2013 (3) TMI 5 - AT - Central Excise

CENVAT credit on Tour Operators Service denied - transportation of their employees between the factory and their place of residence - Held that - This issue is no longer res integra as decided in C.C.E. Bangalore vs. Stanzen Toyotetsu India (P) Ltd 2011 (4) TMI 201 - KARNATAKA HIGH COURT wherein held that Rent-a-Cab service is provided by the assessee to these workers to reach the factory premises in time which has a direct bearing on the manufacturing activity. In fact the employee is also entitled to conveyance allowance. It also would form part of a condition of service and the amounts spent on the conveyance of the employees is also a factory which will be taken into consideration by the employees in fixing the price of the final product. To ensure that the work force comes on time at the work place the employers have taken this measure which has a direct bearing on the manufacturing activity. At any rate it is an activity relating to business - in favour of assessee. CENVAT credit on CHA service denied - used by the assessee for export of goods during the period from June 2007 to September 2008 - Held that - There is only one definition of place of removal under the Central Excise Act or the Rules framed thereunder whether for the purpose of valuation of excisable goods or for the purpose of determination of claim of CENVAT credit or for any other purpose whatsoever. The question whether the port of export could be considered to be place of removal of excisable goods was examined by the division bench in the KUNTAL GRANITES case 2007 (3) TMI 540 - CESTAT BANGALORE with reference to the definition of place of removal under Section 4(3) of the Central Excise as also to Section 5 of the Central Sales Tax Act. On a harmonious construction of the provisions it was held that in respect of the excisable goods cleared from factory for export and subsequently shipped from the port the port of export could be held to be the place of removal . In view of this decision it has to be held that the respondents were entitled to treat CHA service/GTA service as input services under Rule 2(l) of the CENVAT Credit Rules 2004 as these services were used for clearance of excisable goods from the place of removal - in favour of assessee.

Summary

Issues:
1. Denial of CENVAT credit on Tour Operators Service for transportation of employees.
2. Denial of CENVAT credit on CHA service for export of goods.

Analysis:

Issue 1: Denial of CENVAT credit on Tour Operators Service for transportation of employees
The appellant challenged the denial of CENVAT credit on Tour Operators Service used for transporting employees between the factory and their residence during a specific period. The Tribunal referred to a decision by the Hon'ble High Court regarding the Rent-a-Cab service provided to workers for reaching the factory premises on time, emphasizing its direct impact on manufacturing activities. The Tribunal also cited a previous case involving a different unit of the appellant-company where Rent-a-Cab Service was considered an input service integral to manufacturing activity. The Tribunal found that the original and first appellate authorities had allowed CENVAT credit for a subsequent period, indicating inconsistency in decisions. As the department did not challenge the appellate Commissioner's order, the Tribunal set aside the impugned order and allowed the appeal.

Issue 2: Denial of CENVAT credit on CHA service for export of goods
The appellant contested the denial of CENVAT credit on CHA service used for exporting goods during a specific period. The Tribunal considered the appellant's reliance on a previous Bench's decision regarding the entitlement to CENVAT credit on CHA service for export of goods. The Tribunal analyzed the definition of "place of removal" under Rule 2 of the CENVAT Credit Rules, 2004, and its application to the valuation of excisable goods. Referring to relevant case laws and previous rulings, the Tribunal concluded that the port of export could be considered the place of removal for excisable goods cleared from the factory for export. The Tribunal highlighted that no appeal was made against the previous Bench's decision, making it a valid precedent. Consequently, the Tribunal set aside the order denying CENVAT credit on CHA service for export of goods and allowed the appeal.

In both issues, the Tribunal carefully analyzed legal provisions, case laws, and previous rulings to determine the eligibility of the appellant for CENVAT credit on specific services, ultimately allowing the appeals based on the established legal principles and precedents.