M/S.Vardhman Special Steels vs C.C.E.,Ludhiana

(Arising out of OIA No.22/CE/Ldh/2009 dt.4.2.2009 passed by Commissioner of Central Excise (Appeals) Chandigarh)

M/s.Vardhman Special Steels Appellants

Vs.

C.C.E.,Ludhiana Respondent

Appearance:

Present for the Appellant: Shri Rupender Singh, Advocate

Present for the Respondent: Shri V.P.Batra, AR

Honble Mr.P.K.Das, Member (Judicial)

Honble Mr.P.S.Pruthi, Member (Technical)

1.

Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No

2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No

3. Whether their Lordships wish to see the fair copy of the order?

seen

4. Whether order is to be circulated to the Department Authorities?

Yes

Coram: Honble Mr. P.K.Das, Member (Judicial)

Honble Mr.P.S.Pruthi, Member(Technical)

Date of Hearing/decision: 19.01.2015

FINAL ORDER NO.50194/2015

PER: P.S.PRUTHI

The appellants are in appeal against the Order-in-Appeal in which cenvat credit of Rs.9,41,035/- was disallowed as held by the adjudicating authority.

2. The facts of the case are that the appellants paid service tax on GTA service during the period February, 2005 to December, 2005 and availed cenvat credit which was denied on the ground that the appellants did not show any documents evidencing that clearances were made on FOR basis and therefore the factory gate becomes the place of removal. According to the definition of input service in Rule 2(l) of Cenvat Credit Rules, 2004, the main definition refers to any service used by the manufacturer in or in relation to manufacture of final products and clearance of final products from the place of removal. Therefore the cenvat credit was disallowed. The Commissioner (Appeals) upheld the rejection of cenvat credit in terms of Boards Circular No.97/8/2007-ST dated dt.23.8.2007 which states that credit may be allowed if the goods are cleared on FOR basis.

3. Heard both sides.

4. Learned Counsel for the appellant refers to the definition of input service and states that service received and used by the manufacturer for clearance from the place of removal till the gods reached the destination falls within the definition of input service. He relied on the larger bench decision in the case of CCE, Bangalore vs. ABB Ltd.

5. Learned AR reiterated the findings of the Commissioner (Appeals).

6. Considered the submissions of both the sides. The issue, in a short compass, is whether the service tax paid on input service as defined in Rule 2(l) of Cenvat Credit Rules, 2004 would be eligible for cenvat credit accordingly. We have seen the definition of input service. It clearly states that service used for clearance of final products from the place of removal is covered. The matter stands decided by Honble Karnataka High Court in the case of CCE, Bangalore vs. ABB Ltd-2011(23) STR 97 (Kar.) wherein Honble High Court held as under:

31.?The phrase activities relating to business is an omni bus one and it finds a place in the inclusive definition. The question is, by a judicial interpretation, outward transportation of the final product from the place of removal till it is delivered to the customer, could be construed as falling within the definition of input service. It is a well settled rule of interpretation that, while interpreting a provision, the Court must take note of not only the express words used but also the words which are not used. If the legislature has expressly used the words in respect of the transportation in a particular manner and did not choose to include within the ambit of the word transportation, certain aspects, having regard to the scheme of the Section, the way it is worded, it is not open to the Court to include something which the legislature deliberately did not include in the definition. If the Courts indulge in such interpretation, it amounts to re-wilting the provision which is impermissible. Yet another reason for coming to such a conclusion is, in the first part of the restrictive definition clearance of final products from the place of removal is expressly stated.

If transportation of final product from the place of removal is included in the phrase clearance of final products from the place of removal again the same cannot be read into the provision under the words activities relating to business. When a particular service was included within the definition, it is not necessary to interpret other provisions of the very same rule to include the said services over again. When a specific provision is made in the first part of the definition portion of the Cenvat Rules which refers to clearance of final products from the place of removal and in the second part (inclusive) of the definition when the phrase used is activities relating to business such as, merely because in that portion of the definition either transportation charges is not included or service rendered for clearance of final products is not included, it is impermissible to read those words as in the earlier portion of the definition, it is specifically provided for. It is a well known rule of interpretation that when the statute uses words and phrases in a particular section, meaning has to be given it, each of those sections.

When the statute provides specifically for a particular contingency, it is to be so interpreted and after so interpreting, it cannot be said in another portion where general words are used, it also includes what is specifically provided. Therefore, the finding recorded by the CESTAT that the phrase and expression activities relating to business admittedly covers transportation upto the customers place was entirely unnecessary. This interpretation of ours find support from the subsequent conduct on the part of the Central Government, which amended Rule 2(l)(ii). By Notification No. 10/2008-C.E. (N.T.), dated 1-3-2008, the words clearance of final products upto the place of removal were substituted in the place of the words clearance of final products from the place of removal. The intention of the legislature is thus manifest. Till such amendment, the words clearance from the place of removal included transportation charges from the place of removal till it reached the destination, namely the customer. Therefore, the said input service was included in the early part of the definition 2(l)(ii).

Consequently, we cannot read what is expressly provided in the early part of the rule as having been included in the later part of the rule while interpreting the words activities relating to business, though it has been amplified by saying it is only an inward transportation of inputs or capital goods and outward transportation upto the place of removal. The phrase outward transportation upto the place of removal used in the inclusive portion of the definition (the second part), has to be read along with the word inward transportation of input or capital goods. It has no reference to clearance of final products. However, when the claims are put forth on the basis of the said circular of 23-8-2007. for benefit of CENVAT credit, even in the cases where the aforesaid conditions are not satisfied relying on the words clearance of final products from the place of removal, the Central Government thought it fit to amend the provision from 1-4-2008 by substituting the word upto in place of from, in Clause (ii) of Rule 2(l) making the intention clear i.e. whether it is an inward transportation of input of capital goods or clearance of final products upto the pi ace of removal, any service rendered and service tax paid would fall within the definition of input service .

Therefore, it is clear that till such amendment made effective from 1-4-2008 notwithstanding the clarification issued by the Central Government by way of their circular, transportation charges incurred by the manufacturer for clearance of final products from the place of removal was included in the definition of input service. Therefore the interpretation placed by the Tribunal on the words activities relating to business as including clearance of final products from the place of removal which occurred already in the first part of Rule 2(l)(ii)) prior to 1-4-2008, runs counter to the language employed in the second part of the definition of input service and is to that extent contrary to the legislative intention and therefore, the said finding is unsustainable in law.

7. Following the judgement, we hold that the appellants are eligible for cenvat credit.

8. Appeal allowed.

(Pronounced in the court)

(P.S.PRUTHI) (P.K.DAS)

MEMBER (TECHNICAL) MEMBER(JUDICIAL)

mk

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