Custom, Excise & Service Tax Tribunal
Cce-Ludhiana vs M/S. Bharti Teletech Limited on 19 August, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
R.K. PURAM, WEST BLOCK NO. 2, NEW DELHI-110066
COURT NO. IV
Date of hearing: 19/08/2015
Appeal No. E/2067/2010-EX [SM]
[Arising out of Order-in-original No. 43/CE/DC/LDH-III/06 dated 02.01.2007 passed by the Deputy Commissioner, Central Excise Division-III, Ludhiana]
For Approval and Signature:
Honble Shri S.K. Mohanty, Member (Judicial)
1.
Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
CCE-Ludhiana Appellant
Vs.
M/s. Bharti Teletech Limited Respondent
Appearance: Shri R.K. Gupta, DR for the appellant Shri Puneet Aggarwal, Advocate for the respondent.
Coram: Honble Shri S.K. Mohanty, Member (Judicial) Final Order No. 54207/2015 Per: S.K. Mohanty Pursuant to the judgment dated 4/2/2015 of the Honble Punjab and Haryana High Court passed the Civil Writ Petition No. 86/2013, this appeal is being taken up for hearing.
2. The issue involved in the present case for determination by this Tribunal is as under:
Whether Service Tax paid on transportation charges for transporting goods from the assessee place, such as a factory, warehouse, depot, to the customer falls within the meaning of input service as defined under the Rules and can the assessee be allowed to take Cenvat Credit?
3. Shri R.K. Gupta, ld. DR appearing for the appellant submits that no documents are available in the file to show that the goods have been delivered by the respondent on FOR basis to its customers. Thus, in absence of any documents to prove that the ownership/title of goods passed on to the buyer at their side, CENVAT Credit on outward transportation is not available to the respondent. Ld. DR further submits that being aggrieved with the judgment of Honble Karnataka High Court in the case of CCE & ST LTU Bangalore Vs. ABB Ltd. reported in 2011 (23) STR 97, department has already filed the SLP before Honble Supreme Court which is pending for decision. Per Contra, ld. Advocate, Shri Puneet Aggarwal appearing for the appellant submits that there will be dispute in period on amended provision of Rule 2 (l) of the CENVAT Credit Rules, 2004 will have there for taking CENVAT Credit of service tax paid on outward transportation of goods. He submits that in terms of the definition of input service prior to its amendment, provided that clearance of final product from place of removal should take within its ambit for the purpose of taking CENVAT Credit. It is his submission that since the embargo of _______ upto the place of removal was incorporated in the CENVAT Credit w.e.f. 1/04/2008 and the period involved in the present case is from November, 2005 to May, 2006, the embargo contained in the definition clause of input service will have no __ and the respondent is eligible for the CENVAT benefit on the GTA service for outward transportation of the goods.
4. To substantiate his stand that CENVAT Credit is available on the GTA Service, ld. Advocate has relied on the decision refers to paragraph 30 in the judgment of Honble Karnataka High Court in the case of CCE & ST LTU Bangalore Vs. ABB Ltd. reported in 2011 (23) STR 97 to justify his stand that transportation charges incurred for removal of goods to the buyers premises will be eligible for cenvatable benefit. He further relies on the decision of the Bench of this Tribunal in the appellants own case wherein the CENVAT credit on service tax paid on GTA service for transportation of goods has been allowed.
5. Heard ld. Counsel for both the sides and perused the records.
6. The issue involved in the present case is in regard to the availment of CENVAT Credit of service tax paid on GTA Service for transportation of goods from the factory of the respondents to its buyers premises. I find that it is a definition of input service contained in Rule 2 (l) vide notification 1/3/2008, the clearance of final product from the place of removal was considered as input service for the purpose of taking CENVAT Credit. It is an admitted fact on record that the appellant has availed GTA service for transportation of goods from its removal to the factory of buyers and the service tax paid on such transport services have been taken as CENVAT Credit. The question of delivering of goods on the FOR basis is not the subject matter for this appeal since both the sides have aggrieved from the Honble High Court that the issue is only confined to the interpretation of the definition of input service prior to its amendment w.e.f. 1/4/2008 with regard to the eligibility of CENVAT benefit. I find that the issue in dispute is clearly ________ by the Honble Karnataka High Court in the case CCE & ST LTU Bangalore Vs. ABB Ltd. reported in 2011 (23) STR 97 the relevant paragraph in the said judgments is extracted:
The definition of input service contains both the word means and includes, but not means and includes. The portion of the definition to which the word means applies has to be construed restrictively as it is exhaustive. However, the portion of the definition to which the word includes applies has to be construed liberally as it is extensive. The exhaustive portion of the definition of input service deals with service used by the manufacture, whether directly or indirectly, in or in relation to the manufacture of final products, it also includes clearance of final products from the place of removal. Therefore, services received or rendered by the manufacturer from the place of removal till it reaches its destination falls within the definition of input, service. What are the services that normally a manufacturer would render to a customer from the place of removal? They may be packing, loading, unloading, transportation, delivery, etc. Though the word transportation is not specifically used in the said section in the context in which the phrase clearance of final products from the place of removal is used, it includes the transportation charges. Because, after the final products has reached the place of removal, to clear the final products nothing more needs to be done, except transporting the said final products to the ultimate destination, i.e., the customers/buyer of the said product, apart from attending to certain ancillary services as mentioned above which ensures proper delivery of the finished product upto the customer. Therefore, all such services rendered by the manufacturer are included in the definition of input service. However as the legislature has chosen to use the word means in this portion of the definition, it has to be construed strictly and in a restrictive manner. After defining the input service used by the manufacturer in a restrictive manner, in the later portion of the definition, the legislature has used the word includes. Therefore, the later portion of the definition has to be construed liberally. Specifically what are the services which fall within the definition of input service has been clearly set out in that portion of the definition. Thereafter, the words activities relating to business an omni-bus phrase is used to expand the meaning of the word input service. However, after using the omni bus phrase, examples are given. It also includes transportation. The words used are (a) inward transportation of inputs or capital goods (b) outward transportation upto the place of removal. While dealing with inward transportation, they have specifically used the words inputs or capital goods. But, while dealing with outward transportation those two words are conspicuously missing. The reason being, after inward transportation of inputs or capital goods into the factory premises, if a final product emerges, that final product has to be transported from the factory premises till the godown before it is removed for being delivered to the customer. Therefore, input service includes not only the inward transportation of inputs or capital goods but also includes outward transportation of the final product upto the place of removal. Therefore, in the later portion of the definition, an outer limit is prescribed for outward transportation, i.e., upto the place of removal.
7. Further, I find that the relying on the said judgment of the Honble Karnataka High Court, this Tribunal in the case of appellants itself, vide order dated 15/10/2014, has also allowed the appeal in favor of the appellant.
8. Under the on amending definition of the input service contained in Rule 2 (l) of the CENVAT Credit Rules since the requirement for taking CENVAT Credit was with regard to the clearance of final product from the place of removal, the question as to how and where the ownership/title of the goods passed on the buyer is not the relevant consideration and irrespective of the purpose if service tax has been paid on the transportation of the goods to the buyers premises have been incurred by the respondent, the said should be available at CENVAT Credit. In view of the certain position of law, I am of the considered opinion that the respondent shall be eligible for the CENVAT benefit of service tax paid on the GTA service for transportation of goods to its buyers premises. Therefore, there is no infirmity in the impugned order and as such the appeal filed by the Revenue is dismissed.
(S.K. Mohanty) Member (Judicial) 2