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TMI Blog2009 (5) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... We have heard both sides on the issue referred to the larger Bench viz., "whether the services availed by a manufacturer for outward transportation of final products from the place of removal should be treated as an 'Input Service' in terms of Rule 2(1)(ii) of CENVAT Credit Rules, 2004 and thereby enabling the manufacturer to take credit of the service tax paid on the value of such services? or whether 'Input service' should be limited only to outward transportation upto the place of removal in terms of the inclusive definition as held in the Gujarat Ambuja case cited supra?" 2. Rule 2(1) of the CENVAT Credit Rules, 2004 reads as under:- (i) "input service" means any service, - (ii) Used by a provider of taxable service for providing an output service; or (iii) 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, 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 relating to such factor or premises, advertisement or sales promotion, market researc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the country and in pursuance of the declared policy of the Government. The correct way of reading the different heads of exemption enumerated in the section would be to treat each as a separate and distinct head of exemption. Whenever a question arises as to whether any particular category of an income of a co-operative society is exempt from tax what has to be seen is whether income fell with any of the several heads of exemption. If it fell within any one head of exemption, it would be free from tax notwithstanding that the conditions of another head of exemption are not satisfied and such income is not free from tax under that head of exemption." 7. The same proposition has been laid down by the Apex Court in Share Medical Care v. Union of India [2007 (209) E.L.T. 321 (S.C.)]. The relevant para graphs are reproduced herein below "15. From the above decisions, it is clear that even if an applicant does not claim benefit under a particular notification at the initial stage, he is not debarred, prohibited or estopped from claiming such benefit at a later stage. 16. In the instant case, the ground which weighed with the Deputy Director General (Medical), DGHS for non-con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing under Chapters 84, 85 or 90 of the Customs Tariff. The exemption was to the extent of the duty as was in excess of the amount calculated at the rate of 55% ad valorem. Subsequently, another Notification No. 96/91-Cus., dated 25-7-1991 was issued which exempted the goods falling within the Chapters 82, 84, 85 and 90 of the Customs Tariff which was used in the electronic industries. The exemption available was to the extent of duty which was in excess of the amount calculated at 20% ad valorem. At serial No. 53 of the Table the following goods were covered: "Automatic testing or marking or printing or taping machine or any combination thereof." We find that the goods imported were 'Optical Time Domain Reflectometer' which was specifically covered by the already existing Notification No. 59/88-Cus. The description at Serial No. 53 of the Table under Notification No. 96/91 -Cus. was general in nature and it could not be said that the goods were equally covered by both the notifications. When there is specific entry, it is settled position in law that the goods would be class under that specific entry as against the general entry. 10. The learned Advocate had submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while interpreting the expression "in relation to" Apex Court held as under:- "48. The expression "in relation to" (so also "pertaining to"), is a very broad expression which pre-supposes another subject matter. These are words of comprehensiveness which might both have a direct significance as well as an indirect significance depending on the context, see State Wakf Board v. Abdul Aziz (AIR 1968 Madras 79, 81 paragraphs 8 and 10 following and approving Nitai Charan Bagchi v. Suresh Chandra Paul ( 66 C.W.N. 767), Shyam Lal v. M. Shyamlal (A.I.R. 1933 All. 649) and 76 Corpus Juris Secundum 621. Assuming that the investments in shares and in lands do not form part of the undertakings but are different subject matters, even then these would be brought within the purview of the vesting by reason of the above expressions. In this connection, reference may be made to 76 Corpus Juris Secundum at pages 620 and 621 where it is stated that the terms "relate" is also defined as meaning to bring into association or connection with. It has been clearly mentioned that "relating to" has been held to be equivalent to or synonymous, with as to "concerning with" and "pertaining to". The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inance and Investment Co. Ltd. case reported in AIR 1987 SC 1023, the apex court was interpreting the definition of the term "prize chit" which was defined only exclusively, for the purpose of examining whether the endowment scheme piloted by the company fall within the definition of "prize chit" which was banned under Section 3 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. The Supreme Court held that the word "includes" was intended not to extend the meaning of 'prize chit' but to cover the transaction or arrangements of nature of prize chits but under different names. This decision, however, is not applicable for the purpose of interpreting the definition of "input services" which contains both the expressions "means" and "includes" 17. In this view of the matter, the use of the expression 'outward transportation' in the inclusive clause of the definition is by way of abundant caution so as to avoid any dispute being raised on the "means clause" (which refers to clearance from the place of removal), that transportation upto the place of removal is not available as credit. Transportation within a factory would be covered by the inclusive clause. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit of service tax on GTA service. The two issues, namely, 'valuation' and 'CENVAT credit' are independent of each other and have no relevance to each other as clarified by the Board's Circular No.137/3/2006-C.X. dated 2-2-2006. As per the Board Circular No. 97/8/2007 dated 23-8-2007, there may be situations where a 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 property in the goods remained with the seller of the goods till the delivery thereof 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 and in such cases, the credit of service tax paid on the transportation upto such place of sale would be admissible if it can be established by the claimant of such credit that the sale and transfer of property in goods (in terms of the definition 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Federation of Tax Practitioners case supra that service tax and excise duty are consumption taxes to be borne by the consumer and, therefore, if credit is denied on transportation service, the levy of service tax on transportation will become a tax on business rather than being a consumption tax. The submission of the Revenue that CENVAT credit cannot be allowed for services if the value thereof does not form part of value subjected to excise duty is clearly against the fundamental concept laid down by the Supreme Court in the All India Federation of Tax Practitioners case and the OECD guidelines. 22. There is an additional reason for holding that CENVAT credit is admissible on services even if the value thereof is not part of the value subjected to duty. This is because the interpretation of the expression "input services" cannot fluctuate with the change in the definition of "value" in Section 4 of the Central Excise Act and cannot vary depending on whether the goods are levied to duty under Section 4A of the Central Excise Act or tariff value under Section 3(2) of the Central Excise Act or the product attract specific rate of duty. In the case of Gujarat Ambuja Cemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the goods in acceptable condition to the purchaser at his door step. The aforesaid condition has to be considered to be fulfilled because the supply of cement by the appellant to its customer is 'FOR destination'. The appellant also bears the freight in respect thereof upto the door step of the customer. The freight charges incurred by it for such sale and supply at the door step of the customer are subjected to service tax which is also duly paid by the appellant. Moreover, the definition of expression 'input service' is available in Rule 2(1) of the CC Rules, which reads thus:- "2(1) "input service" means any service, - (i) used by a provider of taxable service for providing an output service, or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of 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 relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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