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TMI Blog2009 (2) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... , Excise and Service Tax Appellate Tribunal, Principal Bench, New Delhi (for brevity, 'the Tribunal') The appeal was admitted on the following substantive questions of law: "1. Whether the service of transportation up to the customer's doorstep, in the case of "FOR destination" sales where the entire cost of freight is paid and borne by the manufacturer, would be "input service" within the meaning of Rule 2(1) of the CC Rules? 2. Whether interest ought to have been demanded in the present case?" 2. Brief facts of the case necessary for deciding the questions of law raised before us are that the assessee M/s. Ambuja Cements Ltd. is a private limited company incorporated under the Companies Act, 1956. It is engaged in the business of manufacturing and selling of cement which is a excisable commodity classified in Chapter 25 of the 1st Schedule appended to the Central Excise Tariff Act, 1985. One of its factory is located in District Ropar within the jurisdiction of this Court. The appellant has claimed that it has been paying central excise duty at the appropriate rate in respect of cement produced by it and there is no dispute in that regard. The assessee also claimed that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e effect that transport does not come, the scope of clearance or forwarding. Further, that transportation (freight) is an entirely different activity from manufacture remains settled by the judgements of Hon'ble Supreme Court in the cases of Bombay Tyre International - 1983 (14) E.L.T. 1896, Indian Oxygen Ltd. - 1988 (36) E.L.T. 723 Supreme Court and Baroda Electric Meters - 1997 (94) E.L.T. 13 (S.C.)." 3. Mr. Ravinder Narain, learned counsel for the assessee has drawn our attention to Rule 2(l)(ii) of the CC Rules which defines input service. Learned counsel has emphasised that the inclusive definition of 'input service' given in Rule 2(l)(ii) of the CC Rules shows that it would include inward transportation of goods or capital goods for onward transportation up to the place of removal. 4. He has further argued that the words and expression used in CC Rules and not defined but are defined in the 1944 Act or the Finance Act, 1994 (for brevity, 'the 1994 Act') are to have the meaning respectively assigned to them in those enactments. In that regard reliance has been placed on Rule 2(t) of the CC Rules. On that basis it has been submitted that the expression "plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has paid the service tax on the freight charges would not constitute a basis for allowing Cenvat credit to the extent of tax paid by them. 7. Having heard learned counsel at a considerable length and perusing the paper book and statutes with their able assistance, we are of the view that the questions of law deserve to be answered in favour of the assessee-appellant and against the revenue. It is undisputed that the appellant being a manufacturer and consigner has paid service tax on the value of goods transported by it by road. The Central Board of Excise and Customs (CBEC) has issued a circular dated 23-8-2007 dealing with the issue concerning 'up to what stage manufacturer/consigner could take credit on the service tax paid on goods transported by it by road'. The issue, in fact, has emerged out of the order of the Tribunal passed in the case of the appellant itself. The Board has opined that the phrase 'place of removal' has to be determined by taking into account the facts of each case. According to the circular, the expression 'place of removal' has been defined by Section 4 of the 1944 Act and according to sub-rule (t) of Rule 2 of the CC Rules, if any words or expressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e binding on the department. Placing reliance on earlier judgments of the Supreme Court in the cases of CCE v. Usha Martin Industries, 1997 (94) E.L.T. 460 (S.C) = (1997) 7 SCC 47; Ranadey Micronutrients v. CCE, 1996 (87) E.L.T. 19 (S.C.) = (1996) 10 SCC 387; CCE v. Jayant Dalal (P) Ltd., 1996 (88) E.L.T. 638 (S.C) = (1997) 10 SCC 402 and CCE v. Kores (India) Ltd., 1997 (89) E.L.T. 441 (S.C.) = (1997) 10 SCC 338, Hon'ble the Supreme Court concluded in para 5 as under :- "5. It is clear from the abovesaid pronouncements of this Court that, apart from the fact that the Circulars issued by the Board are binding on the Department, the Department is precluded from challenging the correctness of the said Circulars even on the ground of the same being inconsistent with the statutory provision. The ratio of the judgment of this Court further precludes the right of the Department to file an appeal against the correctness of the binding nature of the Circulars. Therefore, it is clear that so far as the Department is concerned, whatever action' it has to take, the same will have to be consistent with the Circular which is in force at the relevant point of time." 10. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the place of removal. It has also remain uncontroverted that for transportation purposes insurance cover has also been taken by the appellant which further shows that the ownership of the goods and the property in the goods has not been transferred to the seller till the delivery of the goods in acceptable condition to the purchaser at his door step. Accordingly, even the second condition that the seller has to bear the risk of loss or damage to the goods during transit to the destination stand fulfilled. 13. The third condition that the freight charges were integral part of the excisable goods also stand fulfilled as the delivery of the goods is "FOR destination' price. This aspect has been specifically pointed out in para 2.2 of the reply dated 12-4-2006 given to the show cause notice. Therefore, we are of the view that the first question is liable to be answered in favour of the assessee and against the revenue. 14. Once the first question has been answered in favour of the assessee and against the revenue then it is evident that there is no contravention and violation of any of the provisions of law and the credit has been lawfully availed. Therefore the allegation conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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