2018 (2) TMI 1111 - HC - Central Excise

CENVAT credit - input service - outward transportation of final products from the place of removal - Rule 2(I)(ii) of CCR - Held that - issue has been decided in the case of COMMISSIONER OF C. EX. & CUSTOMS Versus PARTH POLY WOOVEN PVT. LTD. 2011 (4) TMI 975 - GUJARAT HIGH COURT , where it was held that 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 - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Interpretation of the term "input service" under the CENVAT Credit Rules, 2004.
2. Eligibility of a manufacturer to take CENVAT Credit of Service Tax on outward transportation services.
3. Justification of allowing CENVAT Credit availed by the manufacturer in respect of service tax paid on Goods Transport Agency service beyond the place of removal.

Analysis:
The High Court of Gujarat addressed the appeal concerning the interpretation of the term "input service" under the CENVAT Credit Rules, 2004. The Revenue challenged the Tribunal's decision on whether services provided by a manufacturer for outward transportation of final products should be considered as an input service. The Court referred to a previous judgment and emphasized that the definition of "input service" is broad and covers services used directly or indirectly in relation to the manufacture of final products and their clearance from the place of removal. The Court highlighted that outward transportation services for finished goods up to the purchaser's premises fall within the ambit of the definition of "input service" under rule 2(l) of the CENVAT Credit Rules, 2004.

Regarding the eligibility of the manufacturer to claim CENVAT Credit of Service Tax on such outward transportation services, the Court upheld that the services provided by the manufacturer for transportation of finished goods from the place of removal to the purchaser's premises are indeed covered within the definition of "input service." The Court emphasized that the statutory provisions encompass services used by the manufacturer in relation to the manufacture of final products or their clearance from the place of removal, supporting the manufacturer's eligibility to claim CENVAT Credit for such services.

Additionally, the Court addressed the justification for allowing the CENVAT Credit availed by the manufacturer in respect of service tax paid on Goods Transport Agency service beyond the place of removal. The Court concluded that the outward transport service utilized by the manufacturers for the transportation of finished goods from the place of removal up to the purchaser's premises is encompassed within the definition of "input service" as provided in rule 2(l) of the CENVAT Credit Rules, 2004. Consequently, the Court dismissed the Tax Appeal, affirming the manufacturer's entitlement to claim CENVAT Credit for outward transportation services related to the clearance of final products beyond the place of removal.