2014 (1) TMI 118 - HC - Central Excise

Availment of CENVAT Credit - Interpretation of Input service - Whether the CESTAT was right in considering the service namely Outward Transportation in respect of courier service and clearing agents, availed by the assessee, as eligible services for availing input service credit - Held that - Words clearance of the final products from the place of removal are significant. Means part of the definition has not limited the services only upto the place of removal, but covers services used by the manufacturer for the clearance of the final products even from the place of removal. It can thus be seen that main body of the definition of term input service is wide and expansive and covers variety of services utilized by the manufacture. 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 - Service would certainly be covered within the expression any service used by the manufacturer directly or indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal - Decided against Revenue.

Summary

Issues:
- Whether the service of outward transportation in respect of courier service and clearing agents, availed by the assessee, is eligible for availing input service credit as defined under Rule 2(l) of the CCR, 2004?
- Whether the definition of "place of removal" prescribed under Rule 4(3)(c) of Cenvat Credit Rules, 2004 was overlooked by the tribunal when goods are cleared by the assessee from the place of manufacturing after payment of duty?

Analysis:

1. The Revenue appealed against the CESTAT judgment, questioning the eligibility of service tax credit on courier services utilized by the assessee for transportation of finished goods from the factory and bringing inputs into the factory. The Adjudicating Officer initially disallowed the credit, leading to subsequent appeals. The Tribunal allowed the appeal based on a larger Bench decision and the interpretation of Rule 2(l) of the Cenvat Credit Rules, 2004. The issue primarily revolves around the definition of "input service" under Rule 2(l) of the Cenvat Credit Rules, 2004.

2. The definition of "input service" under Rule 2(l) includes services used by the manufacturer directly or indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal. A similar issue was addressed in a previous case where the Tribunal held that outward transportation service beyond the place of removal qualifies as an input service. The Court upheld this decision, emphasizing the expansive nature of the definition and the inclusion of services used for clearance of final products from the place of removal.

3. Considering the precedent and interpretation of the definition of "input service," the present tax appeal, involving courier services for transportation of goods, is required to be decided similarly. The services utilized by the manufacturer in this case fall within the scope of services covered under Rule 2(l) of the Cenvat Credit Rules, 2004. The Court dismissed the tax appeal, affirming the eligibility of the assessee to avail input service credit on the courier services used for transportation of goods from the factory and bringing inputs into the factory.

This detailed analysis of the judgment highlights the key issues, legal interpretations, and the Court's decision, providing a comprehensive understanding of the case.