned Show Cause Notice the demand for refunding the Cenvat Credit already availed by the Appellant for the period with effect from 2011 till 2015 has been claimed. The Show Cause Notice is of January 2016. Apparently, it is beyond the period of one year for the demand till the year 2014. But the another apparent fact from record is that the fact of Appellant being availing the Cenvat Credit on the outward freight services came to the notice of the Revenue only when their team conducted an audit of records of the Appellant for the period w
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