A.K.SIKRI,J. - (1.) 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. The assessee is also availing the benefit of Cenvat Credit facility under the Cenvat Credit Rules, 2004 ('Rules, 2004' for short). The assesseeherein 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.
(2.) After hearing, the Adjudicating Authority passed Order-in-Original dated August 22, 2011 holding that 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. Further, the Adjudicating Authority held that CBEC vide its Circular No. 97/8/2007-ST dated August 23, 2007 has clarified the definition of place of removal. With respect to fulfillment of requirement of Circular dated August 23, 2007, it was held that the assessee has not produced any documentary evidence to prove that conditions laid down vide Circular dated August 23, 2007 has been fulfilled. Accordingly, the Adjudicating Authority passed the order as under: "(i) Demanding the irregular Cenvat credit availed on outward transportation of goods amounting to Rs.25,66,131/- under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A of Central Excise Act, 1944; (ii) Demanding interest under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AB of Central Excise Act, 1944 read with Section 75 of the Finance Act, 1994; (iii) Did not order for initiation of action under Rule 15(1) of Cenvat Credit Rules, 2004 read with Rule 25 of Central Excise Rules, 2002; (iv) Imposed penalty of Rs.25,66,131/- under Rule 15(3) of Cenvat Credit Rules, 2004; (v) Imposed penalty of Rs.1,00,000/- under Rule 25 of Central Excise Rules, 2002."
(3.) Aggrieved by the Order-in-Original No. 24/2011 dated August 22, 2011, respondent/assessee preferred an appeal before Commissioner (Appeals). The Commissioner (Appeals) vide Order-in-Appeal No. 57/2012-CE dated March 15, 2012 allowed the appeal and set aside the Order-in-Original holding that assessee is eligible for availment of service tax paid on GTA service on the outward freight from the factory to the customers' premises as per the Board's Circular 97/8/2007-Service Tax dated August 23, 2007. It was now the turn of the Revenue to feel aggrieved by the order. Accordingly, appeal was filed before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) by the Revenue which was rejected vide judgment dated May 1, 2015. Further appeal to the High Court preferred by the assessee has met the same fate as the said appeal has been dismissed by the High Court of Karnataka vide its judgment dated June 29, 2016, which is the subject matter of the present appeal.;