Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise vs M/S. Kec International Ltd on 12 July, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. 520 & 354 of 2010
Date of Hearing: 18.5.2012
Date of decision: 12.7.2012
[Arising out of Order-in-Appeal No. 384 (DK) CE/JPR-I/ 2009 dated 18/22.12.2009 and 58 (DK) CE/JPR-I/ 2010 dated 1/4.02.2010 passed by the Commissioner of Central Excise (Appeals I), Jaipur ]
For approval and signature:
Hon'ble Ms. Archana Wadhwa, Member (Judicial)
1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should 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 :
Departmental authorities?
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Commissioner of Central Excise Appellants Jaipur
Vs.
M/s. KEC International Ltd. Respondent
Appearance:
Ms. Renu Jagdev, SDR for the Appellants
Shri Alok Kothari, FCA for the Respondent
CORAM:
Hon'ble Ms. Archana Wadhwa, Member (Judicial)
ORAL ORDER NO . ________________________
Per Archana Wadhwa:
Being aggrieved with the order passed by Commissioner (Appeals), revenue has filed the present appeal.
2. I have heard Ms. Renu Jagdev, learned SDR for the revenue and Shri Alok Kothari, learned Advocate present for the respondent.
3. As per facts on record, respondents were engaged in the manufacture of galvanized parts of transmission tower and lining falling under Chapter 73 of the schedule to the Central Excise Tariff Act, 1985. the supporting raw material for the said final product is billets which the appellant is procuring from outside. Instead of bringing billets into their factory, they purchased the same and sent it directly to the factory of job worker who convert the same into angles and channels. Duty of Excise paid on the said billet is availed as modvat credit by the said job workers. The angle and channels were manufactured by the job workers and supplied to the appellants but further converts into their final products.
4. The dispute in the present appeal relates to the Cenvat credit of Service Tax paid by the respondents on the GTA service so received by him for transportation of billets. The Revenue case is that inasmuch as the said billets are not brought into the respondents factory and are directly sent to the job workers factory, the Service Tax paid by the appellant for transportation of said billets is not available to them as credit.
5. I find it is the respondents case, as accepted by Commissioner (Appeals) that inasmuch as it is they who have paid freight along with the Service Tax and billets are essential inputs, the credit of Service Tax paid by them should be allowed.
6. For better appreciation, I reproduce the relevant part of the Commissioner (Appeals) order:-
In this connection I observe that it is not in dispute that the appellant has purchased the impugned raw material namely MS billets which have been used in the manufacture of finished goods MS Angles / Channels manufactured by the job worker and supplied to them. Thereafter after taking Cenvat credit on these MS Angles / Channels these have been used by the appellant in the manufacture of galvanised parts of transmission tower and lining. The transportation charge on MS billets from the supplier to the job worker premises including service tax has actually been borne by the appellant and finished goods manufactured by using the input MS Billets which got converted into Angles / channels by job worker and then got converted into galvanised parts of transmission tower and lining by the appellant were sold by the appellant themselves. I further observe that the expense incurred by the appellant on GTA service for procurement of MS Billets is definitely an ingredient cost of galvanised parts of transmission tower and lining sold by the appellant and thus the GTA service is input service under Rule 2(1) of Cenvat Credit Rules, 2004.
Honble Apex Court in case of Regional Director vs. High Land Coffee Works [(1991) 3 SCC 617] has held that the word include is generally used to enlarge the meaning of the preceding words and it is by way of extension, and not restriction. Similar view has been taken by the Larger Bench of the Tribunal in Commissioner of Central Excise v. GTC Industries Ltd. [2008 (12) STR 468 (SC). In this case since the cost of all these services indicated in the chart submitted by the appellant are included in the cost of the final product, hence they are to be treated as input service in terms of said order of the Larger Bench of CESTAT.
Further Honble Larger Bench of CESTAT in the case of M/s. GTC Ltd. -2008-TIOL- 1634-CESTAT-Mumbai and Honble High Court of Bombay in the case of M/s. Coca Cola India vide its order dated 26.8.2009 2009(242) ELT 168(B) has held that any input service which form part of the value of final product on which duty is paid, should be eligible for Cenvat credit.
Respectively following the decisions of Honble Larger Bench of CESTAT supra I hold that GTA service for procuring the MS billets which ultimately has been used for manufacture of galvanised parts of transmission tower and lining sold by the appellant is an input service and the appellant is entitled for the Cenvat credit amounting to Rs.2,89,008/- and I thus set aside the impugned order confirming the demand for recovery of Cenvat credit amounting to Rs.2,89.,008/-.c
7. As is seen from the above, the billets are admittedly the raw material for the respondents final product, if the said billets are brought to the factory by the respondents and then sent to the job workers, there could be no dispute about the availability of credit of Service Tax paid on GTA services. Merely because to save transportation, the billets are directly offloaded in the factory of job workers should not be adopted as a reason for denial of credit, especially when the freight as also Service Tax stand paid by the respondents. Undoubtedly, the billets are first required to be converted into angles and / channels which are further converted into the final product. As such, the billets are essentially starting raw materials for the final product and their transportation has to be held as an input service. As such, I find no valid reasons to interfere in the impugned order of Commissioner (Appeals). Revenues appeal is accordingly rejected.
(Pronounced in the open court on 12.7.2012)
( Archana Wadhwa ) Member(Judicial)
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