2013 (9) TMI 243 - AT - Central Excise

CENVAT credit on GTA servuce - Input credit - place of removal - clearance of clinker - duty paid at specified rate U/s 3(2) on value fixed of the Central Excise Act and not on ad-veloram rate - Held that - Prima facie the definition of place of removal in Section 4(3)(c) would be of no relevance - The duty on the goods - clinker was at specific rate - the place of removal would be the place of removal for the purpose of Rule 4 of Central Excise Rules, i.e. the places on removal from where the duty was liable to be paid, which in the case, was the factory gate as the duty on clinker becomes payable at the time of removal. In this case, the place of removal would be the place of removal for the purpose of Rule 4 of Central Excise Rules, i.e. the places on removal from where the duty is liable to be paid, which in this case, is the factory gate of Sonadih factory, as the duty on clinker becomes payable at the time of removal from Sonadih factory. Prima facie case is against the assessee - directed to make pre-deposit of entire demand of cenvat credit - stay granted in respect of interest and penalty.

Summary

Issues:
1. Eligibility for Cenvat credit of service tax paid on outward transportation of cement and clinker
2. Interpretation of "place of removal" for the purpose of Cenvat Credit Rules

Analysis:

Issue 1: Eligibility for Cenvat credit of service tax paid on outward transportation of cement and clinker
The appellant, a cement manufacturer, availed Cenvat credit on service tax paid for outward transportation of cement and clinker. The department disputed the eligibility of the appellant for this credit and issued a show cause notice demanding recovery of the credit amount along with interest and imposing penalties. The Commissioner adjudicated the matter, dropping the credit demand for cement transportation but confirming it for clinker transportation, imposing a penalty. The appellant filed an appeal against this order.

Issue 2: Interpretation of "place of removal" for the purpose of Cenvat Credit Rules
The main contention revolved around whether the transportation service availed for moving clinker from the Sonadih plant to the Nipania depot was covered under the definition of "input service." The appellant argued that since the clinker was cleared on a stock transfer basis to the Jojobera plant, the place of removal should be considered the Jojobera factory, not the Sonadih plant. They cited relevant rules and circulars to support their claim. However, the department maintained that the factory gate of the Sonadih plant should be considered the place of removal, making the transportation service ineligible for credit.

In the judgment, the Tribunal analyzed the definitions and provisions of the Central Excise Act and Cenvat Credit Rules. They concluded that the definition of "place of removal" under the Central Excise Act primarily pertains to determining assessable value when duty is ad valorem. They expressed doubts about applying this definition directly to Cenvat Credit Rules, especially in cases where duty is specific. The Tribunal opined that in this specific case, where duty on clinker was specific, the definition of "place of removal" from the Central Excise Act was not directly applicable. Consequently, they ruled that the appellant had not established a prima facie case for waiver, directing them to deposit the disputed amount of Cenvat credit demanded.

In summary, the judgment clarified the interpretation of "place of removal" in the context of Cenvat Credit Rules, emphasizing the relevance of duty structure in determining the eligibility of input services for credit.