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TMI Blog2018 (5) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of service tax with interest upheld. Penalty - Held that: - the penalty under Section 11AC is not justified as the elements of Section 11AC do not exist in the present case - penalty set aside. Appeal allowed in part. - E/60934/2017-EX[SM] - FINAL ORDER NO. 62013/2018 - Dated:- 27-2-2018 - Mr. Devender Singh, Member (Technical) Present for the Appellant(s): Sh. Sudeep Singh, Adv. (on merit) Present for the Respondent(s): Sh. Tarun Kumar, A.R. ORDER Per : Devender Singh The appellants are in appeal against the impugned order dated 19.09.2017. 2. Brief facts of the case are that the appellant is manufacturer of liquid gases and are clearing these gases in Vacuum Insulated Transport Tanks under special procedure for removal of liquid gases under Chapter 4 (Part-III) of the CBEC s Excise Manual of Supplementary Instruction. During the audit of their records, it was observed that they had taken service tax credit against the outward freight for transportation of these gases from factory gate to buyers‟ premises by treating the same as input services. The period involved is from March 2011 to September 2012. The input service credit taken was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tra Tech Cement Ltd. in Civil Appeal No. 11261 of 2016. 5. Heard both the sides and perused the record. 6. I find that the issue involved is whether the appellant is eligible for input service credit on outward transportation of their final product from their factory to buyers‟ premises. The main contention of the appellant is that because of the special procedure of transportation of the gases, the place of removal is buyer‟s premises. The appellant have relied on the Board‟s circulars dt. 23.08.2007, 20.10.2014 and 28.02.2015. As rightly pointed out by Ld.AR, the issue is covered by the judgment of Hon ble Supreme Court in Ultra Tech Cement Ltd. (supra) wherein the issue of input service credit availed for transport of goods from place of removal to buyers‟ premises was considered by Hon ble Supreme for the period after 01.03.2008, when the definition of input service in the Cenvat Credit Rules, 2004 was amended and the word from was replaced by the word up to . In the said judgment, the Hon ble Supreme Court held as below: 7) It may be relevant to point out here that the original definition of input service contained in Rule 2(l) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses, the one dealing with general provision and other dealing with a specific item, are not to be read disjunctively so as to bring about conflict to defeat the laws‟ scheme. The purpose of interpretation is to find harmony and reconciliation among the various provisions. 15. Credit availability is in regard to inputs . The credit covers duty paid on input materials as well as tax paid on services, used in or in relation to the manufacture of the final product . The final products, manufactured by the assessee in their factory premises and once the final products are fully manufactured and cleared from the factory premises, the question of utilization of service does not arise as such services cannot be considered as used in relation to the manufacture of the final product. Therefore, extending the credit beyond the point of removal of the final product on payment of duty would be contrary to the scheme of Cenvat Credit Rules. The main clause in the definition states that the service in regard to which credit of tax is sought, should be used in or in relation to clearance of the final products from the place of removal. The definition of input services should be read a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CESTAT in the case of M/s Gujarat Ambuja Cements Ltd. vs CCE, Ludhiana [2007 (6) STR 249 Tri-D]. In this case, CESTAT has made the following observations:- the post sale transport of manufactured goods is not an input for the manufacturer/consignor. The two clauses in the definition of input services take care to circumscribe input credit by stating that service used in relation to the clearance from the place of removal and service used for outward transportation upto the place of removal are to be treated as input service. The first clause does not mention transport service in particular. The second clause restricts transport service credit upto the place of removal. When these two clauses are read together, it becomes clear that transport service credit cannot go beyond transport upto the place of removal. The two clauses, the one dealing with general provision and other dealing with a specific item, are not to be read disjunctively so as to bring about conflict to defeat the laws‟ scheme. The purpose of interpretation is to find harmony and reconciliation among the various provisions . Similarly, in the case of M/s Ultratech Cements Ltd vs CCE Bhavnagar 2007- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delivery of the goods in acceptable condition to the purchaser at his door step; (ii) the seller bore the risk of loss of or damage to the goods during transit to the destination; and (iii) the freight charges were an integral part of the price of goods. In such cases, 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 (in terms of the definition as under section 2 of the Central Excise Act, 1944 as also in terms of the provisions under the Sale of Goods Act, 1930) occurred at the said place. 11) As can be seen from the reading of the aforesaid portion of the circular, the issue was examined after keeping in mind judgments of CESTAT in Gujarat Ambuja Cement Ltd. and M/s. Ultratech Cement Ltd. Those judgments, obviously, dealt with unamended Rule 2(l) of Rules, 2004. The three conditions which were mentioned explaining the place of removal as defined under Section 4 of the Act, there is no quarrel upto this stage. However, the important aspect of the matter is that Cenvat Credit is permissible in respect of input se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be applied because during the period prior to 11.07.2014, the definition of place of removal mentioned in Section 4 of the Central Excise Act, 1944 was applicable. In view of the above, the contention of the appellants to apply these circulars is not tenable, as these circulars have not been issued in the context of the definition of place of removal in the Central Excise Act, 1944, which was applicable prior to 11.07.2014. 8. The appellants have also argued that the judgment of Hon ble Supreme Court in the case of Ultra Tech Cement (supra) is not applicable to the present case as the procedure of P.O.D. was peculiar to the present case and the same has not been considered in the said judgment. I find that the entire argument of the appellant is based on the fact that goods were delivered on F.O.R. basis. I find that under special procedure for removal of gases pass out system, the pass-out document indicates, the description, net quantity of goods being dispatched ( gross weight minus tare weight of tanker), and duty liability on such net quantity. This net quantity and duty leviable thereon (provisional) is provisionally entered/recorded in the Daily Stock Account at the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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