2018 (10) TMI 1204 - AT - Central Excise

CENVAT Credit - input services - denial on account of nexus - place of removal - whether the value of CHA Service and outward transportation in the case of sale to the customer the value has to be the part of the transaction value so as to entitle the appellant to avail the cenvat credit or not? Held that - It is only upto the place of removal that the service can be treated as input service whereupon the cenvat credit can be availed. The place of removal is the place from where the finally manufactured product is cleared after payment of excise duty. Thus any expense incurred beyond this point is not to be included in the value as such will not be the input thereby no cenvat credit will be available on any such expense. GTA service being the services beyond the place of removal therefore cannot be considered as the input services. However in case of imports port is the place of removal. The CHA services apparently have been rendered till the concerned port hence are the service rendered upto the place of removal. As such are very much the input services as per the definition above. The appellant is therefore held entitled to avail cenvat credit on CHA Service - disallowance of credit for CHA is set aside. Appeal allowed in part.

Summary

Issues:
- Incorrect availing of cenvat credit on certain services by the appellant.
- Dispute regarding the recovery of cenvat credit for CHA and GTA services.
- Interpretation of the definition of input service under the Cenvat Credit Rules, 2004.
- Determining the eligibility of cenvat credit on CHA and GTA services.
- Application of the concept of "place of removal" in relation to cenvat credit.

Analysis:
The appeal was filed against the Order of Commissioner(Appeals) regarding the incorrect availing of cenvat credit on services not specified in the Cenvat Credit Rules, 2004. The Department observed that the appellant wrongly claimed cenvat credit on services like telephone courier, annual maintenance, advertising agency, etc., not used in or related to the manufacturing process. The Show Cause Notice proposed recovery of the wrongly availed credit, leading to a dispute. The Commissioner(Appeals) modified the original order, confirming the recovery for some services but setting aside others.

The main issue revolved around the eligibility of cenvat credit for CHA and GTA services. The appellant argued that these services were directly related to the manufacturing process, justifying the credit availed. The appellant contended that the freight charges paid by the manufacturer should be included as input services, especially in cases of imports and exports. The definition of "place of removal" played a crucial role in determining the eligibility of these services for cenvat credit.

The definition of input service under Rule 2(1) of the Cenvat Credit Rules, 2004 was analyzed extensively. The amendment regarding "place of removal" was highlighted, emphasizing that services used beyond this point were not eligible for cenvat credit. The judgment referred to various legal precedents to support the interpretation of input services and the limitations imposed by the definition of "place of removal."

After thorough deliberation, the Tribunal concluded that the appellant was entitled to cenvat credit on CHA services as they were rendered up to the place of removal. However, the recovery of credit on GTA services was upheld as they were considered beyond the place of removal. The decision provided clarity on the scope of input services and the application of the "place of removal" concept in determining cenvat credit eligibility.

In conclusion, the Tribunal partially allowed the appeal, granting cenvat credit on CHA services but upholding the recovery of credit on GTA services. The judgment provided a detailed analysis of the legal provisions and precedents to resolve the dispute effectively.