Custom, Excise & Service Tax Tribunal
M/S. L.G. Balakrishnan & Bros. Ltd vs Cce, Tiruchirappalli on 2 January, 2017
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/Misc./40767/2016 and E/732/2007
(Arising out of Order-in-Original No. 1/2007 (Revision) dated 16.7.2007 by the Commissioner of Central Excise, Tiruchi)
M/s. L.G. Balakrishnan & Bros. Ltd. Appellant
Vs.
CCE, Tiruchirappalli Respondent
Appearance Shri Raghavan Ramabhadran, Advocate for the Appellant Shri S. Nagalingam, AC (AR) for the Respondent CORAM Honble Shri D.N. Panda, Judicial Member Honble Shri Madhu Mohan Damodhar, Technical Member Date of Hearing / Decision: 02.01.2017 Final Order No. 40015 / 2017 Per D.N. Panda The precise question involved in this appeal is whether GTA service availed by the appellant prior to 1.4.2008 to deliver the output to the buyer at his place shall be construed as input service .
2. Appellant says that GTA service was liable to service tax in the hands of the recipient of service. Therefore, GTA service availed as above has suffered tax in the hands of appellant-manufacturer who delivered the output at the buyers place availing GTA service. Accordingly, taxability is not in question but the service tax element involved in respect of receipt of the GTA service whether is eligible to be input credit is in question.
3. On the aforesaid factual background, appellants submission is that the definition of the term input service period 1.4.2008 covered the place of the buyer as the place of removal under rule 2(l) of CENVAT Credit Rules, 2004, which reads as under:
Rule 2(l) of Cenvat Credit Rules, 2004
(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 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; ?????????????????????[Emphasis supplied]
4. On the above basis of the law at the relevant point of time, appellant says that this was the consistent view of the three High Courts beginning from the Honble High Court of Karnataka in Commissioner of Central Excise, Banglaore Vs. ABB Ltd. 2011 (23) STR 97 (Kar.), Honble High Court of Gujarat in the case of Commissioner of Central Excise & Customs Vs. Parth Poly Wooven Pvt. Ltd. 2012 (25) ELT 4 (Guj.) and Honble High Court of Madras in the case of Commissioner of Central Excise Vs. Borg Warner Morse Tec Murugappa Pvt. Ltd. & Anr. 2015-TIOL-831-HC-MAD that the above service is input service. More specifically, the self-same question as stated here in before was before the Honble High Court of Gujarat. That was answered in para 22 of the judgment reported in 2012 (25) STR 4 (Guj.). Honble Court opined that outward transport used by the manufacturer for transporting finished goods from the place of removal upto the place of the purchaser was covered within the definition of input service under Rule 2(l) of CENVAT Credit Rules, 2004.
5. To the above proposition, Revenue says that the order of the authorities below may be upheld for the reasons stated therein.
6. Heard both sides and perused the records.
7. CENVAT Credit Rules, 2004 on the subject as was in force from time to time has been recorded by this Bench in para 2.2 and 2.4 of the reported decision in Commissioner of Central Excise, Chennai II Vs. Lucas TVS Ltd. 2016 (43) STR 418 which is reproduced as under for convenience of reading:-
2.2?Appellants submitted that the law relating to input service as was in force prior to 1-4-2008 enacted in Rule 2(l) of the Cenvat Credit Rules, 2004 read as under :
Rule 2(l) of Cenvat Credit Rules, 2004
(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 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;
xxxx xxxx xxxx 2.4?Appellants explains that the concept of upto place of removal was substituted in Rule 2(l)(ii) of Cenvat Credit Rules, 2004 in place of the term from the place of removal after 1-4-2008 and such term continues to be in statute book, which reads as under :-
Rule 2(l) of Cenvat Credit Rules, 2004
(l)?input service means any service, -
(i) used by a provider of taxable service for providing an output service; or
(ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to 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, accounting, auditing, financing, recruitment and quality control; coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; ?????????????????????[Emphasis supplied]
8. Following aforesaid judicial pronouncements, it may be held that the service of GTA availed before 1.4.2008 shall be input service according to the term upto the place of removal used in Rule 2(l) of CENVAT Credit Rules, 2004 and appeal is allowed. In view of the disposal of the appeal on the above short point, the miscellaneous application stands dismissed since that was making prayer for extension of the interim order of stay.
(Dictated and pronounced in open court) (MADHU MOHAN DAMODHAR) (D.N. PANDA) Technical Member Judicial Member Rex/rkp E/732/2007