COMMISSIONER OF CENTRAL EXCISE SERVICE TAX versus ULTRA TECH CEMENT LTD.

Citation: [2018] 6 S.C.R. 651 · Decided: 01-02-2018 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Appeal(s) allowed

Judgment (excerpt)

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COMMISSIONER OF CENTRAL EXCISE SERVICE TAX
v.
ULTRA TECH CEMENT LTD.
(Civil Appeal No. 11261 of 2016)
FEBRUARY 01, 2018
[A. K. SIKRI AND ASHOK BHUSHAN, JJ.]
Cenvat Credit Rules, 2004 – r.2(I) – Cenvat Credit facility
availed by assessee during the period from January, 2010 to June,
2010 on outward transportation of goods through a transport
agency from their premises to the customer’s premises – Admissibility
of – Held: Not admissible – It is clear from the bare reading of the
r.2(I), as amended in the year 2008, which applies to the period in
question that the Goods Transport Agency service used for the
purpose of outward transportation of goods, i.e. from the factory
to customer’s premises, is not covered within the ambit of r.2(I) “input
service” of the Rules – It is only ‘upto the place of removal’ that
service is treated as input service – Thus, once the final products
are cleared from the factory premises, extending the credit beyond
the point of clearance of final product is not permissible under
Cenvat Credit Rules and post clearance use of services in transport
of manufactured goods cannot be input service for the manufacture
of final product.
Cenvat Credit Rules, 2004 – r.2(I), as amended in 2008 –
Effect of amendment – Held: The original definition of ‘input service’
contained in r.2(I) of the Rules,2004 used the expression ‘from the
place of removal’ – However, vide amendment in the year 2008, the
word ‘from’ is replaced by the word ‘upto’ – Now as per the  original
definition, service used by the manufacturer of clearance of final
products ‘from the place of removal’ to the warehouse or customer’s
place etc., was exigible for Cenvat Credit – However after the
amendment, the benefit which was admissible even beyond the place
of removal now gets terminated at the place of removal and doors
to the Cenvat Credit of input tax paid gets closed at that place –
The word ‘from’ is the indicator of starting point, whereas the
expression ‘upto’ signifies the terminating point, putting an end to
the transport journey.
   [2018] 6 S.C.R. 651
651
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SUPREME COURT REPORTS
[2018] 6 S.C.R.
Allowing the appeal, the Court
HELD:  1. The assessee is involved in packing and clearing
of cement.  It is supposed to pay the service tax on the aforesaid
services.  At the same time, it is entitled to avail the benefit of
Cenvat Credit in respect of any input service tax paid.  Input
service tax was also paid on the outward transportation of the
goods from factory to the customer’s premises of which the
assessee claimed the credit.  The question is as to whether it can
be treated as ‘input service’. ‘Input service’ is defined in Rule
2(I) of the Rules, 2004. It is an admitted position that the instant
case does not fall in sub-clause (i) to r.2(I) and the issue is to be
decided on the application of sub-clause (ii) to r.2(I).  Reading of
the clause (ii) provision makes it clear that those services are
included which are used by the manufacturer, whether directly or
indirectly, in or in relation to the manufacture of final products
and clearance of final products ‘upto the place of removal’.
[Paras 4, 5 and 6] [656-A-C, F-G]
2.  The original definition of ‘input service’ contained in
Rule 2(l) of the Rules, 2004 used the expression ‘from the place
of removal’.  As per the said definition, service used by the
manufacturer of clearance of final products ‘from the place of
removal’ to the warehouse or customer’s place etc., was exigible
for Cenvat Credit. However, vide amendment carried out in the
aforesaid Rules in the year 2008, the word ‘from’ is replaced by
the word ‘upto’.  Thus, it is only ‘upto the place of removal’ that
service is treated as input service.  This amendment has changed
the entire scenario.  The benefit which was admissible even
beyond the place of removal now gets terminated at the place of
removal and doors to the cenvat credit of input tax paid gets
closed at that place.  This credit cannot travel therefrom.  It
becomes clear from the bare reading of this amended Rule, which
applies to the period in question that the Goods Transport Agency
service used for the purpose of outward transportation of goods,
i.e. from the factory to customer’s premises, is not covered within
the ambit of Rule 2(l)(i) of Rules, 2004. The word ‘from’ is the
indicator of starting point, whereas the expression ‘upto’ signifies
the terminating point, putting an end to the transport journey.
[Para 7] [6

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