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TMI Blog2021 (8) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 The respondent assessee filed an Appeal before the said Tribunal against the order passed by the Commissioner of Central Excise, Thane-1. The respondent also applied for stay of recovery of the duty pending the Appeal. Such application was placed before the Tribunal and the Tribunal proceeded by the consent of both sides took up the Appeal itself and disposed it of finally. It is this final order which is challenged before us. 4 The issue involved is whether the services which have been availed of could be said to be input services within the meaning of Rule 2(1) of the CENVAT Credit Rules, 2004. It is submitted that the words "input services" has been defined to mean any services used by 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. The latter part may be inclusive but, in the instant case, the assessee claims CENVAT Credit on commission of export sales, bank commission charges and aviation charges. These could not be said to be falling within the definition. Therefore, the adjudication order could not have been set aside. 5 On the other hand, the learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... desired. The expectation given from the Appellate Tribunal is therefore not fulfilled and particularly when it is manned by persons drawn from judicial services. In these circumstances, we have no alternative but to allow this Appeal only on this short, but substantial question of law and that is that the Appeals cannot be disposed merely by recording rival submissions and not discussing them elaborately but, in a perfunctory manner. 7 The impugned order is therefore quashed and set aside. The order of CENSTAT shall be treated as confined and restricted to the stay application. It will be held that the assessee has made out a strong prima facie case for grant of an unconditional stay, but beyond that the Appeal cannot be said to be finally disposed of by the impugned order." 2.1 As noted by the tribunal in its earlier order dated 11.07.2014, issue involved in all these appeals is in respect of admissibility of CENVAT Credit on following services which have been received by the appellant, after the removal of goods from the factory: a) Clearing charges paid to the Custom House Agent for export of goods. b) Commission on export sale. c) Material Handling Charges. d) Ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he place of removal. This definition, of course, is worded to include variety of services used not only for, but in relation to manufacture of final products and also for clearance of final products up to the place of removal. The term "activities relating to business" has been further elaborated by giving examples, terming them as "such as". These examples are "accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security". Finally, the list also includes inward transportation of inputs or capital goods, and outward transportation up to the place of removal. Thus, the term "input service" is restricted to include inward transportation of inputs or capital goods, and outward transportation up to "place of removal". 16.05 Turning to the phrase "place of removal" it can be seen that the Section 4 of the Central Excise Act, 1944 defines it as "(i) a factory or any other place or premises of production or manufacture of 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to business", expands its scope and so, not only those services given as example but other services of activities of business are also covered by the definition. It is also contended that by use of words, directly or indirectly' and 'in or in relation to the manufacture of the final products the scope is further widened. All the contentions of the assessee are emphasizing this basic argument. On examining this contention against the allegation in the SON and analysis of the definition done above, it is seen that the notice is not based on the restrictive meaning of the term "such as", as mis-presented by the assessee, and does not allege that only the services as actually mentioned in the definition are covered, but, the notice alleges that only those services which are of Ejusdem generis to the given examples are covered. Thus the services which are used by the assessee at their office, for banking or the services which are not in conformity with the genre created by the service given as example in the definition, for example aviation service' are proposed for disqualification. The contention of the assessee, therefore, up to this point is misplaced and hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e valuation of the goods is governed by a separate Section of the Central Excise Act, 1944 and the Rules thereunder, the principle of valuation cannot be applied to the definition of the services. 16.12 To examine this contention further, again the definition of terms "input service" has to be referred to. In this definition, there is reference to the concept of "place of removal" for only two services. These are, "storage up to the place of removal", and "outward transportation up to "place of removal"". "Place of removal" as discussed above is defined under section 4 ibid, storage service and the service of transportation have been specifically included in the second part of definition and restricted to include only transportation up to place of removal. Incidentally, vide Notification No. 10/2008 - CE(NT) dt.01.03.2008 the words "clearance of final products from the place of removal" were substituted by the words "clearance of final products up to the place of removal". The replacement of the words indicates that the definition has been widened to incorporate situations where clearances are by transportation up to the place of removal. However, it also emphasizes the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1944; (iii) Section 5 of the Central Sales Tax Act; (iv) Section 23 and Section 39 of the Sale of Goods Act, 1930; (v) Honest Biovet - 2014 (310) ELT 526 (TLB), has held that in case of 'Port of Export' is 'Place of removal'; (vi) CBEC Circular No. 999/6/2015-CX dated 28.02.2015; (vii) CBEC Circular No. 1065/4/2018-CX dated 08.06.2018; (viii) Judgements Commission on Export Sales (Rs. 21021179) Commission on export sales relates to the payments made for the services received from Overseas Commission Agents, who promote the overseas sales of finished product. (i) Specifically covered under 'Sales Promotion' and hence covered under Rule 2(1) of CCR, 2004; (ii) Illustrative agreement with M/s. Abdurahaman Abubker Sherif; (iii) Notification 2/2016- CE(NT) dated 03.02.2016; (iv) CBEC Circular No.943/04/2011-CX dated 29th April, 2011; (v) Circulars issued by dept. are binding; (vi) Judgements Material Handling Charges (Rs. 3085317) Material handling charges for which service tax is paid by the service providers relates to loading and unloading of finished goods in the factory premises and also at the various Depots, from where the goods are ultima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter to tribunal and the submissions made during the course of arguments. 4.2 On the specific issue of "place of removal" in case of export of goods, CBEC has vide its circular 999/6/2015-CX dated 28.02.2015, clarified as under: "Attention is invited to Circular No. 988/12/2014-CX dated 20.10.2014 issued from F. No. 267/49/2013-CX.8 on the above subject wherein it was clarified that the place of removal needs to be ascertained in terms of provisions of Central Excise Act, 1944 read with provisions of the Sale of Goods Act, 1930 and that payment of transport, payment of insurance etc are not the relevant considerations to ascertain the place of removal. The place where sale takes place or when the property in goods passes from the seller to the buyer is the relevant consideration to determine the place of removal. 2. In this regard, a demand has been raised by the trade that it may be clarified that in the case of exports, for purposes of CENVAT credit of input services, the place of removal is the port or the airport from where the goods are finally exported. 3. The matter has been examined. It is seen that section 23 of the Sale of Goods Act, 1930 provides that wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er bench has in case of Honest Biovet [2014 (310) ELT 526 (T-LB)] has held as follows: "12. As goods in question were cleared under ARE-1 for export under bond, in our view the sale would be completed at load port only as per definition of "Place of Removal" given u/s 4(3)(C)(iii) of the Central Excise Act, 1944. Under these circumstances, ownership of the goods and duty liability is also extended up to the load port and if, the goods are not exported, concerned manufacturer will be required to discharge the duty liability. Therefore, 'removal' also gets extended up to the port of shipment from where the sale would be completed and when the goods were to be exported. Hence, if the goods cleared for export under Bond are destroyed before the export, ownership of the said goods and also duty liability, if any, would be always to the account of appellant assessee and that the said goods could be considered having been destroyed before removal and the benefit of Remission of duty is allowable in such an exceptional situation in terms of Rule 21 of Central Excise Rules, 2002. Clause (iii) in Section 4(3)(C) for "Place of removal" was inserted w.e.f. 14-5-2003 vide Section 136 of the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section/Rule, is generally to explain the meaning of the words contained in the Section/Rules. The purpose of explanation is to explain the meaning and intendments of the Section/Rule. Sometimes, the explanation may be inserted to clarify a doubtful point of law, which would be effectively retrospectively. In the present case, the expressions in the explanation as inserted by Notification No. 2/2016-C.E. (supra), make it clear that it is for explaining the meaning of clause "sales promotion" in the context of Rule 2(l) of the Rules, 2004. It is to provide an additional support to the dominant object of the word "sales promotion" in Rule 2(l) in order to make it meaningful and purposeful. The language of the explanation is consistent with Board Circular to the benefit of the assessee and it would be effective retrospectively. The Hon'ble Supreme Court in the case of Vatika Township Pvt. Ltd. (supra), in the identical situation, held that if a legislation confers a benefit on some other person or on the public generally, and where to confer such benefit appears to have been the legislature's object, then the presumption would be that such a legislation, giving it a purposive construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized by the appellants for the delivery of documents to the customers and statutory bodies. In fact these services are used for conducting their business by the Appellants. Tribunal has in case of Apar Industries [2010 (20) STR 624 (T)], while allowing the CENVAT Credit of Service Tax paid on the Courier Services held as follows: "3. I have considered the submissions made by both sides. As rightly observed by Commissioner, the input service includes various services related to manufacturing activities as well as business activities. The courier services are used by the respondents for placing order, filing quotation for procurement as well as marketing, dispatch instructions, issuing cheque for procurement, sending stock transfer documents to depots, receiving dispatch instructions from marketing/depots/Head office etc., the activities for which the courier service has been used by the respondent. It is quite clear that services have been used in relation to all kinds of activities which have been said to used in relation to manufacture of final product and clearance of final product as well as business activities, as defined in the definition of input services. In view of the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h effect from 1-4-2011, the definition of input service in Rule 2(l) is much wider and broadbanded and takes in its ambit, inter alia, all input services used by the manufacturer, whether directly or indirectly, is or in relation to the manufacture of final products and clearance of final products, except services specifically excluded in clauses A, B and C of the Rule. As trend, hereinafter, the impugned services are very much input services for the purposes of Rule 2(l)." Similarly in case of Reliance Indu8stry, Learned Member observes 6.3 Now the question that arises is regarding services which were excluded by the amendment after 2-4-2011 to the definition of Rule 2(l) of the Cenvat Credit Rules, 2004. The said services are - outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees such as Leave or Home Travel Concession. The amendment indicates when such services are used purely for personal use for consumption of any employee, the Cenvat credit cannot be allowed. On perusal of the records, we find that the appellants have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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