2023 (5) TMI 187 - AT - Central Excise

CENVAT Credit - input services - Business Auxiliary Services - Banking Financial Services - Commission on sales - Security Services - Stock Brocks - place of removal - period from January 2005 to November 2007 - HELD THAT - There are force in the submission of the Ld.Counsel. On a careful reading of the definition of input service it can be observed that it was never the intent of the legislature to give it a restricted meaning. Master Circular was issued clarifying the procedural issues relating to Service Tax being Circular No.97/8/2007- S.T. dated 23-Aug-2007 holding that This circular aims to consolidate the procedural issues relating to service tax including those relating to availment and utilization of Cenvat credit. This circular supersedes all previous circulars/clarifications/instructions issued on these subjects. It is however clarified that this circular is intended only to clarify the scope of the Act and the rules and therefore in the event of any inadvertent inconsistency or contradiction between this circular and the provisions of the Act or the rules the latter shall prevail. It is therefore clear that for a manufacture/consignor the eligibility to avail credit of the service tax paid on the transportation during removal of excisable goods would depend upon the place of removal as per the definition. In case of a factory gate sale sale from a non-duty paid warehouse or from a duty paid depot (from where the excisable goods are sold after their clearance from the factory) the determination of the place of removal does not pose much problem - In such cases the credit of the eservice tax paid on the transportation up to such place of sale would be admissible if it can be established by the claimant of such credit that the sale and the transfer of property in goods (in terms of the definition as under Section 2 of the Central Excise Act 1944 as also in terms of the provisions under the Sale of Goods Act 1930) occurred at the said place. There are no reason to interfere with the order of the Commissioner(Appeals) - appeal of Revenue dismissed.

Summary

Issues involved:
The issues involved in the judgment are the irregular availment of CENVAT Credit on input services by a manufacturer of ferro alloys, as observed by the Department. The main question is whether the input services on which Service Tax was paid and credit availed by the assessee are eligible services for taking credit under the CENVAT Credit Rules, 2004.

Summary:
The Department issued three Show Cause Notices to the assessee regarding irregular availment of CENVAT Credit on input services for the periods from January 2005 to November 2007, and subsequent periods. The Adjudicating authority demanded an amount of Rs. 65,66,475 from the assessee under the CENVAT Credit Rules, 2004. The Ld. Commissioner(Appeals) later held that the total credit is admissible, setting aside the original order. The Department filed an appeal against this decision.

On appeal, the Department argued that the input services used by the assessee did not qualify as per the definition under the CENVAT Credit Rules, 2004. The Department contended that all input services used by the assessee must be covered under the definition of input service as defined in the Rules. The Department emphasized that services related to post-manufacturing activities do not qualify as input services for availing CENVAT Credit.

The assessee, on the other hand, argued that the Department erred in determining the 'place of removal' without considering the fact that the assessee had both domestic and export sales. The assessee claimed that services of a commission agent and banking and financial services were integral to the manufacturing process and should be considered as eligible input services.

The Tribunal, after hearing both sides, found merit in the argument presented by the assessee. The Tribunal noted that the definition of input service should not be given a restricted meaning and referred to a decision by the Hon'ble Gujarat High Court supporting this interpretation. The Tribunal also considered a Master Circular clarifying procedural issues related to Service Tax, emphasizing the importance of determining the 'place of removal' for availing credit on transportation services.

In conclusion, the Tribunal rejected the appeal filed by the Revenue, upholding the decision of the Ld. Commissioner(Appeals) that the total credit of Rs. 65,66,475 is admissible to the assessee.