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TMI Blog2019 (4) TMI 1347X X X X Extracts X X X X X X X X Extracts X X X X ..... wance of Input Service Credit of ₹ 2,73,160/- for the period June, 2008 to August, 2008 on the ground that container services used for outward transportation of the final products upto the place of buyer are not Input Services in terms of Rule 2(l) of the CENVAT Credit Rules, 2004. It has been held that under Rule 2(l), services used upto the place of removal, is admissible as input service credit. The appellant is a manufacturer of Sponge Iron classifiable under Chapter 72 of the First Schedule to the Central Excise Tariff Act, 1985. During the period under dispute, the appellant availed CENVAT Credit of Service Tax paid on container services received from M/s. CONCOR for use in outward transportation of their final product i.e. Sponge Iron upto the place of buyers and claimed CENVAT Credit of the service tax levied thereon as input service within the meaning of Rule 2(l). Show Cause Notice dated 19.03.2009 was issued alleging that the service in question do not qualify to be an Input Service , in view of the definition of Input Service as provided in the CENVAT Credit Rules, 2004. The Adjudicating Authority passed the following order:- I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in 2018(9) G.S.T.L. 337 (S.C.). The Hon ble Supreme Court has laid down thus; 4.As mentioned above, the assessee is involved in packing and clearing of cement. It is supposed to pay the Service Tax on the aforesaid services. At the same time, it is entitled to avail the benefit of Cenvat Credit in respect of any input Service Tax paid. In the instant case, input Service Tax was also paid on the outward transportation of the goods from factory to the customer s premises of which the assessee claimed the credit. The question is as to whether it can be treated as input service . 5. Input service is defined in Rule 2(l) of the Rules, 2004 which reads as under : 2(l) input service means any service :- (i) Used by a provider of taxable service for providing an output services; or (ii) Used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng an end to the transport journey. We, therefore, find that the Adjudicating Authority was right in interpreting Rule 2(l) in the following manner: ... The input service has been defined to mean any service used by the manufacturer whether directly or indirectly and also includes, interalia, services used in relation to inward transportation of inputs or export goods and outward transportation upto the place of removal. 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 services 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip of the goods till the delivery of the goods at the purchaser s door step; (ii) seller bearing the risk of or loss or damage to the goods during transit to the destination and; (iii) freight charges to be integral part of the price of the goods. This approach of the Commissioner (Appeals) has been approved by the CESTAT as well as by the High Court. This was the main argument advanced by the learned counsel for the respondent supporting the judgment of the High Court. 9. We are afraid that the aforesaid approach of the Courts below is clearly untenable for the following reasons : 10. In the first instance, it needs to be kept in mind that Board s Circular dated August 23, 2007 was issued in clarification of the definition of input service as existed on that date i.e. it related to unamended definition. Relevant portion of the said circular is as under : ISSUE : Up to what stage a manufacturer/consignor can take credit on the service tax paid on goods transport by road? COMMENTS: This issue has been examined in great detail by the CESTAT in the case of M/s. Gujarat Ambuja Cements Ltd. vs. CCE, Ludhiana [2007 (6) S.T.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be stored without payment of duty; (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory; from where such goods are removed. It is, therefore, clear that for a manufacturer/consignor, the eligibility to avail credit of the Service Tax paid on the transportation during removal of excisable goods would depend upon the place of removal as per the definition. In case of a factory gate sale, sale from a non-duty paid warehouse, or from a duty paid depot (from where the excisable goods are sold, after their clearance from the factory), the determination of the place of removal does not pose much problem. However, there may be situations where the manufacturer /consignor may claim that the sale has taken place at the destination point because in terms of the sale contract/agreement (i) the ownership of goods and the property in the goods r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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