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2018 (2) TMI 285 - SC - Central ExciseCENVAT credit - input services - service tax paid on goods that are transported to the purchaser after the sale - place of removal - whether the expression input service as defined in Rule 2(l) of the CCR, 2004, in the context of a service provider, would also include services which are used in or in relation to providing taxation output services described in the definition and the outward transportation to the purchaser would be treated as beyond the place of removal ? Held that - As per the definition of input service that was prevailing at the relevant time i.e. prior to April 1, 2008, service used by the manufacturer of clearance of final products from the place of removal to the warehouse or customer s place etc., was exigible for Cenvat Credit - The matter is squarely covered by the Board s Circular dated August 23, 2007, which states that the credit of the service 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 occurred at the said place. Once it is accepted that place of removal is the factory premises of the assessee, outward transportation from the said place would clearly amount to input service. That place can be warehouse of the manufacturer or it can be customer s place if from the place of removal the goods are directly dispatched to the place of the customer. One such outbound transportation from the place of removal gets covered by the definition of input service. Appeal dismissed - decided against Revenue.
Issues:
1. Interpretation of 'input service' under Cenvat Credit Rules, 2004 in the context of service tax paid on transportation beyond the place of removal. 2. Admissibility of Cenvat Credit on outward transportation from factory to customer premises. Analysis: 1. The judgment deals with the interpretation of 'input service' under Cenvat Credit Rules, 2004 concerning service tax paid on goods transportation beyond the place of removal. The main issue is whether outward transportation to the purchaser's premises qualifies as an input service under Rule 2(l) of the Rules, 2004, in the context of a service provider. The Court examined the definition of 'input service' and the concept of 'place of removal' under the Central Excise Act, 1944 to determine the admissibility of Cenvat Credit on such services. 2. The case involved the appellant claiming Cenvat Credit on service tax paid for outward transportation from their factory to customer premises. The Revenue contended that such transportation beyond the place of removal is not eligible for input service credit. The Court referred to Circulars clarifying the definition of 'input service' and conditions for covering cases within the 'place of removal.' It highlighted that the eligibility for credit depends on the 'place of removal' as defined under the Central Excise Act, 1944, and emphasized the importance of ownership, risk-bearing, and freight charges in determining admissibility of credit. 3. The Court relied on previous judgments and Circulars to support its decision. It referenced a Circular stating that a manufacturer/consignor can avail credit on service tax paid on outward transport up to the place of removal. The Court emphasized that if the goods are dispatched directly from the place of removal to the customer's place, such outbound transportation qualifies as an input service. The judgment upheld the decision of the lower courts, dismissing the appeals as lacking merit and affirming the admissibility of Cenvat Credit on outward transportation up to the place of removal. In conclusion, the Supreme Court clarified the interpretation of 'input service' in the context of service tax paid on transportation beyond the place of removal, emphasizing the significance of the 'place of removal' in determining the admissibility of Cenvat Credit. The judgment reaffirmed the eligibility of manufacturers/consignors to claim credit on service tax paid for outward transportation up to the place of removal, based on established legal provisions and previous rulings.
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