Customs, Excise and Gold Tribunal - Ahmedabad
Gujarat Sidhee Cement Ltd. vs Cce on 24 April, 2007
Equivalent citations: 2007[7]S.T.R.571
ORDER Archana Wadhwa, Member (J)
1. The prayer in the application is to dispense with the condition of pre-deposit of duty of Rs. 68,02,079/- confirmed by the authorities below and personal penalty of Rs. 10,000/-.
2. After hearing the both sides duly represented by Shri M.H. Patil, learned advocate for the appellant and Shri D.S. Negi, learned SDR for Revenue, we find that said demand stands confirmed against the applicant in respect of the service tax paid on transport of goods from their factory for delivery at the customer's premises. Rule 2(1) of Cenvat Credit Rules, 2004 allows an assessee to avail the credit of the duty paid on the input services received. It is appellant's contention that outward transportation of finished goods manufactured by them would fall within the definition of "input service" as defined under Rule 2(1). For the above purpose, reliance has been placed on the decision of Commissioner (Appeal) in case NHK Spring (India) Ltd. reported in 2006 (204) ELT 189 (CA). Our attention has been further drawn to the Tribunal's order as reported in 2007-TIOL-100-CESTAT-DEL, wherein the unconditional stay was granted in respect of the same disputed issue.
3. On the other hand, Revenue reiterates the findings of Commissioner. By referring to the definition of input services, it has been contended that only such services, which are availed till the clearance of the goods from the factory gate would constitute input services. In as much as the transportation of the goods from place of removal is a service after the manufacture and clearance of the goods, the same would not be covered by the definition of input services. They have also relied upon the Tribunal's stay order No. S/144 to 147/WZB/Ah'bad/07, dated 10.01.07, vide which the appellant's contention claiming the cenvat credit in respect of service tax paid on CHA services and security services was, prima facie, was not found favourable and the appellants were directed to deposit the service tax as also penalty.
4. In his rejoinder, learned advocate submits that whenever there are conflicting decisions of various benches, one which is favourable to the assessee should be adopted in the matters of stay, as held by Hon'ble Kerala High Court in the case of Binani Zinc Ltd. as reported in 1995 (77) ELT 514(Ker.)
5. For better appreciation of argument raised by both sides, we would like to reproduce the definition of input services, as contained in Rule 2(1) of Cenvat Credit Rules, 2004.
"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 final products and clearance of final products from the place of removal.
(Emphasis provided) 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, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal.
From the under-lined portion of the above definition, we are of the prima facie view that input service also includes services relatable to clearance of final product from the place of removal. As has been rightly argued by Shri M.H. Patil, learned advocate that the subsequent detailed services mentioned below Para 2 (i) are inclusive services and can have no effect on the main Clause 2(i). We agree that if the services are covered by expression - "clearance of final product from the place of removal", there is no intention to go to inclusive clause which only extends the scope of the services and to hold that the input services only relates to inward transportation of capital goods and outward transportation upto place of removal". We find lot of force in the reasoning given in case of NHK Spring (India) Ltd. For better appreciation, we would like to reproduce Para 4 of the said order.
4. The two appeals are being taken up for final disposal after dispensing with pre-deposit of duty and penalty amounts. On a careful consideration of the written and oral submissions made by the Appellants, I find that the issue to be decided in these two appeals relate to the Cenvat Credit taken by the Appellants in respect of the Service Tax paid on transport of goods from their factory for delivery at the customers place. The Adjudicating Authority has disallowed the credit by relying upon provisions of Rule 2(1) of Cenvat Credit Rules, 2004. On the other hand, the contention of the Appellants is that transportation of goods from the factory for delivery at the customers premises would come within the definition of "input service" under the Cenvat Credit Rules. According to them, the definition of "input service" under the Cenvat Credit Rules. According to them, the definition of input service is an inclusive definition covering inward transportation of inputs or capital goods and outward transportation upto the place of removal and that transportation of goods from the factory gate to the customer premises would be rightly covered by the term "input service" as defined in the rules and therefore, the credit taken was in order. On a careful study of the definition of the term input service, I find that as rightly pointed out by the Appellants it is an inclusive definition to cover transport of goods from the factory to the depot as well as transportation of inputs. Their argument that outward transportation of finished goods manufactured by them would fall within the definition of "input service" appears to be correct and therefore the credit availed by them cannot be denied. If the intention was to deny credit in respect of outward transportation of finished goods then the same could have been specifically excluded in the definition itself, which however, has not been done. Further if the intention was to deny the credit in respect of outward transportation then there was no need to include the words "and clearance of the final products from the place of removal" in Rule 2(1) of the Rules relating to the definition of the input service. Hence, going by the definition of the term "input service" in the Cenvat Credit Rules, I am of the opinion that the Service Tax paid on transportation of finished goods from the factory to the premises of customer can be taken as Cenvat Credit by the Appellants and therefore, the denial of the same vide the impugned orders is not proper. Accordingly, I hold that the impugned orders are not sustainable and therefore, the same are set aside.
6. We also note that based upon the said decision, Tribunal has granted unconditional stay to other assessees similarly situate. Reference may be made to Division Bench's stay order in case of Kola (Private) Ltd. reported in 2007 (5) STR 199 (Tri-Mumbai). We also note that as per the appellant's contention, freight charges incurred towards movement of the goods from depot to buyer's premises stands included in the assessable value of their final product and duty paid thereon.
7. Revenue's reliance on the stay order in case of GHCL Ltd. is in respect of CHA services and security services, which were received at the residential colony of staff. It was in these circumstances that Bench observed that there was no, prima facie, case. However, there being earlier decision of Tribunal granting stays in identical circumstances, we would follow, at this interim stage, the orders, vide which stay petitions were allowed.
8. In view of the foregoings, we dispense with the condition of pre-deposit and penalty and allow stay petition unconditionally.
(Pronounced in Court on 24/4/07)