2010 (9) TMI 316 - AT - Service Tax

Cenvat credit of service tax - input service credit for the insurance of transportation of goods upto the port of export - Tribunal has held that service tax paid on GTA services for outward freight from factory to port of export is entitled as input service credit no dispute that the appellants have insured their goods for transportation upto the port credit admissible

Summary

Issues:
- Denial of Cenvat credit on service tax paid for insurance policy for goods transported to the port of export.

Analysis:
The appellant appealed against the denial of Cenvat credit on the service tax paid for an insurance policy covering the transportation of goods from the factory to the port of export. The appellant argued that the insurance service was part of the business activity up to the place of removal of goods and should be eligible for Cenvat credit. The appellant cited previous Tribunal cases to support their contention, emphasizing that service tax paid to facilitate goods reaching the place of removal should qualify for Cenvat credit. The appellant highlighted cases such as L.G. Electronics (India) Pvt. Ltd. v. CCE, Noida, Modern Petrofils v. CCE, Vadodara, CCE, Rajkot v. Rolex Rings P. Ltd., and CCE, Rajkot v. Adani Pharmachem P. Ltd. to strengthen their argument.

The Revenue's representative contended that the issue of service credit on insurance policies for transportation of goods was pending before the Karnataka High Court and should not be decided at the current stage. However, the Tribunal disagreed with this argument, distinguishing the issue in the present case from the pending ABB Ltd. case in the High Court of Karnataka. The Tribunal clarified that the question at hand was whether the appellant was entitled to input service credit for the insurance of goods transported to the port of export. Referring to the precedent set in the Modern Petrofils case, the Tribunal ruled that service tax paid on GTA services for outward freight from the factory to the port of export was eligible for input service credit. Since the appellants had insured their goods for transportation to the port, the Tribunal concluded that they were entitled to input service credit for the insurance paid for transporting goods to the port of export.

In light of the above analysis, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant. The judgment emphasized the eligibility of input service credit for insurance paid on the transportation of goods up to the port of export, aligning with the precedent decisions of the Tribunal in similar cases.