M/s. Hindalco Industries Ltd. Versus Commissioner of CGST & CX, Howrah (Vice-Versa)
Service Tax
2018 (12) TMI 864 – CESTAT KOLKATA – TMI
CESTAT KOLKATA – AT
Dated:- 10-9-2018
Appeal Nos. ST/77288/2018 & ST/78059/2018 – FO/76596-76597/2018
Service Tax
SHRI P.K. CHOUDHARY, MEMBER (JUDICIAL)
Shri S. P. Majumdar, Adv. for the Appellant (s)
Shri S. S. Chattopadhyay, Suptd. (A. R.) for the Revenue
ORDER
PER SHRI P.K. CHOUDHARY
Briefly stated the facts of the case are that the Appellant assessee is engaged in the manufacture of Aluminium Rolled products classifiable under Chapter 76 of the First Schedule to the Central Excise Tariff Act, 1985. A Show Cause Notice dated 09/04/2009 was issued for availing ir-regular credit of Service Tax paid on freight for outward transportation of goods from their factory to the buyer's premises during the period January, 2005 to October, 2006.
2. The Adjudicating Authority confirmed the demand of Rs. 6,89,127/- along with inter
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interpretation that has to be given to input service which is defined in Rule 2(l) of the Cenvat Credit Rules, 2004. It may be stated at this stage itself that all these appeals relate to a period prior to 1-4-2008. The aforesaid Rule was amended w.e.f. 1-4- 2008 as would be noticed hereafter. However, since we are concerned with the unamended Rule, we reproduce the same hereunder:
“(l) “input service” means any service, –
(i) used by a provider of taxable service for providing an output service; or
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from 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, storage upto the place of removal, procurement of inputs, activ
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ncluded as “input services”.
4. We may make it clear that in the instant appeals, we are concerned with the first part of the definition. Insofar as second part is concerned, certain contentions, which have been raised by some of the assessees, have been rejected and that aspect is decided in favour of the Department. Since these appeals are filed by the Department questioning the interpretation that is given by the CESTAT as well as the High Court in respect of first part, we are not making any comments insofar as judgment of the CESTAT pertaining to second part is concerned.
5. Coming back to the first part of the definition as to what input service means, the Full Bench of the CESTAT held that all input services which are used by the manufacturer, whether directly or indirectly, in or in relation to manufacture of final products and clearance of final products from the place of removal are concerned, they are treated as input services and Cenvat credit in respect of expenditure
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laimed and if there was any such tax again paid from the place of depot to the place of customers, the Cenvat credit thereof was not claimed and there is no dispute about it.
6. The aforesaid approach of the Full Bench of the CESTAT, as affirmed by the High Court, appears to be perfectly correct and we do not find any error therein. For the sake of convenience, we would like to reproduce the following discussion contained in the judgment of the High Court.
“30. The definition of 'input service' contains both the word 'means' and 'includes', but not 'means and includes'. The portion of the definition to which the word means applies has to be construed restrictively as it is exhaustive. However, the portion of the definition to which the word includes applies has to be construed liberally as it is extensive. The exhaustive portion of the definition of 'input service' deals with service used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of f
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nished product upto the customer. Therefore, all such services rendered by the manufacturer are included in the definition of 'input service'. However, as the legislature has chosen to use the word 'means' in this portion of the definition, it has to be construed strictly and in a restrictive manner. After defining the 'input service' used by the manufacturer in a restrictive manner, in the later portion of the definition, the legislature has used the word 'includes'. Therefore, the later portion of the definition has to be construed liberally. Specifically what are the services which fall within the definition of 'input service' has been clearly set out in that portion of the definition. Thereafter, the words 'activities relating to business' – an omni-bus phrase is used to expand the meaning of the word 'input service'. However, after using the omni-bus phrase, examples are given. It also includes transportation. The words used are (a) inward transportation of inputs or capital goods
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tain point. Therefore, tax paid on the transportation of the final product from the place of removal upto the first point, whether it is depot or the customer, has to be allowed.
8. Our view gets support from the amendment which has been carried out by the rule making authority w.e.f. 1-4-2008 vide Notification No. 10/2008-C.E. (N.T.), dated 1-3-2008 whereby the aforesaid expression “from the place of removal” is substituted by “upto the place of removal”. Thus from 1-4-2008, with the aforesaid amendment, the Cenvat credit is available only upto the place of removal whereas as per the amended Rule from the place of removal which has to be upto either the place of depot or the place of customer, as the case may be. This aspect has also been noted by the High Court in the impugned judgment in the following manner :
“However, the interpretation placed by us on the words 'clearance of final products from the place of removal' and the subsequent amendment by Notification 10/2008-C.E. (N
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