Case Law Details
Commissioner Of Central Excise Vs. Ultra Tech Cement Ltd. (Supreme Court of India)
The core issue involved in the present case is with regard to the admissibility or otherwise of the Cenvat Credit on Goods Transport Agency service availed for transport of goods from the place of removal to buyer’s premises. This issue has arisen in the following factual background:
The respondent M/s. Ultratech Cement Ltd. (hereinafter referred to as the ‘assessee’) is involved in packing and clearing/forwarding of cement classifiable under Chapter sub heading 25232910 of Central Excise Tariff Act, 1985, with Central Excise Registration No. AAACL6442LEM014. The assessee is also availing the benefit of Cenvat Credit facility under the Cenvat Credit Rules, 2004 (‘Rules, 2004’ for short). The assessee herein gets finished goods (cement) from its parent unit on stock transfer basis and sells the same in bulk form and packed bags. The assessee during the period from January, 2010 to June, 2010 availed Cenvat Credit of service tax paid on outward transportation of goods through a transport agency from their premises to the customer’s premises. According to the appellant/Revenue, the transport agency service used by the assessee for transportation of their final product from their premises to customers premises cannot be considered to have been used directly or indirectly in relation to clearance of goods from the factory viz., place of removal in terms of Rule 2(l) of the Rules and as such cannot be considered as input service to avail Cenvat credit.
Accordingly, the Office of the Commissioner of Central Excise: Bangalore II Commissionerate issued show cause notice dated February 3, 2011 to the assessee inter alia stating that on scrutiny of ER-1 return submitted by the assessee for the period January, 2010 to June, 2010, it was noticed that the assessee have wrongly availed the Cenvat Credit of Service Tax paid on outward transportation of goods from the factory to the Customer’s premises, inasmuch as the Goods Transport Agency Service used for the purpose of outward transportation of the goods from factory to customer’s premises is not input service within the ambit of Rule 2(l)(ii) of the Rules, 2004. It was further mentioned that the total Cenvat Credit claimed was in the sum of Rs. 25,66,131/- and the assessee was called upon to show cause as to why the said amount be not recovered and penalty be not imposed. The assessee submitted its reply to the show cause notice contesting the position contained therein.
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Decision of SC for Ultra-tech Cement pertains to period prior to 01.04.2008 when the definition of place of removal was ‘From Place of Removal’ which is modified wef 1.4.08 and later it reads as ‘Upto the place of removal’ therefore, if an assessee fulfills all the three conditions of FOR Term and the disputed period pertain to post 01.04.2008, credit of input service on outward freight would be eligible. The judgement of SC in case of Ultra-tech Cement is irrelevant in this case.