2019 (9) TMI 328 - HC - Service Tax

CENVAT Credit - input services - transportation of excisable goods from its Chennai Unit I to Jamshedpur Unit 2 of the Assessee itself - place of removal - applicability of the case of Hon'ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. 2018 (2) TMI 117 - SUPREME COURT in the facts of present case. HELD THAT - A closer and finer reading of the Hon'ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. 2018 (2) TMI 117 - SUPREME COURT would clearly reveal that the Hon'ble Supreme Court was concerned only with the controversy of Cenvat Credit on goods transported from the place of removal to the buyers' premises and not the transport of goods from one Unit of the Assessee to another Unit of the same Assessee. In the context of the factual background, the judgment of the Hon'ble Supreme Court, in view of the amended definition of the place of removal wherein the word ' upto ' has been substituted for the word ' from' in clause 3 of Rule 2(l) which defines Input Services , cannot be applied to the facts of the present case. The Hon'ble Supreme Court held that the Cenvat on goods transport agency availed for transport of goods from the place of removal of Assessee to the buyer's premises was not admissible to the respondent and that by necessary implication would mean that Input Services for transport of goods upto the final place of removal of goods by way of sale to the buyers would be so included. The stark distinction of facts of the case before the Tribunal and the facts before the Hon'ble Supreme Court in Ultra Tech case should have been noticed by the final fact finding authority viz., the Tribunal before applying the judgment of the Apex Court to the facts of the case before it rather mechanically. It is the duty of the final fact finding body to analyse the facts of the case on hand appropriately and only after comparing the facts of the case before the higher Constitutional Courts, it should proceed to apply the ratios of the Judgments from the Constitutional Courts to the case before it - The misapplication of the Judgments without comparing the facts, can result in serious miscarriage of justice and can expose the non-application of mind by the responsible appellate forums like the CESTAT in the present case. CENVAT Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Entitlement to Input Tax Credit of Service Tax paid on transportation of excisable goods from Chennai Unit I to Jamshedpur Unit 2.
- Interpretation of the definition of 'place of removal' in CENVAT Credit Rules, 2004.
- Applicability of the decision of the Hon'ble Supreme Court in the case of Ultra Tech Cement Limited to the present case.

Analysis:
1. Entitlement to Input Tax Credit:
The Assessee appealed against the dismissal of their claim for Input Tax Credit by the CESTAT. The Assessee argued that as per the amended definition of 'Input Services,' they were entitled to claim Cenvat credit for the Service Tax paid on transporting goods from Chennai Unit 1 to Jamshedpur Unit 2. They contended that the goods were further processed at Jamshedpur Unit 2 before being sold, making it eligible for credit. The Assessee distinguished the Ultra Tech Cement case, emphasizing that it concerned transport from the seller to the buyer's premises, not between different units of the same Assessee.

2. Interpretation of 'Place of Removal':
The Revenue argued that the transport charges for moving goods between the Assessee's separate registered units were not covered under the definition of 'place of removal.' They cited Rule 2(qa) of the CENVAT Credit Rules, stating that the goods must be sold from the premises they were transported to without any change in form to qualify as 'place of removal.' The Revenue relied on the Ultra Tech Cement case to support their position.

3. Applicability of Ultra Tech Cement Case:
The High Court analyzed the Ultra Tech Cement case and concluded that it supported the Assessee's position. They highlighted that the Supreme Court's judgment focused on the transport of goods from the place of removal to the buyer's premises, not between different units of the same Assessee. The Court emphasized that the amended definition of 'place of removal' allowed for a broader interpretation, encompassing scenarios where goods were further processed before sale. The Court criticized the Tribunal for not adequately considering the factual distinctions between the Ultra Tech case and the present case. Ultimately, the Court allowed the Assessee's appeals, directing the Revenue Department to grant Cenvat Credit for the Service Tax paid on the transportation of goods between the Assessee's units.