M/s Pee Cee Cosma Sope Ltd. Versus CE, C & CGST – CCE & ST, Jodhpur
Service Tax
2018 (7) TMI 99 – CESTAT NEW DELHI – TMI
CESTAT NEW DELHI – AT
Dated:- 2-7-2018
Appeal No. ST/51046/2018 – EX(SM) – Final Order No. 52367/2018
Service Tax
Hon'ble Ms. Rachna Gupta, Member ( Judicial )
Shri Ravikant Mishra, Advocate for the appellant
Shri H.C. Saini, D. R. for the respondent
ORDER
Per Rachna Gupta
Present is an appeal filed being aggrieved of Order of Commissioner (Appeals) dated 26.02.2018 whereby the Cenvat Credit of Rs. 70,714/- has been held to be irregularly availed by the Appellant and has accordingly been disallowed with the order of recovery thereof along with the interest. In addition, a penalty has been imposed in view of Section 78 of the Central Excise Act, 1944. The factual matrix relevant for the purpose is as follows:
1. The Appellant is engaged in the manufacture of excisable goods falling under Chapter 34 of Central Excise Tariff Act, 1985. It
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definition of place of removal as given in the Act and since the place where excisable goods sold can be the place where the property or goods can process from buyer to seller and the sale culminates only after the goods reached the destination then it will be deemed to be place of removal. Accordingly, the freight rate for transporting the goods from the Appellant's premises to the customer's premises for sale, have had rightly been considered as input services by the Appellant and a right credit thereof has been availed. The findings of the order under challenge are therefore liable to be set aside.
3. It is further submitted that even if the Tribunal is convinced with the findings of the impugned order, still the order under challenge deserves to be set aside for the basic reason that the Show Cause Notice based upon which the order has been announced is hopelessly barred by time. The refund for the period with effect from 2011 to 2015 has been challenged and the Show Cause Notice
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he part of the Appellant. Hence, the Department has rightly invoked Section 78 of the Act. The order under challenged has rightly been announced. The appeal is, accordingly, prayed to be rejected. After hearing both the parties and perusing the entire record of this appeal, we are of the considered opinion as follows:
(i) The core issue involved in the present case is with regard to the admissibility, or otherwise, of Cenvat Credit on goods transport agency service availed for transport of goods from the place of removal to the buyer's premises, treating the said service as the input service. For this purpose, the definition of input service as defined in Rule 2(l) of Cenvat Credit Rules, 2004 (CCR) is important to be looked into. It reads as follows:
“5. 'Input service' is defined in Rule 2(l) of the Rules, 2004 which reads as under:
“2(l) “input service” means any service:-
(i) Used by a provider of taxable service for providing an output services; or
(ii) Used by the manufa
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f clearance of final products 'from the place of removal' to the warehouse of customer's place etc., was exigible for Cenvat Credit. This stands finally decided in Civil Appeal No. 11710 of 2016 (Commissioner of Central Excise Belgaum v. M/s Vasavadatta Cements Ltd.) vide judgment dated January 17, 2018. However, vide amendment carried out in the aforesaid Rules in the year 2008, which became effective from March 1, 2008, the word 'from' is replaced by the word 'upto'. Thus, it is only 'upto the place of removal' that service is treated as input service. This amendment has changed the entire 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 amendment Rule, which applies to the period in question that the Goods Transport Agency service used for the purpose of o
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ayment 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 services stage credit does not arise. Transportation is an entirely different activity from manufacture and this position remains settled by the judgment of Honourable Supreme Court in the cases of Bombay Tyre International – 1983 (14) E.L.T. 1896 (S.C.), Indian Oxygen Ltd. – 1988 (36) E.L.T. 723 (S.C.) and Baroda Electric Meters – 1997 (94) E.L.T. 13 (S.C.). The post removal transport of manufactured goods is not an input for the manufacturer. Similarly, in the case of M/s Ultratech Cements Ltd. v. CCE, Bhatnagar – 2007 (6) S.T.R.
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