2014 (11) TMI 543 - AT - Service Tax

Waiver of pre deposit - CENVAT Credit - various input services - place of removal - Held that - As per Section 4(3)(c), the place of removal is inter-alia any other place or premises from where the excisable goods are to be sold after the clearance from the factory from where the goods are removed. In our view the appellants have been able to make out a good prima-facie case that in their case the place of removal will be retail outlets in respect of goods sold from their retail outlets and the agents warehouse in respect of goods sold from there. In such a scenario all the services listed above would prima-facie qualify as input services as they are in relation to advertisement, legal work, sales promotion, market research, storage upto the place of removal and outward transportation upto the place of removal, etc. which are all duly covered prima-facie in the scope of the definition of input service - Stay granted.

Summary

Issues:
Service tax demand confirmation along with penalties and liability on individuals for a retail company's cenvat credit on various services.

Analysis:
The judgment involves a case where a retail company, engaged in manufacturing and selling readymade garments, filed appeals against an order confirming a service tax demand of Rs. 86,35,176 along with penalties. The demand pertained to cenvat credit taken on services like rent, maintenance charges, freight, postage, security, legal & professional services, advertisement, insurance, software & website maintenance, commission charges, and services from commission agents in Jammu & Kashmir. The company argued that the services were input services as they related to various aspects of their business operations, including advertising, legal work, sales promotion, market research, storage, and outward transportation. The appellants contended that the place of removal for their goods was their retail outlets or warehouses of commission agents, making the services eligible for cenvat credit. The adjudicating authority, however, considered the factory gate as the place of removal, leading to the denial of cenvat credit on the disputed services.

The main issue in the case revolved around determining the place of removal for the goods sold by the company. The appellants claimed that their retail outlets and commission agents' warehouses were the places of removal as they remained responsible for the goods until their sale from these locations. They argued that the services in question directly related to their business activities at the place of removal, making them eligible for cenvat credit. The tribunal noted that the definition of place of removal under Section 4 of the Central Excise Act includes any premises where goods are to be sold after clearance from the factory. Relying on various judgments, the tribunal found that the appellants had presented a prima facie case supporting their claim that the retail outlets and commission agents' warehouses were indeed the places of removal for their goods. Consequently, the tribunal held that the services in question qualified as input services, as they were directly linked to activities like advertisement, legal work, sales promotion, and outward transportation up to the place of removal, aligning with the definition of input service.

Based on the arguments presented and the interpretation of the place of removal in relation to the goods sold by the company, the tribunal found that the appellants had established a strong case for the waiver of pre-deposit. Consequently, the tribunal waived the pre-deposit of the adjudicated liabilities and stayed the recovery during the pendency of the appeals.