Whether credit of loading and unloading service at the transhipment point after removal from factory gate admissible?

PJ/Case Laws/2012-13/1477

Case:- HINDUSTAN NATIONAL GLASS & INDUS. LTD. Versus COMMR. OF C. EX., ROHTAK

Citation:- 2013 (288) E.L.T. 408 (Tri.-Del.)

Brief Facts:-The appellant are manufacturer of glass bottles in their factory at Bahadurgarh. The goods after clearance from the factory on payment of duty are transferred at their transshipment point at Mundka/Tikri Village, New Delhi from where the goods were sold. In terms of communication with the appellant, the place of removal of finished goods is the factory gate at Bahadurgarh. The appellant were availing services of manpower supply for loading and unloading of finished goods at Mundka in respect of which they took Cenvat credit during the period from May, 2006 to March, 2009. The Department was of the view that this service availed at transshipment point after the removal of the goods has no nexus with the business of the appellant. Accordingly, a show cause notice was issued for denial of Cenvat credit, its recovery along with interest and imposition of penalty. The show cause notice was adjudicated by the Assistant Commissioner- vide order-in-original by which he confirmed the Cenvat credit demand along with interest and imposed penalty of equal amount on the appellant under Rule 15 of Cenvat Credit Rules, 2004. On appeal being filed before Commissioner (Appeals), the Commissioner (Appeals) upheld the order of Assistant Commissioner. Against this order, this appeal has been filed.

Appellant Contentions:-The Appellant submitted that the service of unloading and loading of the finished goods at transshipment point at Mundka/Tikri Village is an activity relating to business of the appellant; that therefore, it is covered by the definition of 'Input Service"; that the value of loading and unloading charges at transshipment point is included in the value of the goods on which duty has been paid; that in this regard, the appellant have produced a Chartered Accountant's certificate and that in view of this, the impugned order denying Cenvat credit in respect of manpower supply service at the transshipment point is not correct. Shri Kumar further pleaded that Cenvat credit demand is time-barred except for a small amount for the period from Jan., 2009 to February, 2009 as the show cause notice was for the period from May, 2006 to March, 2009 and there was no wilful misstatement or suppression of fact on the part of the appellant. He also pleaded that during the period of dispute the main definition of 'input service' covered services in relation to clearances of the goods from the place of removal and therefore, the service in question, availed off the removal after the removal of the goods is covered by the definition of 'input service'. He, therefore, pleaded that the impugned order denying Cenvat credit in respect of manpower supply service received at their transshipment point is not correct.

Respondent Contentions:-The Respondent has pleaded that services, in question, has been received after clearance from the factory, that as per the appellant's own admission the place of removal is the factory gate; that loading and unloading of the finished goods at the transshipment point after removal of the finished goods from place of removal has no nexus with the business activity of the appellant; that the manufacturing business activity relating to the business which is to be inclusive of part definition of 'input service' covers only the activity relating to the manufacturing business; that the Cenvat credit has therefore been correctly denied, and that hence there is no infirmity in the impugned order.

Reasoning of Judgment:-We have considered the submissions from both the sides and perused the records. In this case, there is no dispute about the fact that 'place of removal' of the goods is the factory gate, as the appellant have admitted this fact in their communication to the Department. The service of manpower supply for loading and unloading of finished goods at the transshipment point has been availed after removal of goods to the transshipment point. In my view, this service has no nexus with the manufacturing business of the appellant. As held by the Hon'ble Bombay High Court in the case of Ultratech Cement reported in 2010 (260) E.L.T. 369 (Bom.) = 2010 (20) S.T.R. 577 (Bom.), the term 'activity relating to the business' in the definition of 'input service' covers only the activity relating to manufacturing business and not the activity relating to trading. In this case, the manpower supply is for loading and unloading of the finished goods after removal of the goods from the factory gate and there is no dispute that it is the factory gate which is the place of removal. Moreover, no invoices have been produced to show that duty had been paid on the value which included the expenses at the transshipment point. Tribunal is, therefore, of the view that Cenvat credit has been correctly denied. As regards the plea of time-bar, the appellant has submitted that as there is no suppression of fact on their part and that they had declared the availment of Cenvat credit in respect of unloading and loading charges at transshipment point in respect of finished goods in the ER-1 returns. This plea is not acceptable as the ER-1 returns have not been produced to show that availment of Cenvat credit in respect of services availed at transshipment point after removal of the goods had been specifically disclosed in the ER-1 return. Tribunal, therefore, do not find any infirmity in the impugned order. The appeal is dismissed.

Decision:-Appeal is dismissed.

Comment:-The substance of this case is that credit cannot be availed of the services that are taken after removal of goods from the factory.

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PJ/Case Laws/2012-13/1477

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