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2018 (6) TMI 1414 - AT - Central ExciseCENVAT Credit - input services - GTA Services - whether in case of clearance under Section 4A the Depot can be considered as a place of removal ? - Held that - CBEC vide letter No.137/3/200-CX dt. 2.2.2006 inter alia had clarified that in case of depot sales of goods the credit of service tax paid on the transportation of goods up to such depot would be eligible irrespective of the fact whether the goods were chargeable to excise duty at specific rates or ad valorem rates on the basis of valuation under section 4 or 4A of the Central Excise Act - there should not be any doubt that eligible services availed upto the depot /RDCs by the appellant in this case would be eligible for availment of input service credit - There should not be any doubt that eligible services availed upto the depot /RDCs by the appellant in this case would be eligible for availment of input service credit. GTA services availed beyond the RDCs - Held that - There are two different situations one before 1.4.2008 and after that date by virtue of amendment vide clause (ii) of Rule 2(l) by Notification No.10/2008-CE (NT) dt. 1.4.2008. By this amendment the phrase from the place of removal was substituted up to the place of removal . The issue of whether the assessees are eligible for service tax credit in respect of the GTA services beyond place of removal has been mired in litigation for quite some time. The appellants will be eligible for input service credit in respect of GTA services availed beyond their RDCs but only upto 31.3.2008. For all services availed on or after 1.4.2008 they then by consequence cannot avail input service credit on such GTA services - the input services which have been disputed except for GTA beyond the RDCs are very much eligible services for the purpose of Rule 2(l) whether before 1.4.2011 or after that date. Penalty - Held that - Issues relating to eligibility of cenvat credit of many of these input services were a matter of litigation. Hence the matter has to be considered as one of interpretation - penalties set aside. Appeal disposed off.
Issues Involved:
1. Eligibility of input service credit for services received at Regional Distribution Centres (RDCs) and Corporate Office. 2. Eligibility of input service credit for Goods Transport Agency (GTA) services beyond RDCs. 3. Applicability of penalties under various provisions of Finance Act, 1994. Detailed Analysis: 1. Eligibility of Input Service Credit for Services at RDCs and Corporate Office: The appellants, engaged in the manufacture of footwear, availed Cenvat credit on various input services such as transport, courier, car hire, telecom, and maintenance, rendered at their Corporate Office and RDCs. The department contended these services were not related to the manufacture of the final product and that the concept of 'place of removal' under Section 4A of the Central Excise Act, 1944, does not apply, thus disallowing the input service credit. The Tribunal observed that the definition of 'input service' under Rule 2(l) of the Cenvat Credit Rules, 2004, is inclusive and covers services used directly or indirectly in relation to the manufacture of final products. The Tribunal referred to various case laws and concluded that services provided either to the Corporate Office or RDCs, except for GTA services beyond RDCs, are eligible for input service credit. The Tribunal emphasized that services such as auditing, advertising, and training, which are performed outside the place of removal, are included in the definition of 'input service.' 2. Eligibility of Input Service Credit for GTA Services Beyond RDCs: The Tribunal addressed the eligibility of GTA services availed beyond RDCs in two periods: before and after 1.4.2008. Prior to 1.4.2008, the Apex Court in Vasavadatta Cements ruled that credit for GTA services beyond the place of removal is allowable. However, post 1.4.2008, the amendment to Rule 2(l) substituted "from the place of removal" with "up to the place of removal," restricting the credit eligibility. The Apex Court in Ultratech Cement confirmed that post-amendment, credit for GTA services beyond the place of removal is not permissible. Consequently, the Tribunal upheld the denial of input service credit for GTA services beyond RDCs from 1.4.2008 onwards. 3. Applicability of Penalties: The Tribunal noted that the eligibility of Cenvat credit on many input services was subject to litigation and interpretation. Hence, it concluded that penalties under various provisions of the Finance Act, 1994, are not warranted in this case. The Tribunal set aside all penalties imposed on the appellants. Conclusion: The appeals were partly allowed with the following terms: 1. Input service credit for GTA services beyond RDCs/Corporate Office from 1.4.2008 is not eligible. The impugned orders confirming demands for these services with applicable interest are upheld. 2. Input service credit for other disputed services is eligible both before and after 1.4.2011. The impugned orders denying credit for these services are set aside. 3. All penalties imposed are set aside. 4. The miscellaneous application seeking a stay of the operation of the impugned order is dismissed as infructuous.
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