Custom, Excise & Service Tax Tribunal
Bhubaneshwar-I vs Nalco Ltd on 20 August, 2024
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
KOLKATA
REGIONAL BENCH - COURT NO.1
Excise Appeal No.76016 of 2014
(Arising out of Order-in-Original No.CCE/BBSR-I/07/2014 dated 29.03.2014 passed
by Commissioner of Central Excise,Customs & Service Tax, Bhubaneswar I)
Commissioner of Central Excise & Service Tax,Bhubaneswar I
(C.R.Building, Rajaswa Vihar, Bhubaneswar-751007)
Appellant
VERSUS
M/s NALCO Limited
(Mine & Refinery Complex, Damonjodi, Dist.-Koraput,Orisha, Pin-763008)
Respondent
APPERANCE :
Shri K.Chowdhury, Authorized Representative for the Appellant Shri Jnanesh Mohanty & Ms.Shreya Mundhra, both Advocates for the Respondent CORAM:
HON'BLE MR.ASHOK JINDAL, MEMBER (JUDICIAL) HON'BLE MR.K.ANPAZHAKAN, MEMBER (TECHNICAL) FINAL ORDER NO.76686/2024 DATE OF HEARING : 20 .08.2024 DATE OF DECISION : 20.08.2024 Per Ashok Jindal :
The Revenue is in appeal against the impugned order, wherein the ld.Adjudicating Authority has dropped the proceedings against the respondent.
2. The facts of the case are that the respondent is engaged in the manufacture of aluminium and in the course of its business, the respondent received Input Service Credit from its unit at Vizag relating to services received for the purposes of export of the finished goods, such as, port terminal handling charges, siding charges, cargo handling charges pertaining to "Port Services" provided by M/s Visakhapatnam Port Trust. The cenvat credit of service tax so availed was utilized for payment of Central Excise duty on clearance of finished goods.
2Excise Appeal No.76016 of 2014 2.1 During the course of audit, it was observed that the export related services received and distributed by ISD to the respondent do not have any nexus with the manufacturing activities of their final product and are used beyond the place of removal. As such, it was observed that the said services fall outside the scope of "Input Services" as defined under ERule 2 (l) of the Cenvat Credit Rules, 2004. Accordingly, the proceedings were initiated against the respondent for the period November, 2007 to March, 2013 by issuance of show-cause notice dated 19.06.2013 by invoking extended period of limitation.
2.2 The matter was adjudicated and the Adjudicating Authority dropped the proceedings against the respondent.
2.3 Against the said order, the Revenue is before us.
3. Today, when the matter was called, it was submitted by both the sides that in the respondent's own case for the another unit, the issue has been settled by this Tribunal vide Final Order No.76612/2024 dated 05.08.2024. Therefore, the issue is no more res-integra.
4. Heard both the parties and considered the submissions.
5. We find that the issue has been examined by this Tribunal in the respondent's own case for the another unit, wherein this Tribunal has observed as under :
"7. Admittedly, the only issue in this case is that of Cenvat Credit being taken on the basis of the ISD Invoices issued by the Vizag office of the Respondent. Through these invoices, the Vizag office has transferred the Cenvat Credit pertaining to the services rendered at the port. There is no dispute that the service was 3 Excise Appeal No.76016 of 2014 rendered by the vendor and was also utilized by the Respondent for their exports. The Excise Appeal No. 76015 of 2014 4 Show Cause Notice has been issued on a very narrow interpretation of the term "place of removal" on the ground that the port from where the export is taking place is not the „place of removal‟.
8. This very issue was before the Hon. Gujarat High Court in the case of CCE v. Inductotherm India Pvt. Ltd.- 2014 (36) STR 994 (Gujarat High Court). The Hon'ble High Court has held as under:-
22. The question that begs the decision is as to whether cargo handling services can be said to have been used in or in relation to manufacture and clearance of final product upto the place of removal, which is port. Admittedly, there is no express inclusion of cargo handling service in the definition of 'input service'.
However, in light of the decisions rendered in this area, such interpretation can be made holding that in case of export of final product, place of removal would be port of shipment and not factory gate and therefore, the manufacturer would be entitled to avail the amount claimed towards cargo handling as 'input service' under the Cenvat Credit Rules.
23. Admittedly, cargo handling services are utilized for the purpose of export of final product where the place of removal for the purpose of export shall necessarily have to be the port and therefore any service availed by the exporters until the goods left India from the port are the service used in relation to clearance of final products upto the place of removal. If at this stage, the definition of input service is recollected, it includes services used by the manufacturer directly or indirectly in or in relation to manufacture of the final product and in relation to clearance of final product from the place of removal. Definition of term 'input service' being very wide in its expression, wherein number of services used by manufacturer are included in the same, used directly or indirectly.
24. This Court in the case of Parth Poly Wooven Pvt. Ltd. (supra) has held that when the manufacturer transports his finished goods from the factory, without clearance to any other place such as, 4 Excise Appeal No.76016 of 2014 go-down, warehouse, etc. from where it would be ultimately removed, such service is covered in the expression "outward transportation up to the place of removal" since such place other than factory gate would be the place of removal. It had been in clear terms held that outward transport service used by the manufacturer for transportation of finished goods from the place of removal up to the premises of the purchaser is covered within the definition of 'input service' provided in rule 2(1) of the Cenvat Credit Rules. Taking this analogy further, the cargo handling service is availed essentially for the purpose of exporting the goods and in such case, the O/TAXAP/22/2014 ORDER services of cargo handling used by the manufacturer for transportation of the finished goods from the place of removal shall have to be essentially the port from where goods are actually taken out of the country. [Emphasis supplied]
9. Similar issue had come up before this Bench in the case of Electrosteel Castings Ltd. v. CCE 2019 (2) TMI 1023. The Hon'ble Bench has held as under:-
10. There is no dispute about the fact that the goods have been exported. In such cases the place of removal is the port where the export of goods is loaded on to the vessel. Inspite of the same, the Adjudicating Authority has denied such credit. We note that Hon‟ble High Court of Gujarat in the case of inductotherm India Pvt. Ltd. (Supra) has granted the credit of CENVAT Credit for Cargo Handling Services used for clearance of final product from the port for export. The Hon‟ble High Court observed that: "22. The question that begs the decision is as to whether cargo handling services can be said to have been used in or in relation to manufacture and clearance of final product upto the place of removal, which is port. Admittedly, there is no express inclusion of cargo handling service in the definition of „input service‟. However, in light of the decisions rendered in this area, such interpretation can be made holding that in case of export of final product, place of removal would be port of shipment and not factory gate and therefore, the manufacturer would be entitled to 5 Excise Appeal No.76016 of 2014 avail the amount claimed towards cargo handling as „input service‟ under the Cenvat Credit Rules."
11. Even though, the Hon‟ble High Court has held that with regard to „Cargo Handling service‟, we find that the same ratio will be applicable to all three services which are in dispute before us since, all of them have been rendered in the port for export of goods.
12. By following the decision of the Hon‟ble High Court, we conclude that the appellant will be entitled to CENVAT Credit. Accordingly, the impugned orders are set aside and appeals are allowed. [Emphasis supplied]
10. In the case of Tinplate Company of India Ltd. v. Commissioner 2020 (12) TMI 846 CSTAT Kolkata, the Hon'ble Bench has held as under:- 10.2 In the case of Commissioner Vs. Dynamic Industries Ltd., 2014 (307) ELT 15 (Guj), also the Hon‟ble Gujarat High Court has held that where exports are on FOB basis, place of removal is the port and not factory gate and hence since the impugned CHA, shipping agent and container services were utilised for purposes of export of final products and exporters could not do business without them, the service tax paid on these services availed was admissible. It has been further held that the words "input services" cannot be given restrictive meaning in view of the phrase "means..... and includes" used in Rule 2(l) of the Cenvat Credit Rules.
10.3 The view taken in the aforesaid decisions is also the view and instruction of CBEC, as communicated by its Circular No. 999/6/2015- CX dated February 28, 2015. In para 6 of the Circular it has been observed as follows:
"6. In the case of clearance of goods for export by manufacturer exporter, shipping bill is filed by the manufacturer exporter and goods are handed over to the shipping line. After Let Export Order is issued, it is the responsibility of the shipping line to ship the goods to the foreign buyer with the exporter having no control over the goods. In such a situation, transfer of property can be said to have taken place at the port where the shipping bill is filed 6 Excise Appeal No.76016 of 2014 by the manufacture exporter and place of removal would be this Port/ICD/CFS. Needless to say, eligibility to CENVAT Credit shall be determined accordingly."
10.4 The facts in the above stated cases and the instant case are similar, except that herein there are several other services, all rendered in the port of export of the final products. Hence the ratio laid down in the above decisions are fully applicable to the instant case. Therefore respectfully following the said decisions we hold that the appellant is entitled to the cenvat credit of the said services as "input service" within the meaning of Rule 2(l)(ii) of the Cenvat Credit Rules. [Emphasis supplied]
11. We find from the above decisions that the issue on hand is squarely covered. Accordingly, following the ratio laid down in the above decisions, we dismiss the Appeal filed by the Revenue on merits.
12. We also find force in the Respondent's argument that the Show Cause Notice for the period 2008 to March 2012 was issued on 3rd May 2013, and hence the same is required to be treated as time barred. Since the fact of taking the Cenvat Credit on a monthly basis on account of such ISD invoices was very much reflected in the ER-1, the Department cannot take the stand that Respondent has suppressed any fact. The issue as to whether the exports done through port can be taken as a „place of removal‟ was a matter of interpretation and the same was resolved by the Gujarat High Court in the case of Inductotherm India Pvt. Ltd. case cited supra. Therefore, at the most, the issue can be said to be that of interpretation and not a case of suppression. Therefore, we do not find any justification for the Revenue to have invoked the extended period provisions to issue the first Show Cause Notice demanding reversal of Cenvat Credit of Rs. 1,14,24,881/-. Therefore, we dismiss the Revenue's Appeal to this extent even on account of time bar.
13. The Revenue's Appeal stands dismissed on the above grounds."
7Excise Appeal No.76016 of 2014
6. Therefore, the issue is no more res-integra. Therefore, we hold that the respondent is entitled to the Cenvat Credit of the service in question as "input service" in terms of Rule 2 (l) of the Cenvat Credit Rules, 2004. Accordingly, we do not find any infirmity in the impugned order and consequently, the same is upheld.
7. In the result, the Revenue's appeal is dismissed.
(Dictated and pronounced in the open court)
(Ashok Jindal)
Member (Judicial)
(K.Anpazhakan)
mm Member (Technical)