TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 781
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....basis. That transportation charges were paid by the Respondent for sending the raw materials both to the job workers factory and from job workers premises to Respondents depots for sale to the customers. That service tax on freight so paid by the Respondent is taken as Cenvat Credit by Respondent when final goods manufactured discharge duty at the time of clearance by the job workers. That three demand show cause notices were issued to the Respondent, for the period October, 2006 to March, 2012, for denying service tax credit on freight paid by the Respondent under Rule 15(2) of the Cenvat Credit Rules, 2004(CCR). The show cause notices were confirmed, alongwith interests, and equivalent penalties were also imposed upon Respondent under Rule 15(2) of CCR, read with Section 11AC of the Central Excise Act, 1944. It was strongly argued by the Learned A.R that job worker is the manufacturer who only is eligible to take Cenvat Credit with respect to inputs/input services availed in respect to manufacturing activity done on job work basis. That in the case of Commissioner of Central Excise, Indore vs. Dhananjay Confectionery (P) Ltd.[2010(20)S.T.R. 696(Tri.-Del.)] relied upon by First A....
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....dings is whether Cenvat credit is admissible to the Respondent for the GTA service tax paid by Respondent when goods are manufactured by the job worker and cleared on payment of duty from the factory premises of job worker. Cenvat credit has been taken by the Respondent for the freight paid by them upto the factory premises of the job worker while sending raw materials and also freight charges paid by Respondent from the job workers to the Depots of the Respondent while sending finished goods. 4.1 As per the definition of Input Service, given in Rule 2 (l) of the Cenvat Credit Rules, 2004 (CCR), Cenvat credit of services can be availed by a manufacturer upto the place of removal. Rule 4 (5) (a) of CCR provides for removal of inputs for further manufacture if the intermediate goods are received back within 180 days. Rule 4 (5) (b) of CCR provides for clearance of goods manufactured to be cleared from job workers premises, subject to permission from the jurisdictional DC/AC on payment of duty. The word manufacturer has not been defined in CCR but the same has to be construed from the definition of the word manufacturer contained in Section 2 (f) of the Central Excise Act, 194....
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.... or] [(iii) which, in relation to the goods specified in the third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer,] And the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account;] 4.3 The definition of "manufacture" above contained in Section 2 (f) of the Central Excise Act, 1944 is an inclusive definition. As per the provisions of Cenvat Credit Rules, 2004, read with the job worker procedure, allows a principal manufacturer to send raw materials and pay duty on the finished goods so manufactured by the job worker. The Central Excise duty is required to be paid by a manufacturer only. Principal manufacturer is also a "manufacturer" as per the inclusive definition of manufacturer contained in section 2 (f) of Central Excise Act, 1944, even if the goods a....
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....e "depots" of the Respondent cannot be considered as the "place of removal" because Respondent has not elected to discharge duty liability on the finished goods, after being manufactured by the job worker, as permissible under the CCR. This view is fortified by the case law Lotte India Corporation Ltd. Vs. CCE, Pondichery [2015 (37) STR 876 (Tri-Chennai) where CESTAT, Chennai made following observations in para 14: "14. I have considered submissions on both sides. This is a case where the appellant did not do the manufacturing activity in respect of the goods for which Cenvat credit of input services was taken. Neither did the appellant pay excise duty on such goods. Both manufacturing and duty payment were done by job workers. In such a situation there is no justification to consider the appellant as manufacturer for the purpose of taking Cenvat credit in respect Service Tax paid on transportation of inputs and final products. In the various decisions relied upon by the appellant the assesse has done either a part of the manufacturing activity or at least paid duty on the final product manufactured by job worker by following various rules enabling such payment as distinct from f....