TaxTMI 
TaxTMI 
2007 (7) TMI 19
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.... the stay application of M/s. SGGL. Both Sr. Advocate for the applicant and Ld. SDR for the Revenue argued extensively on the substantive issue which arose in the case, whereupon we felt that the appeal itself could be taken up along with the appeal of M/s. IJLL for hearing on the same day, to which both sides agreed. Accordingly, after dispensing with pre deposit, we took up both the appeals. 2. M/s. IJLL are manufacturers of lighting equipments for automobiles and these equipments are supplied as Original Equipments to customers like M/s. Maruti Udyog Ltd., M/s. Telco Ltd., M/s. Mahindra & Mahindra etc. They availed CENVAT credit on inputs, capital goods and input services and utilized the same for payment of duty on the said Original Equipments (final products). During the period Nov'04 to Sept'05, IJLL availed credit of service tax paid on freight in respect of transportation of their final products from factory to buyers' premises, They utilized this credit, which they called 'input service tax credit', for payment of duty (on final products) which was determined on the basis of the price at factory gate. Obviously, the outward transportation of the final products from the fa....
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....d input services under the CCR 2004. Credit of the service tax paid on freight incurred for the outward transportation of the final products from factory to customers' premises was availed and utilized for payment of duty on final products during the above period. As in the case of M/s. IJLL, this duty was determined on the basis of the price at factory gate, which did not include the above freight. In a SCN dated 27-11-2006, the department sought to recover the above credit amounting to Rs. 1,73,53,490/- along with Education Cess from M/s. SGGL for the above period as also to impose penalty on them. The proposals were con tested. In adjudication of the dispute, the Commissioner confirmed, the above demand against the assessee under Section 11A of the Central Excise Act, along with interest under Section 11AB of the Act and imposed on them penalty equal to tax + cess under Section 11AC of the Act. M/s. SGGL's appeal is against the Commissioner's decision. 4. M/s. IJJL and M/s. SGGL (hereinafter referred to as 'appellants' or 'assessees' also) had, by paying freight themselves or through agents for transportation of their final products by road in goods carriage from factory to buy....
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....ha Aiyar's ADVANCED LAW LEXICON, Govt. of India s decision reported in 1982 (10) E L T 517 and Tribunal s decision re ported in 1985 (21) E.L.T. 596, he equated "clearance" to "removal" and "removal to transportation' and argued that the outward transportation of the final products from factory to customers' premises fell within the ambit of "clearance of final products from the place of removal" and should be held to have been used in the clearance of final products from the place of removal. Alternatively, it could be held to have been used in relation to the clearance of final products from the place of removal In this connection ld counsel referred to the meaning of the expression "in relation to" as explained by the Apex Court in Doypack Systems case He also relied on the Tribunal s decision in Commissioner v CKP Mandal, 2006 (3) S.T.R. 449 (T) = 2005 (180) E.L.T 471 (Tri.-Mumbai), wherein the same expression occurring under Section 65(105)(m) of the Finance Act, 1994 was considered Ld counsel argued that, if in construing a taxing statute, any doubt arose, it must be resolved in favour of the tax payer. In this connection, he relied on the Apex Court's judgment in Polestar El....
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.... passed by the Com missioner (Appeals), Indore in the case of NHK Springs India Ltd. had been set aside, on the substantive issue, by the Tribunal in CCE, Indore v. NKH Springs India Ltd., 2007 (7) S.T.R. 63 (Tri.) = 2007-TIOL-740-CESTAT-DEL. Ld. SDR also relied on Gujarat Ambuja Cements (supra). She pointed out that, in both the cases, outward transportation of final product from the place of removal was held not to be "input service" for the purpose of CENVAT credit. Ld. SDR referred to the definition of "final products" under Rule 2(h) of the CCR 2004 and argued that any "input service" for the purpose of availment of CENVAT credit by the manufacturer of final product must be one used in or in relation to the manufacture of the final product also. Goods Transport Service used by such manufacturer for delivering his goods at the customers' premises would not be "input service" because such service was not used in or in relation to the manufacture of the goods. SDR argued that it was permissible to interpret the scope of the main part of the definition of "input service", by taking aid from the inclusive part of the definition. If so interpreted, according to her, any outward tran....
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....rvice". Counsel has also relied on an old decision of Govt. of India reported in 1982 (10) E.L.T. 517 and a similar decision of the Tribunal reported in 1985 (21) E.L.T 596 to buttress the point. In those cases, it had been observed that the word "clearance" had been used synonymously with "removal" throughout the Central Excise Rules, 1944. We are of the view that, where the Central Excise Act has clearly defined "place of removal" under Section 4(3)(c) thereof and this definition has been adopted into Rule 2(1) of the CCR 2004, it is not necessary to consult any Lexicon to understand the meaning of "removal". Section 4 of the Central Excise Act lays down the law of valuation of excisable goods for the purpose of levy of duty of excise. It provides that, "where the duty of excise is chargeable on any excisable goods with reference to their value, such value shall be the transaction value in a case where the goods are sold by the assessee for delivery at the time and place of removal and "Accordingly, the assessee has to pay duty on the assessable value of the goods determined with reference to the time and place of removal. Both "place of removal" and "time of removal" are defined....
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.... service used directly or indirectly in the clearance of final products from the place of removal. This appears to be the view taken by the learned President sitting single in the case of NHK Springs (supra). In the case of Gujarat Ambuja Cements (supra), the Division Bench accepted the Revenue's argument that transportation did not come within the scope of clearance, which is not different from the view taken by us. In the result, it is held that the outward transportation of final products after their clearance from factory, in this case, is not a service used, directly or indirectly, in the clearance of the goods from the factory. 8.3 The question now arises as to whether such transportation can be said to be a service used, directly or indirectly, in relation to the clearance of the goods from the factory. This question does not appear to have been answered in Gujarat Ambuja Cements case, nor was it considered in NHK Springs case. "Input service" as defined under Rule 2(l)(ii) is any service used, directly or indirectly, in or in relation to the manufacture of final products and clearance of 'final products from the place of removal. The learned SDR has noted the conjunction u....
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....AT-LB)] which held that such lubricants were to be considered as inputs used in relation to the manufacture of final products. This view was taken after noting that lubrication of machinery was essential for smooth conduct of the manufacturing activity. The lubricants did not enter into the process of manufacture and therefore there was no chance of their being contained in the in the final product. Nevertheless, it was found, they aided the manufacturing activity by lubricating the capital goods. There are also cases in which even effluent treatment chemicals used by certain, industries were held to be inputs for Modvat credit under Rule 57A. These chemicals were also held to have been used in relation to the manufacture of final products. Whenever any goods (other than capital goods) used by a manufacturer in his factory was found to have at least a remote relation to the manufacture of final product, it was held to be input used in relation to such manufacture. The expression "indirectly" employed in the definition was understood as indicative such relation. The expression "in relation to" used in the definition of "input service" has to be understood in the same at sense as it ....
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....the place of removal. Obviously, "inward transportation of inputs/capital goods" means transportation of these goods into the factory. "Outward" being the antonym of "inward", outward transportation can only mean transportation out of the factory. What is transported from factory to depot or warehouse (place of removal) for clearance is not input or capital goods but final product. Such transportation of final products only upto the place of removal has been recognized as "input service" under Rule 2(1) as held by the coordinate Bench in Gujarat Ambuja Cements case. 8.7 The learned counsel's opposition to taking aid from the inclusive part of the definition is not justifiable. Neither any rule of interpretation nor any judicial authority has tabooed it. Whether to take such aid for understanding the scope of the main part of the definition will depend on the text and context of the definition. The main part of the definition of "input service" under Rule 2(1) (ii) deals with service used in the manufacture or clearance of final products as also with service used in relation to the manufacture or clearance of final products. Any service used in the manufacture or clearance of final....
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....dverbial one are not interchange able equivalents; (c) the General Clauses Act, 1897, has interchangeably used the phrases "in relation to" and "as respects" each intended to restrict the scope of the meaning of the word defined vide definitions of "Central Government" [Section 3(8)] and "State Government" [Section 3(60)]:- "(8) "Central Government" shall, — (a) in relation to anything done before the commencement of the Constitution, mean the Governor-General or the Governor-General in Council, as the case may be;" "(60) "State Government", — (a) as respects anything done before the commencement of the Constitution, shall mean, in a Part A State, the Provincial Government of the corresponding Province in a Part B State, the authority or person authorized at the relevant date to exercise executive Government in the corresponding acceding State and in a Part C State, the Central Government;" Therefore, the expression "in relation to" which can be found in various grammatical situations in different legislative texts and contexts will have to be construed in a manner consistent with the scheme of the law. One has got to under stand the definitions under Rule 2 of the Cenvat ....
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....tory (place of removal). 10. M/s IJLL have not contested any part of the demand on the ground of limitation. In the case of M/s. SGGL, it appears, a part of the demand raised on them is beyond the normal period of limitation. The assessee has contested this part of the demand by submitting that they had not suppressed any information and hence there was no reason to invoke the extended period of limitation. It is submitted that, hi a letter dated 8-8-2005 addressed to the jurisdictional Superintendent, they had furnished material information to the department. In this connection, we note the following observations in the ld. Commissioner's order : "In the purported letter it appears that the noticee has only informed that they are paying service tax on freight amount vide TR.-6 challan in the capacity of consignor on the basis of GTA's bill & consignment note covering each transportation and are availing credit of service tax paid on freight amount from 16-6-2005. The said letter does not appear to declare that they are availing credit of service tax paid on freight amount incurred on outward transportation of finished goods from the factory to the buyers' premises. The letter on....