2013 (9) TMI 912 - HC - Central Excise

CENVAT Credit on GTA services - upto the place of removal - scope of the terms means and includes - Rule 2(l) of CCR - Services of Outward Transportation of Goods Rule 2(1) of CENVAT credit Rules - Whether CESTAT was right in holding that the credit of service tax in respect of service tax paid on services of outward transportation of goods beyond place of removal in the office is admissible by overlooking the statutory provisions of Rule 2 (1) of CENVAT Credit Rules, 2004 which does not cover these services in the definition of input service for the purpose of allowing Cenvat Credit thereon and ignoring various decisions as referred - Held that - Following Commissioner of Central Excise & Customs vs. Parth Poly Wooven Private Limited 2011 (4) TMI 975 - GUJARAT HIGH COURT - Main body of the definition of term input service is wide and expansive and covers variety of services utilized by the manufacturer - By no stretch of imagination can it be stated that outward transportation service would not be a service used by the manufacturer for clearance of final products from the place of removal. Outward transportation would be an input service as covered in the expression means part of the definition, it would be difficult to exclude such service on the basis of any interpretation that may be offered of the later portion of the definition which is couched in the expression includes - the expression includes cannot be used to oust any activity from the main body of the definition if it is otherwise covered by the expression means - the expression includes followed by means in any definition is generally understood to be expanding the definition of the term to make it exhaustive, but in no manner can the expression includes be utilized to limit the scope of definition provided in the main body of the definition - This was also not the intention of the Legislature. - Decided against the revenue.

Summary

Issues:
1. Interpretation of CENVAT Credit Rules, 2004 regarding the admissibility of service tax credit on outward transportation services.

Analysis:
The Gujarat High Court considered the appeal by the Revenue against the order of the Customs, Excise & Service Tax Appellate Tribunal. The central issue was whether the Tribunal was correct in allowing the credit of service tax on outward transportation services beyond the place of removal, contrary to Rule 2(1) of the CENVAT Credit Rules, 2004. The Court referred to the definition of 'input service,' emphasizing the broad scope that includes services directly or indirectly used in the manufacture or clearance of final products. The Court noted that outward transportation services can qualify as an input service under the 'means' part of the definition, and the 'includes' part does not limit the scope but expands it. The judgment highlighted that the legislative intent was not to restrict outward transportation services from being considered as input services.

The Court cited a previous case where it was held that outward transportation services are covered by the main body of the definition of 'input service.' The judgment emphasized that the later part of the definition, which includes the term 'clearance of final products from the place of removal,' should not be interpreted to exclude outward transportation services used by the manufacturer beyond the place of removal. The Court acknowledged an amendment to the definition of 'input service,' but refrained from commenting on its impact as the case predated the amendment. The Court concluded that the statutory provisions encompass services used by the manufacturer in relation to the manufacture or clearance of final products, dismissing the Tax Appeal in favor of the assessee.

In summary, the Gujarat High Court affirmed that outward transportation services can be considered input services under the CENVAT Credit Rules, 2004, as they are used in the manufacture or clearance of final products. The judgment emphasized the expansive nature of the definition of 'input service,' rejecting the argument that outward transportation services should be excluded based on a restrictive interpretation of the definition. The Court's decision aligned with previous rulings and the legislative intent, providing clarity on the admissibility of service tax credit on outward transportation services beyond the place of removal.