TaxTMI 
TaxTMI 
2019 (12) TMI 424
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.... of buyer during the period from April, 2006 to March, 2011. 03-The facts of the case reveal that the appellant a Private Limited Company is having a manufacturing Unit at Pithampur, District Dhar and is engaged in manufacturing process of C.I. Castings and engine parts. The appellant is also availing CENVAT Credit of duty paid on inputs / capital goods and services as provided under the provisions of CENVAT Credit Rules, 2004 (CCR). 04-During an audit, the Department observed that the appellant was wrongly taking CENVAT Credit of Service Tax on inelligible services. The appellant took CENVAT Credit of Service Tax paid on transportation of goods from the factory premises to the buyer premise. The Department issued a show cause notice and a reply was filed in the matter. 05-The adjudicating authority after hearing the parties at length disallowed credit in respect of services of outward transportation on the ground that these services have been availed beyond the factory premises and therefore, the said services are not covered under the main or the inclusive part of the input service. 06-A first appeal was preferred and the appellant has submitted the order passed by th....
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....nd that the Adjudicating Authority was right in interpreting Rule 2(l) in the following manner: "... The input service has been defined to mean any service used by the manufacturer whether directly or indirectly and also includes, interalia, services used in relation to inward transportation of inputs or export goods and outward transportation upto the place of removal. The two clauses in the definition of 'input services' take care to circumscribe input credit by stating that service used in relation to the clearance from the place of removal and service used for outward transportation upto the place of removal are to be treated as input service. The first clause does not mention transport service in particular. The second clause restricts transport service credit upto the place of removal. When these two clauses are read together, it becomes clear that transport services credit cannot go beyond transport upto the place of removal. The two clauses, the one dealing with general provision and other dealing with a specific item, are not to be read disjunctively so as to bring about conflict to defeat the laws' scheme. The purpose of interpretation is to find harmony and reco....
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....or damage to the goods during transit to the destination and; (iii) freight charges to be integral part of the price of the goods. This approach of the Commissioner (Appeals) has been approved by the CESTAT as well as by the High Court. This was the main argument advanced by the learned counsel for the respondent supporting the judgment of the High Court. 9.We are afraid that the aforesaid approach of the Courts below is clearly untenable for the following reasons: 10.In the first instance, it needs to be kept in mind that Board's Circular dated August 23, 2007 was issued in clarification of the definition of 'input service' as existed on that date i.e. it related to unamended definition. Relevant portion of the said circular is as under: "ISSUE: Up to what stage a manufacturer/ consignor can take credit on the service tax paid on goods transport by road? COMMENTS: This issue has been examined in great detail by the CESTAT in the case of M/s Gujarat Ambuja Cements Ltd. vs CCE, Ludhiana [2007 (6) STR 249 Tri-D]. In this case, CESTAT has made the following observations:- "the post sale transport of manufactured goods is not an input for th....
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....ty ; (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory; from where such goods are removed." It is, therefore, clear that for a manufacturer /consignor, the eligibility to avail credit of the service tax paid on the transportation during removal of excisable goods would depend upon the place of removal as per the definition. In case of a factory gate sale, sale from a non-duty paid warehouse, or from a duty paid depot (from where the excisable goods are sold, after their clearance from the factory), the determination of the 'place of removal' does not pose much problem. However, there may be situations where the manufacturer /consignor may claim that the sale has taken place at the destination point because in terms of the sale contract /agreement (i) the ownership of goods and the property in the goods remained with the seller of the goods till the delivery of the goods in acceptable condition to the purchaser at his door step; (ii) the seller bore the risk of loss of or damage to the goods during transit to the destination; and (iii) the freig....