Custom, Excise & Service Tax Tribunal
Bhavnagar vs Saurashtra Chemicala on 11 September, 2024
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench at Ahmedabad
REGIONAL BENCH-COURT NO. 3
Excise Appeal No. 12044 of 2017- DB
[E/Cross/10380/2018]
(Arising out of OIA-BHV-EXCUS-000-APP-283-16-17dated 31.03.2017passed by
Commissioner ( Appeals ) Commissioner of Central Excise, Customs and Service Tax-
RAJKOT)
Commissioner of C.E. & S.T.-Bhavnagar ........Appellant
Plot No.6776/B-1...Siddhi Sadan, Narayan Upadhyay Marg,
Beside Gandhi Clinic, Near Parimial Chowk,
Bhavnagar,Gujarat-364001
VERSUS
Saurashtra Chemicala ......Respondent
A Division Of Nirma Ltd., Birla Sagar, Porbandar, Gujarat WITH Excise Appeal No. 11280 of 2017 - DB (Arising out of OIA-BHV-EXCUS-000-APP-283-16-17 dated 31.03.2017passed by Commissioner of Central Excise, Customs and Service Tax-RAJKOT) Saurashtra Chemicals Division Of Nirma Ltd ........Appellant Birlasagar Porbandar Porbandar, Gujarat VERSUS Commissioner of C.E. & S.T.-Bhavnagar ......Respondent Plot No.6776/B-1...Siddhi Sadan, Narayan Upadhyay Marg, Beside Gandhi Clinic, Near Parimial Chowk, Bhavnagar,Gujarat-364001 APPEARANCE:
Shri Rajesh K Agarwal, Superintendent (AR) appeared for the Appellant-Revenue Shri Amal Dave, Advocate appeared for the Respondent-Assessee CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. RAJU Final Order No. 11986-11987/2024 DATE OF HEARING: 04.06.2024 DATE OF DECISION: 11.09.2024 RAMESH NAIR In the assessee's appeal the issue involved is that whether the first Appellate authority was right in rejecting availment of Cenvat credit
2|Page E/12044/2017-DB (E/Cross/10380/2018), E/11280/2017-DB amounting to Rs.46,27,417/- for the period of 03.12.2005 to 31.03.2012 on the grounds that it was availed more than 1 year after the date of issuance of the documents. On this issue, the case of the department is that since, the credit was availed after more than 1 year, in terms of Section 11A and 11B of the Central Excise Act, 1944 the credit is not admissible as the general time limit is 1 year. In the case of Revenue's appeal the issue involved is that whether the respondent can be denied Cenvat Credit of Rs.1,21,08,667/- in respect of services which were used at salt pans for manufacturing salt which was the raw material for manufacturing soda ash. On this issue, the case of the department is that since, the service was used outside the factory premises that is at salt pans which is not part of the manufacturing facility of the assessee, the credit is not admissible.
2. Shri Amal Dave, learned counsel appearing on behalf of the assessee in respect of the credit involved Rs.46,27,417/- submits that during the relevant period, there was no time limit prescribed either of 6 months or 1 year. Therefore, in absence of prescription of any time limit for availing the Cenvat credit, credit availed after 1 year from the date of invoice cannot be denied. He further submits that in this case all the invoices were issued prior to the amendment of the Cenvat Credit Rules, 2004 which prescribed time limit of 1 year. Therefore, even if 1 year period is prescribed, the same is not applicable to the invoices issued prior to the amendment. He submits that the issue has been consistently settled by this Tribunal in the following judgments:-
1. M/s. Global Ceramics Pvt. Ltd.-2019(26) GSTL 470(Delhi)
2. Roquette Riddhi Siddhi Pvt. Ltd. (2024 (1) TMI 1210- CESTAT AHMEDABAD-LB)
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3. As regard the Revenue's appeal which proposes to deny the Cenvat Credit of Rs.1,21,08,667/- on the ground that the services were used at salt pan which is outside the factory premises, he submits that in respect of input service, there is no necessity that all the services should be used within the manufacturing premises, the requirement is if any input service is used for manufacture irrespective within the factory or outside the factory, the credit is admissible. In support, he placed reliance on the following judgments:-
1. PARRY ENGG. & ELECTRONICS P. LTD (2016 (1) TMI 546 CESTAT AHMEDABAD-LB)
2. ENDURANCE TECHNOLOGY PVT LTD (2015 (6) TMI 82 - BOMBAY HIGH COURT)
3. SAURASHTRA CEMENT LIMITED (2018 (8) TMI 460 - CESTAT AHMEDABAD)
4. SWISS GLASCOATE EQUIPMENTS (2022 (3) TMI 47 - CESTAT AHMEDABAD).
4. Shri Rajesh K Agarwal, learned Superintendent (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order in the matter of appeal filed by the assessee and reiterates the grounds of appeal in respect of the appeal filed by the revenue.
5. We have carefully considered the submission made by both the sides and perused the records. We find that the following two issues arise for our consideration:
1. Whether the Commissioner (Appeals) was right in rejecting the availment of the Cenvat credit, amounting to Rs.46,27,417/-
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(E/Cross/10380/2018),
E/11280/2017-DB
for the period of 03.12.2005 to 31.03.2012 on the ground that the credit was availed more than 1 year after the date of the issuance of the documents.
2. Whether the respondent can be denied Cenvat credit of the services which were used at salt pans for manufacturing salt which was the raw material for manufacturing soda ash.
5.1 As regard the first issue, we find that the credit was denied only on the ground that the credit was taken after 1 year from the date of invoice.
In this regard, we find that the credit was takenon 31.07.2012for the period of 03.12.2005 to 31.03.2012. The case of the department is that the credit should have been taken within 1 year from the date of invoice.
Therefore, in respect of this Cenvat Credit since, the credit was taken after 1 year the same is not admissible. We find that for arriving at this conclusion the Revenue has relied upon the provision 11 A and 11 B. These Sections nowhere prescribe about the time limit for availment of the Cenvat credit. Therefore, the borrowing of the provision of Section 11A and 11B is absolutely illegal and incorrect. As regard the amendment in Cenvat Credit Rules, 2004 prescribing the time limit of 1 year, the said amendment was made on 11.07.2014. Since in present case, entire period is up to 31.03.2012, the credit on the time limit cannot be denied. This has been held in number of judgments which are reproduced below:-
a) In case of Roquette Riddhi Siddhi P Ltd vs. C.C.E.-Ahmedabad-II this Tribunal has passed the following order:-
"4. We have carefully considered the submission made by both the sides and perused the records. We agree with the submission of learned Counsel that all the three issues are squarely covered by various judgments of this Tribunal.
5. As regard the issue A on the fact there is no dispute that all the invoices were issued prior to 18.09.2014. Therefore, the 3 rd Proviso to Rule 4 of Cenvat Credit Rules, 2004 inserted with effect from 18.09.2014 shall not
5|Page E/12044/2017-DB (E/Cross/10380/2018), E/11280/2017-DB apply in respect of the invoices issued prior to 18.09.2014. Accordingly, on that basis the Cenvat credit could not have been dis-allowed. This issue is covered by the following judgment:-
a) In the case of Roquette Riddhi Siddhi Pvt. Ltd. (supra) CESTAT Bangalore has passed the following decision:-
6.3. The second issue arises in Appeal No. E/20044/2017 is that whether the appellant can avail cenvat credit on the invoices issued prior to 01/09/2014 within six months after the issuance of the Notification No. 21/2014 CE (NT) dated 11/07/2014 or not? The said issue has been settled by this Tribunal in the case of Bharat Aluminium Company Limited wherein this Tribunal has observed as under:
"5. Having expressed our anguish, we note that the issue is no more res Integra. Reliance can be placed to the following decisions;
(i) Indian Potash Ltd. vs Commissioner of Central GST, Meerut [2018 (10) TMI 1367-CESTAT Allahabad]
(ii) Hindustan Coca Cola Beverages Pvt. Ltd. vs. Commissioner of Central Tax [2018 (10) TMI 1366- CESTAT Bangalore]
(iii) Industrial Filters & Fabrics Pvt. Ltd. vs. CGST & CE, Indore[2019 (1) TMI 1426-CESTAT New Delhi]
(iv) Suryadev Alloys and Power Pvt Ltd. vs. Commissioner of GST & Central Excise, Chennai [2018 (11) TMI 1019-CESTAT Chennai]
(v) Umesh Engineering Works vs. Commissioner of Central Tax, Bengaluru West [2019 (1) TMI 1158- CESTAT Bangalore]
(vi) Sarda Energy and Minerals Ltd. vs. CCE & ST, Raipur [2019 (4) TMI 473-
CESTAT New Delhi] Wherein it was clearly held that the six month limitation provided with effect from 01/09/2014 would not apply to the cenvatable invoices issued prior to said date. The other decisions relied upon by the Ld. Advocate are also to the same effect but multiplying the precedent decisions would not make a difference as it is a settled law. Further, not only various Tribunals' decisions but Hon'ble Delhi High Court also in case of Global Ceramics Private Limited and Ors. vs. The Principal Commissioner of Central Excise and Ors. W.P. (C) 6706/2016 and W.P. (C) 9152/2016 has also observed to the same effect in paragraph 11.4 of their decisions.
6. As such, we find that the issue is no more res Integra and stands settled in favour of the assessee. However, the fact that the invoices in question were prior to 01/09/2014 is required to be verified. The Original Adjudicating Authority is directed to do so, with the association of appellant to whom an opportunity would be given."
As the issue has already been settled and no more res integra, therefore, we hold that appellants have correctly taken the cenvat credit on 18/09/2014 for the invoices issued prior to 01/09/2014.
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E/11280/2017-DB
7. In view of the above, we do not find any merit in the impugned orders and the same are set aside. In the result, appeals are allowed with consequential relief, if any."
b) In the case of Aalidhra Textool Engineers Pvt Ltd (Supra) this Tribunal held as under:-
"4. I have considered rival submission. I find that the issue is squarely covered by the decision of Hon'ble High Court of Delhi in the case of Global Ceramics Pvt. Ltd., (supra) wherein following has been observed:
17. There is substance in the contention of the Learned Counsel for the Assesses in both the cases that the above amended provision cannot be given retrospective effect. As explained in Eicher Motors Ltd. v. Union of India (supra) the rule of lapse of credit lying with it unutilized on the date of amendment, cannot be applied to the goods manufactured prior to the date of the amendment. This is based on the principle that the right to adjustment of tax on final products accrues to an Assessee on the date when they paid the tax on the raw materials and that right would continue until the facility available thereto gets worked out. In fact, the judgment in Osram Surya (P) Ltd. v. Commissioner of Central Excise, Indore (supra) approvingly refers to the judgment in Eicher Motors Ltd. v. Union of India (supra).
18. In the present case, the credit accrued when CVD was paid on finished goods deemed to be cleared from home consumption when the dealers sold the goods at higher price by altering the MRP. The right to the Cenvat credit accrued on the very day when the inputs were received.
19. In Jayam & Co. v. Assistant Commissioner - (2016) 96 VST 1 (SC) = 2018 (19) G.S.T.L. 3 (S.C.), it was held that a provision introduced for the first time cannot be given retrospective effect. It is further held as under :
"11. Now it is a well-settled rule of interpretation hallowed by time and sanctified by judicial decisions that, unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. The general rule as stated by Halsbury in Volume 36 of the Laws of England (Third Edition) and reiterated in several decisions of this court as well as English Courts is that -
"all statutes other than those which are merely declaratory or which relate only to matters of procedure or of evidence are prima facie prospective and retrospective operation should not be given to a statute so as to affect, alter or destroy an existing right or create a new liability or obligation unless that effect cannot be avoided without doing violence to the language of the enactment. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only."
20. Likewise in Samtel India Ltd. v. CCE, Jaipur - 2003 (155) E.L.T. 14 (S.C.), it was held that the right to credit accrued to an Assessee on the date the tax on inputs was paid. Once the inputs were used, the Rule imposing a period of limitation, could not be given retrospective effect.
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21. The Gujarat High Court in Filco Trade Centre Pvt. Ltd. v. Union of India (decision dated 5th September, 2018 in SCA No. 18433/2017) [2018 (17) G.S.T.L. 3 (Guj.)] followed the dictum of the Supreme Court in Jayam & Co. v. Assistant Commissioner (supra) and reiterated that the input tax credit could not be denied on the basis of an amendment, which is prospective. The question dealt with by the High Court was whether Section 140A(3)(iv) of the CGST Act, which declined the Cenvat credit in relation to goods purchased prior to one year from the appointed date, could be given retrospective effect. In answering the question in the negative, the Gujarat High Court held as under :
"30. To sum up we are of the opinion that the benefit of credit of eligible duties on the purchases made by the first stage dealer as per the then existing CENVAT credit rules was a vested right. By virtue of clause (iv) of Sub-Section (3) of Section 140A such right has been taken away with retrospective effect in relation to goods which were purchased prior to one year from the appointed day. This retrospectivity given to the provision has no rational or reasonable basis for imposition of the condition. The reasons cited in limiting the exercise of rights have no co- relation with the advent of GST regime. Same factors, parameters and considerations of "in order to co-relate the goods or administrative convenience" prevailed even under the Central Excise Act and the CENVAT Credit Rules when no such restriction was imposed on enjoyment of CENVAT credit in relation to goods purchased prior to one year."
22. Consequently, in the present case, the Court is satisfied that the Amendment to Rule 4(1) CCRs prescribing a time limit for claiming Cenvat Credit will not apply to the consignments in the present case where the import took place prior to the date of the amendment and the deemed manufacture took place when the MRP was altered, which also happened prior to the amendment. In other words, the CVD paid by the BRCPL will have to be permitted to be adjusted against the CE duty settled as will the service tax paid on the input services.
5. Relying on the aforesaid decision, the appeal is allowed."
5.1 In view of the above judgment, it is settled that the provision for limitation of Six months/ One Year for availment of credit from the date of invoice, is applicable only in respect of the invoices issued after 18.09.2014. In the present case, since the invoices are prior to 18.09.2014, the limitation of six Months/ one year shall not apply. Hence, the credit on this issue is admissible to the appellant.
6. As regard the issue B above, the appellant have availed Cenvat Credit in respect renting of immovable property service for a warehouse taken on lease outside the factory premises. However, the warehouse is used for storage of raw material, this activity is directly related to the manufacturing of the appellant. Merely, because the warehouse is located outside the factory premises, the credit of input service cannot be denied.
6.1 As regard the credit on input service, the only criteria is that irrespective of the location of service received if the service is
8|Page E/12044/2017-DB (E/Cross/10380/2018), E/11280/2017-DB essential for in or in relation to manufacture of final product and overall business activity of the assesseee the credit is admissible. In this regard, this view is supported by the following judgments:-
a) In the case of Saurashtra Cement Ltd (supra), Hon'ble Ahmedabad Tribunal has passed the following order:-
"4. On careful consideration of the submissions made by both the sides and perusal of the records, I find that the Jetty is a captive active Jetty of the appellant, which is exclusively used by the appellant, only. At time, the appellant have to get the Dredging done at the Jetty for proper function of Jetty to improve the draft. Since Jetty is used primarily for import of coal which is used in the manufacture of final product, Dredging Service is qualified as input service. It is also a fact that Dredging Service is nothing to do with the customer to whom final product is sold. The service charge of Dredging Service is borne by the appellant only, which stands absorbed in the overall cost of manufacturing of cement. Therefore, it cannot be said that the Dredging Service is used for the removal of final product from place of removal. Also as per Hon'ble Bombay High Court judgement in the case of CC Ex., Nagpur vs Ultratech Cement Ltd 2010 (20) STR 577 (Bom.) it was held that if the cost of input service is borne by the assessee and the same stand absorbed in the cost of final product, such services are qualified as input services and accordingly the CENVAT Credit is admissible. Considering the ratio laid down by the Hon'ble High Court and the facts of the present case, I am of the considered view that the Dredging Services used by the appellant is an input services, hence, CENVAT Credit is admissible. I also observed that merely because the service was availed outside the factory of the appellant the credit cannot be denied. Whether the service is availed in the factory or outside the factory, only requirement is that it should be in relation to the manufacture of final product, therefore, the CENVAT Credit is admissible. Accordingly I set aside the impugned order and allow the appeal."
b) In the case of Swiss Galscote Equipments (Supra) this Tribunal has passed the following decision:-
"4. I have carefully considered the submissions made by learned Authorised Representative and perused the records. The issue involved is whether the appellant is entitled for Cenvat Credit in respect of repair and maintenance of wind mill which is located outside the factory premises. Both the lower authorities have denied the Cenvat Credit on the ground that the wind mill is located outside the factory premises. An identical issue has been decided by this Tribunal in the case of Commissioner of Central Excise & Customs, Aurangabad v/s Endurance Technology 2015-TIOL-1371-HC-MUMST wherein after considering various judgments following order was passed:
"Both these appeals can be disposed of by this common judgment as the facts and controversies between the parties are similar.
21 The appellant is challenging judgment and order passed by Central Excise Service Tax Appellate Tribunal [CESTAT for short]. The substantial questions
9|Page E/12044/2017-DB (E/Cross/10380/2018), E/11280/2017-DB that arise for our consideration and which are indentified earlier are as under:
I] Whether the CESTAT is correct in holding that the assessee is entitled to avail the CESTAT credit on "management, maintenance or repair services" provided on services provided to Windmills installed and situated away from factory and factory premises?
II] Whether electricity generated at Supa and Satara, situated for away, could be said to have been used for manufacture of the final product of the assessee at Waluj, Aurangabad.
3] The question No.[II] can be answered in affirmative because admittedly, the electricity generated at Supa and Satara which are situated for away from the manufacturing unit of the appellant can be said to have used for manufacture of final product at Waluj, Aurangabad. Mainly because admittedly such electricity generated at Supa and Satara is adjusted to the electricity used at Waluj. This adjustment is admitted by the revenue and in view of this adjustment, it can safely be stated that the electricity generated at Supa and Satara is the electricity used at Waluj.
4] Question no.1 is main bone of contention between the parties. Even the law on this subject is very well settled by atleast three prominent judgments of our High Court reported in 2010 (20) S.T.R. 589 (Bom.) = 2010-TIOL- 686-HC-MUM-ST in the case of Commissioner of Central Excise, Nagpur Versus Ultratech Cement 2010 (260) E.L.T. 369 (Bom.) 2010-TIOL-745-HCU- ST in the case of Commissioner of Central Excise, Nagpur Versus Ultratech Cement Ltd. And 2013 (32) S.T.R. 532 (Bom.)=2013-TIOL-212-HC-MUM-Cx in the case of Deepak Fertilizers & Petrochemicals Corporation Ltd. Versus C.C.Ex.Belapur. The question between the parties is whether the respondent was entitled to credit on management, maintenance or repair services provided on windmills installed by the respondents. The answer lies in interpretation of Rule 2(B)
(k), (1) (m), 3 and 4 of CENVAT Credit Rules, 2004. The relevant Rule 2(B)
(k), (1), 3 and 4 of CENVAT Credit Rules, 2004 read as under:
"2(B)(k) "Input" means
(i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known a petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production:
(ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service;
Explanation 1: The light diesel oll, high speed diesel oll or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever.
Explanation 2: Input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer; 10 | P a g e E/12044/2017-DB (E/Cross/10380/2018), E/11280/2017-DB 2(B) (I) "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, 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.
(m) "Input service distributor" means an office of the manufacturer or producer of final products or provider of output service, which receives invoices Issued under rule 4A of the Service Tax Rules 1994 towards purchases of input services and issues invoice, bill or, as the case may be, challan for the purposes of distributing the credit of service tax paid on the said services to such manufacturer or producer or provider, as the case may be.
Rule 3. CENVAT Credit: (1) A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as the CENVAT credit of -
[xl] the additional duty of excise leviable under [Section 85 of Finance Act, 2005 (18 of 2005)] paid on -
(i) any input or capital goods received in the factory of manufacture of final product or premises of the provider of output service on or after the 10th day of September 2004; and [ii] any input service received by the manufacturer of final product or by the provider of output services on or after the 10 th day of September, 2004 Including the said duties, or tax, or cess paid on any input or input service, as the case ay be, used in the manufacture of intermediate products, by a job- worker availing the benefit of exemption specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No.214/86 Central Excise, dated the 25 th March, 1986, published in the Gazette of India vide number G.S.R.547(E), dated the 25 th March, 1986, and received by the manufacturer for use in, or in relation to the manufacture of final product on or after the 10 th day of September, 2004.
Rule 4: Conditions for allowing CENVAT credit (1) The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of output service.
[Provided that in respect of final products, namely, articles of jewellery falling under heading 7113 of the First Schedule to the Excise Tariff Act, the CENVAT credit of duty paid on inputs may be taken Immediately on receipt of such inputs in the registered premises of the person who get such final products 11 | P a g e E/12044/2017-DB (E/Cross/10380/2018), E/11280/2017-DB manufactured on his behalf, on job work basis, subject to the condition that the inputs are used in the manufacture of such final product by the job worker.] Rule 4(7) The CENVAT credit in respect of input service shall be allowed, on or after the day which payment is made of the value of input service and the service tax paid or payable as is indicated in invoice, bill or, as the case may be, challan referred to in rule 9,"
5] On perusal of these Rules, it becomes clear that the management, maintenance and repair of windmills Installed by the respondents is input service as defined by clause "I" of Rule 2. Rule 3 and 4 provide that any input or capital goods received in the factory or any input service received by manufacture of final product would be susceptible to CENVAT credit. Rule does not say that input service received by a manufacture received at the factory premises. The judgments referred to above, also interpret the word "input" service in similar fashion.
In the case of Commissioner of Central Excise, Nagpur Versus Ultratech Cement Ltd. [cited supra), the Division Bench of this Court held that the definition of "input service" is very wide and covers not only services which are directly or indirectly used in or in relation to manufacture of final product but also includes various services used in relation to business of manufacture of final product. The expression "activities" in relation to business is also discussed in this judgment by referring to judgment of Apex Court.
In the case of Deepak Fertilizers & Petrochemicals Corporation Ltd. Versus C.C.Ex. Belapur [cited supra] the Division Bench held as under:
"The definition of the expression input service covers any services used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products. The words 'directly or indirectly' and 'in or in relation to' are words of width and amplitude. The subordinate legislation has advisedly used a broad and comprehensive expression while defining the expression input service'. Rule 2(1) initially provides that input service means any services of the description falling in sub- clauses (1) and (II). Rule 2(1) then provides an inclusive definition by enumerating certain specified services. Among those services are services pertaining to the procurement of Inputs and inward transportation of inputs. The Tribunal, proceeded to interpret the inclusive part of the definition and held that the Legislature restricted the benefit of Cenvat credit for input services used in respect of inputs only to these two categories viz. for the procurement of inputs and for the inward transportation of inputs. This interpretation which has been placed by the Tribunal is ex-facie contrary to the provisions contained in Rule 2 (l). The first part of Rule 2(l) inter alia covers any services used by the manufacturer directly or indirectly, in or in relation to the manufacture of final products. The inclusive part of the definition enumerates certain specified categories of services. However, it would be farfetched to interpret Rule 2 (l) to mean that only two categories of services in relation to inputs viz. for the procurement of inputs and for the inward transportation of inputs were intended to be brought within the purview of Rule 2 (1). Rule 2 (1) must be read in its entirety. The Tribunal has placed an interpretation which runs contrary to the plain and literal meaning of the works used in Rule 2 (1). Moreover as we have noted earlier, whereas Rule 3(1) allows a manufacturer of final
12 | P a g e E/12044/2017-DB (E/Cross/10380/2018), E/11280/2017-DB products to take credit duty and Service Tax among others paid on any input or capital goods received in the factory of manufacturer of the final product, insofar as any input service is concerned, the only stipulation is that it should be received by the manufacturer of the final product. This must be read with the broad and comprehensive meaning of the expression 'input service' in Rule 2(1). The input services in the present case were used by the appellant whether directly or indirectly, in or in relation to the manufacture of final products. The appellant, it is undisputed, manufactures dutiable final products and the storage and use of ammonia is an intrinsic part of that process.
6] In view of this discussion, we have no hesitation to hold that the answer to question No.(I) is in affirmative. Despite this settled position, learned counsel for the appellant tried to submit that the judgment cited at Sr. No. (2) is being challenged before Supreme Court. This submission does not really help us in deciding the appeals. Both appeals are dismissed.
From the above judgment, it can be seen that the issue is identical in the present case as in the above cited case. Therefore, the ratio of the above judgment is applicable in the present case. Accordingly, irrespective of the fact that windmill is located outside the factory premises, repair and maintenance service is admissible for Cenvat credit in terms of rule 2 (l) of Cenvat Credit Rules, 2004. Accordingly, the impugned orders are set aside. Appeals are allowed."
6.2 From the above judgments, it can be seen that even though services were provided outside the factory premises but the same is in relation to the manufacture of the final product of the appellant the credit was allowed. Following the said judgments, in the present case also the appellant are entitled for the Cenvat Credit in respect of renting of immovable of property i.e. warehouse located outside the factory premises.
7. As regard the issue C, the credit was denied on the ground that the invoice is bearing the address of head office. We find that there is no dispute that the service was received by the appellant in their factory. Even though the address of head office is mentioned but so long the input service was received by the appellant for their factory, the credit cannot be denied. There is no case of the department that the credit on such invoice has been taken in appellant's other unit. This issue has been considered by this Tribunal in the case of Madhya Pradesh Consultancy Organization Ltd. (supra), the relevant para 14 is reproduced below:-
"14. Regarding denial of Cenvat credit of Rs. 22,500/-, the appellant pleaded that such denial is only on the ground that the invoices were not in the appellant's name but were *sic+ in the name of branch/head office. We note that this cannot be the reason for denial of credit. There is no allegation or finding to the effect that the input services were not received by the appellant or the said services were not covered under the scope of eligible input services in terms of the Cenvat Credit Rules, 2004. In such situation, we find that the denial of credit only on the ground that the address of branch office or head office was mentioned instead of appellant's address cannot be the 13 | P a g e E/12044/2017-DB (E/Cross/10380/2018), E/11280/2017-DB ground for denial of otherwise eligible Cenvat credit. On the last issue, the appellant did not categorically submit anything regarding catering service availed by them. No particulars or facts are submitted regarding the said service availed by them. In absence of any specific defence, we find no reasons to interfere with the denial ordered by the Original Authority.
7.1 In the case of Rajendra Kumar and Associates (Supra), this Tribunal allowed the credit even though the different address was mentioned in the invoices by passing the following order:-
"13. In regard to Cenvat credit of Rs. 1,04,10,273/- availed by the Appellant on the basis of invoices addressed to the office situated at B6/117 Safdarjung Enclave which is not registered with the Service Tax Department, the Commissioner discussed the issue in two parts, namely :
"(i) Whether the Noticee is entitled to avail the Cenvat credit on the strength of invoices/bills issued to their office which is unregistered with Service Tax Department.
(ii) Whether the Noticee is required to obtain centralized service tax registration for their different offices or they are required to registered as input service distributor for availing the Cenvat credit on the invoices issued on the different address of the Noticee."
14. The Commissioner held that invoices should contain the address registered with the Service Tax Department and the findings are :
"Here it is pertinent to mention that Rule 4A of Service Tax Rules, 1994 speaks about invoices, bills and challans to be issued by the service provider. It states that invoices, bills and challans shall be serially numbered and shall contain the following, namely-(i) the name, address and the registration number of such person; (ii) the name and address of the person receiving taxable service; (iii) description and value of taxable service provided or agreed to be provided; and (iv) the service tax payable thereon. Further, sub-rule (2) of Rule 9 of Cenvat Credit Rules, 2004 states that no Cenvat credit under sub-rule (1) shall be taken unless all the particulars as prescribed under the Central Excise Rules, 2002 or the Service Tax Rules, 1994, as the case may be, are contained in the said document. The proviso to this Rule states that if the said document does not contain all the particulars but contains the details of duty or service tax payable, description of the goods or taxable service, assessable value, Central Excise or Service tax registration number of the person issuing the invoice, as the case may be, name and address of the factory or warehouse or premises of first or second stage dealers or provider of output service, and the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, is satisfied that the goods or services covered by the said document have been received and accounted for in the books of the account of the receiver, he may allow the Cenvat credit. Though I agree with the contention of the Noticee that the Cenvat credit rules do not state that the premises of the recipient has to be registered preemies in order to avail the Cenvat credit, yet in view of the rules quoted herein above i.e. either rule 4 or rule 9 of CCR, the name and address of the person receiving the service is of utmost importance. In the given case the name and address of the service 14 | P a g e E/12044/2017-DB (E/Cross/10380/2018), E/11280/2017-DB recipient pertains to the branch which is not registered with the jurisdictional authorities. Now, when the Cenvat credit rule gives a discretion to the deputy/ assistant commissioner to allow the credit on being satisfied that the goods of services covered by the documents have been received and accounted for in the books of account of the receiver, how can he/she can be supposed to have been convinced about the receipt of certain services which are received in the location which does not registered under in his/her jurisdiction. Hence the contention of the Noticee does not have any merit and is totally unacceptable."
15.The registration of premise with the Service Tax Department is not a condition for availing Cenvat credit.
16.The Karnataka High Court in MPortal India Wireless Solutions (P) Limited held that there is no requirement in law that the premises should be registered for availing Cenvat credit and the relevant portion is reproduced below :
"7. Insofar as requirement of registration with the department as a condition precedent for claiming CENVAT credit is concerned, Learned Counsel appearing for both parties were unable to point out any provision in the Cenvat Credit Rules which impose such restriction. In the absence of a statutory provision which prescribed that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law. Therefore, said finding recorded by the Tribunal as well as by the lower authorities cannot be sustained. Accordingly, it is set aside".
17.A Division Bench of the Tribunal in Adbur Private Limited also observed as follows :
"9. Regarding denial of Cenvat credit on the ground that the invoices were addressed to unregistered premises of the appellant, we note that there is no dispute regarding eligibility of input service for availability of credit to the appellant. The denial of credit is only with reference to address in the document. We find in various decisions, this Tribunal held that the credit cannot be denied on this reason. Reference can be made to the decision in Manipal Advertising Services Pvt. Ltd. (supra). We also note that in the appellant's own case on the same issue, the Original Authority for the later period held that denial of credit cannot be justified on this ground, vide order dated 21-7-2016."
18. This is what was also held by a Division Bench of the Tribunal in Pernod Ricard India Private Limited.
19. Once the requirement of Rule 4A of the 1994 Rules and Rule 9 of the 2004 Rules are satisfied, the benefit of Cenvat credit could not have been demanded. Thus, the Commissioner was not justified in denying the benefit of Cenvat credit on the unregistered premises.
20. The Commissioner has further held that the benefit of Cenvat credit for services received by the Appellant on the strength of invoices addressed to another unit is not admissible as the Appellant failed to take Central Registration or ISD Registration to avail and distribute the Cenvat credit. 15 | P a g e E/12044/2017-DB (E/Cross/10380/2018), E/11280/2017-DB
21. This finding of the Commissioner is also not correct. There is no law that prescribes that the only way to distribute Cenvat credit is registering as an ISD.
7.2In view of the above judgments, it is settled that merely because the invoice is bearing the address of head office credit to the appellant's unit cannot be denied.
8. In view of the above discussion, supported by the various judgments, we are of the view that appellant succeeds on all the three issues and the credit on all the three issues are admissible to the appellant. Accordingly, the impugned order is set aside and appeal is allowed."
In view of the above decision which has relied upon various judgments of this Tribunal categorically held that for the period prior to the amendment in Cenvat Credit Rules, which prescribed 1 year limit for taking the credit, no Cenvat credit can be denied.
5.2 As regard the second issue that whether the Cenvat credit in respect of input service used outside the factory premises can be denied or otherwise, we find that there is no dispute that the appellant is engaged in manufacture of salt in their factory for the purpose of manufacturing the soda ash. The appellant used salt which is the main input material. The salt is procured through salt pans which is obviously located outside the factory premises. For procurement of salt from the salt pans input service is used. Since, the salt is used directly in the manufacture of the final product viz. soda ash, the service used for procuring the salt from salt pans is directly in or in relation to manufacture of soda ash. In the various cases, it is consistently held that merely because the service is used outside the factory premises, Cenvat Credit cannot be denied so long the service has nexus with the manufacturing activity of the manufacturer.
Therefore, merely because the input service is used outside the factory premises for procuring the salt from the salt pans, credit cannot be denied. 16 | P a g e E/12044/2017-DB (E/Cross/10380/2018), E/11280/2017-DB The issue that whether the service used/ received out of the factory premises credit can be denied or otherwise, it has been decided in the favour of the assessee in the following judgments:-
A) In the case of Parry Engg & Electronics P. Ltd. (supra), the issue involved was that the service was received in connection with the windmills of generation of electricity which is located outside the factory premises. The Revenue has disputed the credit only on the ground that the service was received outside the factory premises.
The Larger Bench of the Tribunal, Ahmedabad clearly answered the question in favour of the assessee whereby it was held that even if the service is received outside the factory but in relation to the manufacture of the final product, the credit cannot be denied. B) Similar issue was considered in the case of Swiss Glascoate Equipments (supra) wherein, the repair and maintenance service of wind mill was used which is located outside the factory premises. The Tribunal in this matter after considering the various judgments passed the following order:
"From the above judgment, it can be seen that the issue is identical in the present case as in the above cited case. Therefore, the ratio of the above judgment is applicable in the present case. Accordingly. irrespective of the fact that windmill is located outside the factory premises, repair and maintenance service is admissible for Cenvat credit in terms of rule 2 (1) of Cenvat Credit Rules, 2004. Accordingly, the impugned orders are set aside. Appeals are allowed."
C) Identical issue was considered in the case of Saurashtra Cement Limited wherein the fact was the Dredging services was availed outside the registered premises and the Revenue's contention was that the same was neither used for manufacture nor removal of goods, hence, the same is not qualified as the input service. The Tribunal, Ahmedabad held that active jetty of the appellant, which is exclusively used by the appellant only. At time, the appellant have to get the Dredging done at the Jetty for proper function of the Jetty to improve the draft. Since jetty is used primarily for import of coal which is used in the manufacture of final product, Dredging service is qualified as input service, merely because the service was availed outside the factory of the appellant the credit cannot be denied. 17 | P a g e E/12044/2017-DB (E/Cross/10380/2018), E/11280/2017-DB D) The Hon'ble Bombay High Court in the case of Endurance Technology Pvt. Ltd.(supra) dealing with the fact that the assessee has availed the service of management, maintenance or repair on windmills installed by the assessee outside the factory premises. It was held that management, maintenance and repair of windmills installed by respondents is input service as defined by clause "l" of Rule 2. Rule 3 and Rule 4 provide that any input or capital goods received in the factory or any input service received by manufacturer of final product would be susceptible to Cenvat credit. Rule does not say that input service received by a manufacturer must be received at the factory premises. Accordingly, allowing the credit to the assessee, the revenue's appeal was dismissed.
In view of the above consistent view taken by the Tribunal as well as the Hon'ble Bombay High Court, the appellant is entitled for the Cenvat credit in respect of input service received at salt pans.
6. Accordingly, both the issues involved in the present case are in favour of the assessee. Hence, the impugned order stands modify to the above extent. The assessee's appeal is allowed. The revenue's appeal is dismissed. CO also stands disposed of.
(Pronounced in the open court on 11.09.2024) (RAMESH NAIR) MEMBER (JUDICIAL) (RAJU) MEMBER (TECHNICAL) Bharvi