2011 (5) TMI 142 - AT - Service Tax

Cenvat credit - Circular No. 97/8/2007-ST dated 23-8-2007 - the respondent is a manufacturer of zinc, lead, and other concentrates - The respondents is exporting their final products namely, the concentrates - The GTA services utilised for transport of final products cannot be obviously treated as input services both for the manufactures of the final products and the recipients of final products - The obligations based on contracts between a buyer and seller may not be a relevant factor to determine whether certain services utilised could be treated as input services or not - Appeal is allowed by way of remnad

Summary

Issues:
- Whether the GTA services used in transporting finished goods to the port of export qualify as input services for Cenvat credit.
- Whether the place of removal for excisable goods can be considered as the loading port in cases of export.
- Whether the terms of the contract between the manufacturer and the buyer can determine the place of removal.

Analysis:

Issue 1: GTA Services as Input Services
The dispute revolves around whether the GTA services utilized for transporting finished goods to the port of export qualify as input services for Cenvat credit. The Department argued that transportation beyond the factory gate does not qualify as an input service, citing circulars and legal provisions. The Respondent contended that the concentrate yard at the port is the place of removal, emphasizing the contractual obligations and the interpretation of ownership and risk in transportation. Various decisions were cited to support the Respondent's position.

Issue 2: Place of Removal in Export Cases
The definition of "place of removal" under the Central Excise Act is crucial in determining the liability for duty. The Appellate Tribunal analyzed the concept of place of removal concerning the clearance of goods for export, emphasizing that the liability for duty arises at the time and place of removal, which is typically the factory gate. The Tribunal discussed the post-removal activities such as transportation to the port area and the relevance of contractual obligations in determining the place of removal.

Issue 3: Contractual Terms and Place of Removal
The Tribunal examined whether the terms of the contract between the manufacturer and the buyer can alter the place of removal, particularly in cases of export. The Tribunal highlighted that excise and commercial invoices are typically raised from the factory gate, indicating the place of removal. The Tribunal also discussed the relevance of GTA services as input services based on contractual terms and previous decisions from co-ordinate Benches.

Conclusion
The Tribunal decided to refer the matter to a Division Bench to address key questions of law regarding the determination of the place of removal based on contractual terms and whether GTA services from the factory to the port of loading can be considered as input services eligible for credit. The decision to seek further clarification from the Division Bench reflects the complexity and significance of the issues raised in the appeal.