2011 (1) TMI 441 - AT - Service Tax

Cenvat Credit - Show-cause notice was issued for the recovery of service tax credit availed on the said outward services for export as irregularly availed Cenvat Credit - place of removal can only be a factory or a warehouse or a depot and therefore the appellant s contention that port of shipment would be place of removal is not correct - Tribunal in the case of Modern Petrofils Vs. CCE Vadodara 2010 -TMI - 77338 - CESTAT AHMEDABAD has in an identical situation held that the port of shipment can be considered as place of removal and assessees entitled for the credit of service tax paid on freight till port of shipment

Summary

Issues:
Eligibility of Cenvat Credit on service tax paid on outward transportation of goods.

Analysis:
The appeal was filed by the Revenue against the Order-in-Appeal regarding the eligibility of Cenvat Credit on service tax paid on outward transportation of goods for export. The respondents were availing Cenvat Credit on input services and discharging service tax liability on services received from GTA. The issue revolved around whether the port of shipment should be considered as the place of removal for goods cleared for export. The Adjudicating Authority dropped the proceedings, which was upheld by the Commissioner (Appeals) based on a Tribunal decision. The Revenue contended that the place of removal should be the factory gate, not the port, and cited a stayed judgment. However, the respondents argued that the port of shipment should be considered as the place of removal, supported by a Tribunal decision in a similar case.

The main issue was the eligibility of Cenvat Credit on service tax paid on outward transportation of goods for export. The Tribunal considered the responsibility of the seller up to the port of shipment, indicating that the port could be considered the place of removal for consignments meant for export. The Tribunal referenced a similar case where the port of shipment was accepted as the place of removal, allowing Cenvat Credit on service tax paid on freight till the port of export. The Tribunal rejected the Revenue's argument that the factory gate should be the place of removal, emphasizing the specific circumstances of exports made on FOB or CIF basis.

The Tribunal concluded that the impugned order was legally sound and upheld it, rejecting the Revenue's appeal. The decision was based on the precedent that the port of shipment could be considered the place of removal for goods cleared for export, allowing Cenvat Credit on service tax paid on outward transportation. The Tribunal found that the facts in the case were identical to a previous case where the port of shipment was accepted as the place of removal. Overall, the Tribunal ruled in favor of the respondents, affirming their right to avail Cenvat Credit on service tax paid on outward transportation of goods for export.