Custom, Excise & Service Tax Tribunal
M/S Kalyani Steels Ltd vs The Commissioner Of Central Excise on 30 June, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH
BANGALORE
Appeal(s) Involved:
ST/149/2007-DB
[Arising out of Order-in-Original No. 01/2007-ST (Commr) dated 30/03/2007 passed by Commissioner of Central Excise, Belgaum]
For approval and signature:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER
HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s Kalyani Steels Ltd.,
Hospet Road, Ginigera,
Distt Koppal,
Karnataka 583 228
Appellant(s)
The Commissioner of Central Excise,
Belgaum.
Respondent(s)
Appearance:
Mr. M.S. Nagaraja, Adv For the Appellant Mr. N. Jagadish, A.R. For the Respondent Date of Hearing: 15/06/2016 Date of Decision:
CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER Final Order No.20502/2016 Per : S.S GARG The present appeal is directed against the order of the Commissioner dated 04.04.2007 vide which the learned Commissioner has denied the CENVAT credit on outward transportation to the tune of Rs 11,72,269/- for the period April 2005 to October 2005.
2. Briefly the facts of the present case are that the appellants are engaged in the manufacture of pig iron and rolled steel bars and rods of alloy and non-alloy steel falling under Chapter heading 7201.00, 7214.00 and 7228.00. The appellants have been discharging their service tax liability of freight paid for inward and outward transportation of goods under the category of goods transport agency services. During November 2005, the department visited the factory of the assessee for audit of their books and records and after verification of the record, the department found that the appellants are not eligible for the CENVAT credit of service tax paid on outward freight and thereafter a show-cause notice was issued to the appellant. The appellant contested the allegation in the show-cause notice and has also disputed the quantum as stated in the show-cause notice. The learned Commissioner vide his order dated 04.04.2007 restricted the demand in respect of CENVAT credit to the extent of Rs 11,72,269/- (Rs 9,00,200/- pertaining to outward transportation from the factory plus Rs 2,72,069/- pertaining to outward transportation distributed from head office Pune) and hence this appeal.
3. Heard both sides.
4. Learned counsel for the appellant submitted that the impugned order passed by the Commissioner is illegal, against the judgments rendered by various benches of the Tribunal and the High Courts and has been passed without considering the submissions of the appellant. He further submitted that the appellant has correctly availed service tax paid on outward freight as per Rule 2(l) of CENVAT Credit Rules which provides for availing credit of service tax paid on input services used in or in relation to manufacture and clearance of finished goods from the place of removal. He also submitted that the appellants are manufacturers of final products and accordingly as per the explanation to rule 2(l) the service for which they are liable to pay service tax has to be treated as input service and accordingly credit should be allowed. He further submitted copies of purchase orders to highlight that they have not claimed freight amount separately from their customers as the same is included in the transaction value claimed in the invoices. He also submitted that the demand of CENVAT credit of Rs 2,72,069 distributed by the ISD is beyond the show-cause notice and therefore not sustainable. He also submitted that the transportation of the goods from the factory for delivery at the customers premises would come within the definition of input service under the CENVAT Credit Rules 2004 as the definition of input service is an inclusive definition covering inward transportation of input or capital goods and outward transportation from the place of removal and that transportation of goods from the factory gate to customers premises would be rightly covered by the term input services. In support of his submissions he relied upon the following judgements;
i. Madras Cements Ltd Vs ACCE, Bangalore [2015(40)STR 645 (Kar)] ii. Ambuja Cements Ltd Vs UOI [2009(236)ELT (431)(P&H)] iii. Lafarge India Ltd Vs CCE Raipur [2014(35)STR 645 (Chh)] iv. CCE Rohtak Vs Haryana Sheet Glass Ltd [2015(39)STR 392 (P&H)] v. Uflex Ltd Vs CCE Jammu [2015(327)ELT 359 (Tri-Del)] vi. Hard Castle Petrofer Pvt Ltd Vs CCE Jammu (J&K) [2014(304)ELT 576 (T-Del)] vii. CCE, ST-LTU Vs ABB Ltd [2011(23)STR (97) (Kar)] viii. CCE Vs Parth Poly Wooven Pvt Ltd [2012(25) STR 4 (Guj)] ix. CC Mumbai Vs Toyo Engineering India Ltd [2006(201)ELT 513(SC)] x. CCE Nagpur Vs Ballarpur Industries Ltd [2007(215)ELT 489(SC)] xi. CCE Vs Dynamic Industries Ltd [2014(307)ELT 15 (Guj)] He further submitted that in the judgments cited supra, Honble High Court of Karnataka in the case of CCE, ST-LTU Vs ABB Ltd [2011(23)STR (97)(Kar)] has clearly held that the appellant is entitled to CENVAT credit of service tax paid on outward transportation.
5. On the other hand learned A.R. reiterated the findings of the Commissioner.
6. We have considered the submissions by both sides and have gone through the judgments cited (supra). On a careful reading of the definition of input service we find that outward transportation of finished goods manufactured by the appellant would fall within the definition of input service and therefore credit availed by them cannot be denied. If the intention was to deny the 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 clearance of the final products from the place of removal in rule 2(l) of the rules relating to the definition of input services. Hence going by the definition of the term input service in the CENVAT Credit Rules and considering the decisions of the higher judicial fora cited by the appellant, we are of the considered opinion that the service tax paid on transportation of finished goods from the factory to the premises of the customers can be taken as CENVAT Credit by the appellant and therefore, the denial of the same vide the impugned order is not legal and proper. Accordingly we hold that the impugned order is not sustainable and therefore the same is set aside by allowing the appeal of the appellant with consequential relief if any.
(Order pronounced in open court on )
ASHOK K. ARYA
TECHNICAL MEMBER
S.S GARG
JUDICIAL MEMBER
pnr
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