2012 (11) TMI 1001 - AT - Central Excise

Appeal Dismissed: No Cenvat Credit for Loading/Unloading Services

The appeal was dismissed, affirming the denial of Cenvat credit for loading and unloading services at the transshipment point. The court found that the ... Cenvat credit - input service - activity relating to the business - nexus with manufacturing activity - place of removal - time-bar / limitation for recovery - disclosure in ER-1 returnCenvat credit - input service - activity relating to the business - nexus with manufacturing activity - place of removal - Entitlement to Cenvat credit in respect of manpower supply for loading and unloading of finished goods at transshipment point after removal from the factory gate. - HELD THAT: - The Tribunal found as an admitted factual position that the place of removal was the factory gate and that the manpower supply service was availed at the transshipment point after removal of the goods. Applying the definition of 'input service' and the principle that 'activity relating to the business' is confined to activities connected with the manufacturing business (following the reasoning relied upon from Ultratech Cement), the Tribunal held that loading/unloading at the transshipment point, being an activity after removal and concerned with onward sale/dispatch, had no nexus with the appellant's manufacturing activity. The appellant also failed to produce invoices showing that duty had been paid on a value that included the transshipment expenses. On these foundations the Tribunal concluded that the Cenvat credit was correctly denied. [Paras 5]Cenvat credit in respect of manpower supply at the transshipment point denied as it lacked requisite nexus with the manufacturing business; denial upheld.Time-bar / limitation for recovery - disclosure in ER-1 return - Whether the demand for recovery of Cenvat credit was time-barred and whether the appellant had established disclosure in ER-1 returns to defeat limitation. - HELD THAT: - The appellant contended that the demand was time-barred except for a limited period and asserted that availment had been declared in ER-1 returns. The Tribunal observed that the show cause notice covered the period May, 2006 to March, 2009 and that the appellant had not produced the ER-1 returns to demonstrate specific disclosure of the services availed at the transshipment point. In absence of documentary proof of disclosure and given no finding of lack of wilful concealment, the Tribunal rejected the plea that the demand was time-barred. [Paras 6]Plea of time-bar and of disclosure in ER-1 returns rejected for want of documentary proof; demand not barred.Final Conclusion: The appeal was dismissed: Cenvat credit for manpower supply at the transshipment point was correctly denied for lack of nexus with the manufacturing activity and the appellant's contention of time-bar/adequate disclosure in ER-1 was not established. Issues:1. Denial of Cenvat credit for services of loading and unloading of finished goods at transshipment point.2. Nexus of the service availed with the business activity.3. Time-barred plea for Cenvat credit demand.Analysis:1. The appellant, a manufacturer of glass bottles, availed services of manpower supply for loading and unloading of finished goods at a transshipment point in New Delhi. The Department issued a show cause notice for denial of Cenvat credit, recovery of the amount with interest, and imposition of a penalty. The Assistant Commissioner confirmed the demand, and the Commissioner (Appeals) upheld the decision, leading to the current appeal.2. The appellant argued that the loading and unloading service at the transshipment point is related to their business activity and falls under the definition of 'Input Service.' They contended that the loading and unloading charges are included in the value of goods on which duty has been paid. The appellant presented a Chartered Accountant's certificate to support their claim. However, the Department asserted that the service received after goods clearance from the factory gate, the acknowledged place of removal, lacked nexus with the manufacturing business activity of the appellant.3. The judge examined the submissions and records, noting that the service at the transshipment point was indeed availed after goods removal. Citing a judgment from the Hon'ble Bombay High Court, it was established that 'activity relating to the business' in the definition of 'input service' pertains only to manufacturing activities, not trading. As the service in question was post-removal and not directly linked to manufacturing, the denial of Cenvat credit was deemed appropriate. Additionally, the absence of invoices showing duty payment on expenses at the transshipment point further supported the decision to deny the credit.4. Addressing the plea of time-bar for Cenvat credit demand, the appellant claimed no willful misstatement or suppression of facts, stating that they had disclosed the credit availed in their ER-1 returns. However, as the ER-1 returns were not provided to demonstrate specific disclosure of the credit for services at the transshipment point, the judge found no merit in the time-barred argument and upheld the impugned order.5. Consequently, the appeal was dismissed, affirming the denial of Cenvat credit for the loading and unloading services at the transshipment point, as the service lacked nexus with the manufacturing business activity of the appellant, and the plea of time-bar for Cenvat credit demand was not substantiated with sufficient evidence.