2011 (4) TMI 975 - 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 - 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. When we hold that 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 . As already observed, it is held in several decisions that 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 . In other words, 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. To our mind this was also not the intention of the Legislature in the present case.

Issues Involved:
1. Entitlement to Cenvat credit on service tax paid on Goods Transport Agency (GTA) services for outward transportation beyond the place of removal.
2. Interpretation of the term "input service" under Rule 2(l) of the Cenvat Credit Rules, 2004.
3. Applicability of Board's Circular No. 97/8/2007, dated 23-8-2007.
4. Judicial precedents and statutory provisions relevant to the issue.

Issue-wise Detailed Analysis:

1. Entitlement to Cenvat Credit on GTA Services for Outward Transportation Beyond Place of Removal:
The primary issue in these appeals is whether the Tribunal was justified in holding that the assessee was entitled to avail Cenvat credit on the service tax paid on GTA service for outward transportation of goods beyond the place of removal, as per the definition in Rule 2(l) of the Cenvat Credit Rules, 2004. The Tribunal had relied on the Larger Bench decision in ABB Ltd. v. C.C.E. & S.T., Bangalore, which supported the assessee's claim.

2. Interpretation of the Term "Input Service" under Rule 2(l) of the Cenvat Credit Rules, 2004:
The definition of "input service" under Rule 2(l) is central to the case. The definition includes services used directly or indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal. The court noted that the definition is broad and inclusive, covering various services used by the manufacturer, including outward transportation. The court emphasized that the expression "means and includes" in the definition is intended to be exhaustive and not restrictive.

3. Applicability of Board's Circular No. 97/8/2007, dated 23-8-2007:
The Revenue argued that without establishing that the sale was on a FOR (Free on Rail) basis and that the goods were delivered by the assessee at the purchaser's doorstep, the assessee could not benefit from the Board's circular. The court, however, found that the main body of the definition of "input service" already covered outward transportation, making the circular less relevant to the statutory interpretation.

4. Judicial Precedents and Statutory Provisions Relevant to the Issue:
The court considered several judicial precedents, including Maruti Suzuki Ltd. v. Commissioner of Central Excise and Escorts JCB Ltd. v. Commissioner of Central Excise, which provided context on the interpretation of terms like "used in or in relation to manufacture." The court also referred to the statutory provisions under the Finance Act, 1994, and the Central Excise Act, 1944, to interpret the definitions and scope of "input service."

The court concluded that outward transportation is an input service as it is used by the manufacturer for the clearance of final products from the place of removal. The court dismissed the Revenue's appeals, affirming the Tribunal's decision in favor of the assessee.

Conclusion:
The court held that outward transportation service used by manufacturers for transporting finished goods from the place of removal to the purchaser's premises is covered within the definition of "input service" under Rule 2(l) of the Cenvat Credit Rules, 2004. The appeals were dismissed, and the question was answered in favor of the assessee.

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