2010 (9) TMI 517 - AT - Service Tax

Cenvat credit - Rule 2(1) of the CENVAT credit Rules, 2004 - whether the appellants are availed CENVAT credit of service tax paid on services of CHA for clearance of final product upto the place of export i.e., upto the port or not - It is, therefore, clear that for a manufacturer/consignor, the eligibility to avail credit of the service tax paid on the transportation during removal of excisable goods would upon the pace of removal as per the definition - it is quite clear that in case where the sale is on FOB/CIF bases, the place of removal has to be the load port only - There is no doubt that in each and every case, it is necessary to consider as to exactly which is the place of removal before allowing the benefit of CENVAT credit - In case of CCE v. Adani Pharmachem (P.) Ltd. (2008 -TMI - 31092 - CESTAT AHMEDABAD) held that the services of CHA required to facilitate clearance of final products from place of removal i.e., place of export are entitled for input service credit - Decided in the favour of the assessee

Summary

Issues:
Denial of Cenvat credit for service tax paid on CHA services for export of goods.

Analysis:
The appellants contested the denial of Cenvat credit for service tax paid on CHA services for export clearance of goods. They argued that the services were availed for clearance of finished products up to the port of export, which constitutes the place of removal. Citing precedents like Excel Crop Care Ltd. and Rolex Rings cases, they claimed entitlement to input service credit under Rule 2(1) of the CENVAT credit Rules, 2004. They also referenced Board Circular No. 97/8/2007-ST defining the place of removal and Adani Pharmachem case, supporting their stance on input service credit eligibility for CHA services facilitating final product clearance to the export port.

The opposing view, presented by the learned DR, contended that CHA services were not linked to manufacturing final products, thus warranting denial of input service credit. Reference was made to Maruti Suzuki Ltd. and Sundaram Brake Linings cases to support this argument.

Upon examination, the judge noted the divergence between the cited cases and the current matter. The judge emphasized that the issue at hand was the eligibility of input service credit for CHA services up to the place of export, not input credit on manufacturing inputs or outdoor catering services. Drawing on the Adani Pharmachem case, the judge highlighted the importance of determining the place of removal in cases of FOB/CIF sales, emphasizing that the load port constitutes the place of removal for such transactions. The judge reiterated that input services include those related to outward transportation up to the place of removal, making services facilitating goods reaching the place of removal eligible for CENVAT credit.

In alignment with the Adani Pharmachem case's rationale, the judge overturned the impugned order and allowed the appeal, emphasizing the applicability of the precedent's principles to the current dispute. The judge emphasized the need to consider the specific circumstances of each case to determine the place of removal accurately before granting CENVAT credit, underscoring the case-specific nature of such decisions.