TaxTMI 
TaxTMI 
2026 (8) TMI 1399
X X X X Extracts X X X X
X X X X Extracts X X X X
....r storage and subsequent supply to dealers. The appellant paid Service Tax under reverse charge on GTA services used for transportation to the depot and availed and distributed the corresponding credit through the ISD mechanism. During audit, it was observed that the appellant also bore freight for transportation of batteries from the depot to dealers and paid Service Tax as consignor under GTA. Accordingly (i) treating the depot as the place of removal, the Department proposed denial of CENVAT credit on such outward transportation for the period January 2010 to August 2013. (ii) Credit relating to repair and maintenance services provided by contractors at dealers' premises during the same period was also proposed to be denied on the ground that such services were rendered beyond the place of removal. (iii) A further short-payment of Service Tax under reverse charge on GTA services was also alleged. Hence, Show Cause Notice dated 30.03.2015 was issued proposing recovery of the aforesaid amounts with interest and penalties. Statement of Demand No. 40/2015 dated 06.04.2015 was also issued for the period September 2013 to September 2014 proposing recovery....
X X X X Extracts X X X X
X X X X Extracts X X X X
....one constitutes the place of removal. The said finding is contrary to the statutory scheme and the evidentiary record. Sales invoices prove goods were sold on a Free on Road (FOR) destination basis with freight borne by the Appellant, making the buyer's premises the "place of removal" under Rule 2(l) and 2(qa) of the CCR. This position is supported by CBEC/CBIC Circulars dated 23.08.2007 and 08.06.2018 and settled by the Supreme Court in CCE Vs Roofit Industries [2015 (319) ELT 221 (SC)], along with Bharat Fritz Werner Ltd. [2022 (7) TMI 352-Karnataka High Court], and the Larger Bench in Ramco Cements Ltd. [2025 (9) TMI 674-CESTAT Chennai]. Further payment of VAT at the depot is not determinative of the place of removal under the CCR. B. Demand under Rule 14 of the CCR is without jurisdiction as against the ISD The confirmation of demand on the Appellant in its capacity as Input Service Distributor is ex facie without jurisdiction. An Input Service Distributor (ISD) is a mere statutory conduit for credit distribution. Any recovery of allegedly inadmissible credit must be initiated against the independent, registered recipient units that availed it, not the ISD....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... E. Extended period of limitation is not invocable The demand for the period January 2010 to March 2013 has been confirmed by invoking the extended period. Credit details were fully disclosed in ST-3 returns and statutory records, which were later audited. The issue is purely a matter of statutory interpretation (as recognized by the CBIC Circular dated 08.06.2018). Reliance is placed on Anand Nishikawa Co. Ltd. Vs CCE, Meerut, 2005 (188) E.L.T. 149 (S.C.), Hindustan Steel Ltd. Vs State of Orissa, 1969 (2) SCC 627, APC Drilling and Construction Co. Vs Commissioner of GST & Central Excise, Salem, 2025 (8) TMI 571 (CESTAT-Chennai) and Environment Planning & Coordination Organization Vs Principal Commissioner, 2025 (7) TMI 150 (CESTAT-New Delhi). The CBIC Circular dated 08.06.2018 also recognises that disputes relating to outward transportation credit are interpretational in nature. The demand is therefore barred by limitation to the extent it travels beyond the normal period. F. Interest and penalty are not sustainable Since the underlying demand is unsustainable on merits and barred by limitation, the consequential interest and penalties must fail automati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r of remand by Commr. (Appeals) is erroneous. D. Short payment of tax of Rs.1,58,222/- on reverse charges in respect of Transport of Goods E. Demand is time barred and interest and penalty are sustainable We find that the dispute relating to outward transportation is a contentious one. Hence the issue of time-bar cannot be gleaned merely from a record of the events, a proper threefold scrutiny would be necessitated: first, whether the demand is sustainable on merits; second, whether it falls beyond the normal period of limitation; and third, whether the Department has established, by cogent evidence, deliberate suppression or willful misstatement with intent to evade Service Tax. Accordingly, the merits of the demand must be examined first. Only if the demand survives on merits does the question of examining the valid invocation of the extended period arise. We hence proceed accordingly. We take up the issues sequentially 5. Credit on outward transportation up to the place of removal is legally admissible. 5.1 The period under consideration from January 2010 to 2015, which covers the pre and post 01.04.2011 period, when major changes were introduced in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 5.4 The Larger Bench of this Tribunal in Ramco Cements Ltd., Interim Order No. 40020/2023 dated 21.12.2023 [2023 (12) TMI 1332 (CESTAT Chennai LB)], held that in cases involving FOR-contracts, the place of removal has to be determined by applying the said judgments, the decision of the Hon'ble Karnataka High Court in Bharat Fritz Werner Ltd. Vs Commissioner of Central Tax, Bangalore [2022 (66) G.S.T.L. 434 (Kar.)], and the aforesaid Board Circular dated 08.06.2018. The said view has subsequently also been followed recently in The Ramco Cements Ltd. Vs Commissioner of GST & Central Excise, Anna Nagar [2025 (9) TMI 674 (CESTAT Chennai)]. 5.5 In the present case, the Appellant contends that the judgment in Ultratech Cement Ltd. (supra) was rendered in the context of sales where the place of removal was not shown to extend up to the buyers' premises, whereas the present transactions are governed by FOR destination terms. It is submitted that effective control over the goods and the risk during transit remained with the Appellant until delivery at the retailers premises and that the sale was completed only upon such delivery. According to the Appellant, the retailers premises wou....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the Larger Bench of this Tribunal in Ramco Cements Ltd. (supra), we hold that the retailers premises constituted the place of removal in the facts of the present case. The GTA service used for transportation of goods up to such place is, therefore, an input service within the meaning of Rule 2(l) of the CENVAT Credit Rules, 2004, and the Appellant is eligible to avail CENVAT credit thereon. 6. Credit on manpower supply and godown/depot rent The Appellant contends that the impugned orders wrongly proceeded on the assumption that the disputed credit related to repairs and maintenance services at customers' premises. The Show Cause Notice and its annexures, however, establish that the disputed services were manpower supply and renting of godown/depot services. 6.1 Manpower was centrally procured at the Chennai office and deployed to various factories as required, while the godowns were used for storage of finished products. These services are integrally connected with the manufacture and storage of batteries and, as applicable to the relevant period, fall within the scope of "activities relating to business" and the inclusive limb of the definition of input service. 6.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the availment, distribution and recovery of CENVAT credit. We, therefore, proceed to examine the legal issues arising for consideration. 7.2 At the outset it must be said that the introduction of the input credit schema was a major tax reform and a radical departure from the past with the avowed intent of removing the cascading effect of taxes. As held by the Hon'ble Supreme Court in R. K. Garg Vs Union of India [(1981) 4 SCC 675 / 1982 SCC (Tax) 30), every legislation particularly in economic matters is essentially empiric and it is based on experimentation or what one may call trial and error method and therefore it cannot provide for all possible situations or anticipate all possible abuses. Similarly, the Hon'ble Supreme Court in State of Madhya Pradesh Vs Nandlal Jaiswal [1987 (1) SCR 01] held that "in complex economic matters every decision is necessarily empiric, and it is based on experimentation" and that the court, while considering the validity of executive action relating to economic matters grant a certain measure of freedom or 'play in the joints' to the executive." The Hon'ble Supreme Court, in its recent judgment in S. P. Chandrakar Vs State of Chhattisgarh & ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce Act, 1994. 7.5 The above provisions, read together, make it necessary to distinguish between, (i) the eligibility of the underlying input service and the credit taken by the ISD, (ii) the distribution of such credit in accordance with Rule 7, and (iii) the independent availment or utilisation of the distributed credit by the recipient unit. 7.6 We find that an ISD is not immune from proceedings for a contravention committed by it in the course of distribution of credit. Rule 7 casts specific obligations upon the ISD in regard to the manner and quantum of distribution. Thus, if an ISD distributed credit in excess of the credit available, or distributed credit in circumstances prohibited by Rule 7 or any other provision applicable to an ISD, the contravention is attributable to the ISD itself. A breach of those obligations is a contravention attributable to the ISD and may invite consequences prescribed under Finance Act 1994 and the CCR, 2004, as applicable during the relevant period. However the availability of a clear statutory mechanism for recovery of CENVAT credit distributed by an ISD from the ISD itself, requires to be settled. 7.7 The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....periods from January 2010 up to March 2012 expired between 25.04.2011 and 25.04.2013. For the subsequent periods, the eighteen-month period expired on 25.04.2014 for April-September 2012 and on 25.10.2014 for October 2012-March 2013. The Show Cause Notice dated 30.03.2015 was therefore issued beyond the normal period prescribed under Section 73(1). 8.4 Consequently, the demand for the entire period January 2010 to March 2013, on account of this dispute, is beyond the normal period and can survive only if the extended period under the proviso to Section 73(1) is validly invoked. The mere fact that the alleged short-payment was noticed during audit cannot, by itself, justify invocation of the extended period. The Department is required to establish fraud, collusion, wilful misstatement, suppression of facts, or contravention of the provisions of the Finance Act or the Rules with intent to evade payment of service tax, as specifically contemplated by the proviso to Section 73(1). In the present case, the Appellants contend that the relevant particulars were duly disclosed in the ST-3 returns and that there was no suppression or wilful misstatement with intent to evade payment of se....