TaxTMI 
TaxTMI 
2018 (5) TMI 293
X X X X Extracts X X X X
X X X X Extracts X X X X
....ransportation does not fall under the ambit of the definition of input services under Cenvat Credit Rules, 2004. Three show cause notices were issued demanding Cenvat credit of service tax amounting to Rs. 6,90,027/- along with interest and proposing penalty under Section 11AC of the Central Excise Act, 1944. The matter was adjudicated and the entire demand of Rs. 6,90,027/- was confirmed along with interest and penalty of equivalent amount was imposed under Section 11AC of the Act. The appellants went in appeal, wherein their appeal was rejected by the Commissioner (Appeals). Aggrieved from the same, the appellants have filed this appeal. 3. Ld. Advocate for the appellants submits that there is a special procedure for removal of liquid gases, in which a Pass-out document (POD) system is prevalent. Contention is that the gases are transported by a special tank and prices are settled on FOR basis and the ownership and property of the goods invariably vests with the appellants upto the point of delivery, which is the place of removal. The element of freight is an integral part of the price of goods. He also contends that the conditions of the CBEC‟s Circular No. 97/8/2007-ST d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by the manufacturer of clearance of final products 'from the place of remova' to the warehouse or 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 amended Rule, which applies to the period in question that the Goods Transport Agency service used for the purpose of outward transportation of goods, i.e. from the factory to customer's premises, isnot covered within the ambit of Rule 2(l)(i) of Rules, 2004. Whereas the word 'from' is the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n place, the question of granting input service stage credit does not arise. Transportation is an entirely different activity from manufacture and this position remains settled by the judgment of Honorable Supreme Court in the cases of Bombay Tyre International 1983 (14) ELT, Indian Oxygen Ltd. 1988 (36) ELT 723 SC and Baroda Electric Meters 1997 (94) ELT 13 SC. 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) STR 364 (Tri), it was held that after the final products are cleared from the place of removal, there will be no scope of subsequent use of service to be treated as input. The above observations and views explain the scope of relevant provisions clearly, correctly and in accordance with the legal provisions." 8) The aforesaid order of the Adjudicating Authority was upset by the Commissioner (Appeals) principally on the ground that the Board in its Circular dated August 23, 2007 had clarified the definition of 'place of removal' and the three conditions contained therein stood satisfied insofar as the case of the respondent is concerned, i.e. (i) regarding ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uent use of service to be treated as input. The above observations and views explain the scope of the relevant provisions clearly, correctly and in accordance with the legal provisions. In conclusion, a manufacturer / consignor can take credit on the service tax paid on outward transport of goods up to the place of removal and not beyond that. 8.2 In this connection, the phrase 'place of removal' needs determination taking into account the facts of an individual case and the applicable provisions. The phrase 'place of removal' has not been defined in CENVAT Credit Rules. In terms of sub-rule (t) of rule 2 of the said rules, if any words or expressions are used in the CENVAT Credit Rules, 2004 and are not defined therein but are defined in the Central Excise Act, 1944 or the Finance Act, 1994, they shall have the same meaning for the CENVAT Credit Rules as assigned to them in those Acts. The phrase 'place of removal' is defined under section 4 of the Central Excise Act, 1944. It states that,- "place of removal" means - (i) a factory or any other place or premises of production or manufacture of the excisable goods ; (ii) a warehouse or any other place or premises wherein t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ght about a total change. Now, the definition of 'place of removal' and the conditions which are to be satisfied have to be in the context of 'upto' the place of removal. It is this amendment which has made the entire difference. That aspect is not dealt with in the said Board's circular, nor it could be. 12) Secondly, if such a circular is made applicable even in respect of post amendment cases, it would be violative of Rule 2(l) of Rules, 2004 and such a situation cannot be countenanced. 13) The upshot of the aforesaid discussion would be to hold that Cenvat Credit on goods transport agency service availed for transport of goods from place of removal to buyer‟s premises was not admissible to the respondent. Accordingly, this appeal is allowed, judgment of the High Court is set aside and the Orderin- Original dated August 22, 2011 of the Assessing Officer is restored." 7. In their written submissions, the appellant have argued on the basis of the Circular dt. 23.08.2007 to contend that the ownership and property in goods remains with the manufacturer till the goods are delivered. The seller bears the risk of loss or damage to the goods during transportation to the destina....
X X X X Extracts X X X X
X X X X Extracts X X X X
....strued as "Provisional assessment under Rule 7 of the Rules. On completion of deliveries, the quantity actually delivered, the quantity actually returned in tanker and the quantum of loss, if any is duly recorded in the Daily Stock Account. The provisional entry relating to quantity of removal and the duty liability is thus converted into final entry in Daily Stock Account immediately after the return of the tanker (after a single trip/transportation) or latest by next morning. It is therefore, evident that the above arrangement is purely provisional arrangement considering special nature of goods and finalization of Daily Stock Account at the point of clearance from the factory itself indicates that the place of removal is the factory gate. As the Cenvat credit is allowed upto the factory gate, after 2008 amendment made effective from 1.3.2008, hence, the amended rule is applicable in the present case. Hon'ble Supreme Court in the case of Ultra Tech Cement (supra) has considered the situation in the context of such sales for the period after the said amendment in CCR, 2004. Hence the ratio laid down in the said judgment is squarely applicable to the present case. 9. The appellant....