9911796707
TMI Blog2014 (3) TMI 921X X X X Extracts X X X X X X X X Extracts X X X X ..... dent M/s.Inductotherm India P. Ltd., the assessee manufactures Induction Melting and Heating Furnace, Induction Welding equipments and spare parts which are classifiable under Chapter Heading 8514, 8515 and 8454 of the Schedule to the Central Excise Tariff Act, 1985. Facility of cenvat credit duty paid on inputs and inputs service was availed by the assessee -respondent under the Cenvat Credit Rules 2004 ('Credit Rules' hereinafter). 4. For the period from 2008-09 to 2010-11, it was noted by the Audit Department that the assessee had availed cenvat credit of service tax paid on cargo handling services amounting to Rs.10,32,141/-. Details were called for from the assessee which provided such details, inter alia, stating that the sum paid on cargo handling service at the time of export of the goods during such period was claimed giving year-wise bifurcation. 5. Although the attention of the assessee was drawn to this fact by the Department, it had continued to avail such credit of service on cargo handling and therefore a show cause notice was issued proposing to recover the service tax credit of the total amount vide notice dated 1st March 2012 under proviso to sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at the buyers' premises, then the buyers' premise also will have to be treated as place of removal. Accordingly, it is urged to quash and set aside the judgments of both the authorities. 10. Having heard learned counsel Mr.Ravani and having examined the material on record, the question that requires to be considered in the present appeal is whether the input credit of service tax paid by the assessee-respondent on cargo handling service would be admissible and whether the same would fall under the purview of definition of "input service". Cargo handling service is rendered on clearance of final product from the port for the purpose of export and therefore whether input of such cargo handling service received by the manufacturer can be said to have been used for clearance of final product upto the place of removal and hence whether such amount is admissible for taking cenvat credit needs examination. 11. At this stage, definition of input service as defined under rule 2(l) of the Cenvat Credit Rules 2004 requires consideration. Definition of "input service" is as under: "(l) "input service" means any service, (i) used b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice', as already noticed, it is coined in the phraseology of "means and includes". Portion of the definition which goes with the expression means, is any service used by the manufacturer whether directly or indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal. This definition itself is wide in its expression and includes large number of services used by the manufacturer. Such service may have been used either directly or even indirectly. To qualify for input service, such service should have been used for the manufacture of the final products or in relation to manufacture of final produce or even in clearance of the final product from the place of removal. The expression 'in relation to manufacture' is wider than 'for the purpose of manufacture'. The words 'and clearance of the final products from the place of removal' are also significant. Means part of the definition has not limited the services only upto the place of removal, but covers services used by the manufacturer for the clearance of the final products even from the place of removal. It can thus be seen that main body of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly including any service directly or indirectly in or in relation to manufacture of final product or clearance of final product from the, place of removal, no interpretation of the later part of the definition would permit us to exclude such a service form the sweep of the definition. Secondly, we notice that the definition of the term 'input service' came to be amended with effect from 1.4.08 and instead of words "clearance of final products from the place of removal", the words "clearance of final products upto the place of removal" came to be substituted. What would be the position if the case had arisen after 1.4.08 is a situation we are not confronted with. We, therefore, refrain from making any observations in this regard. We, however, cannot help noticing the change in the statutory provisions which is at the heart of the entire controversy. In so far as the cases on hand are concerned, the statutory provisions cover the service used by the manufacturer in relation to the manufacture of the final products or even the clearance of final products from the place of removal. 21. We must, however, for our curiosity reconcile the expression "from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice tax paid on any input or capital goods received in the factory of manufacturer of the final product and any input service received by the manufacturer of the final product. It also held that distinction is made between the input or capital goods on one hand and input services on the other and that the service tax should be paid on any input or capital goods received in the factory of manufacture of the final product and such a restriction is not imposed in regard to input services since the only stipulation in clause (ii) is that the input services should be received by the manufacturer of the final product. The Court held thus : "Hence, even as a matter of first principle on a plain and literal construction of Rule 3(1) the Tribunal was not justified in holding that the Appellant would not be entitled to avail of CENVAT credit in respect of services utilized in relation to ammonia storage tanks on the ground that they were situated outside the factory of production. The definition of the expression 'input service' covers any services used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducts and the storage and use of ammonia is an intrinsic part of that process." 16. Some of the relevant decisions of the Tribunal on the issue referred to in the instant case by the CESTAT require brief reference. 17. In the case of CCE v. Ultratech Cements Ltd. [2010] 29 STT 244, the Bombay High Court held thus: "27. The definition of "input service" as per Rule 2(l) of 2004 Rules (insofar as it relates to the manufacture of final product is concerned), consists of three categories of services. The first category, covers services which are directly or indirectly used in or in relation to the manufacture of final products. The second category, covers the services which are used for clearance of the final products up to the place of removal. The third category, includes services namely; (a) Services used in relation to setting up, modernization, renovation or repairs of a factory, (b) Services used in an office relating to such factory, (c) Services like advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee that the charges incurred towards service tax paid on cargo handling services need to be included in the input services. The order in original denies to the respondent- assessee cenvat credit on the ground that such service does not qualify within the definition of input service as per rule 2(l) of the Cenvat Credit Rules and any service tax paid for handling the cargo, according to the Revenue, is for clearance of the product beyond the place of removal and therefore, any such amount paid on service tax cannot be included in the definition of input service. 22. The question that begs the decision is as to whether cargo handling services can be said to have been used in or in relation to manufacture and clearance of final product upto the place of removal, which is port. Admittedly, there is no express inclusion of cargo handling service in the definition of 'input service'. However, in light of the decisions rendered in this area, such interpretation can be made holding that in case of export of final product, place of removal would be port of shipment and not factory gate and therefore, the manufacturer would be entitled to avail the amount claimed towards car ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
