2011 (3) TMI 837 - AT - Central Excise

Cenvat Credit - whether the CHA services and port services can be held to be admissible input services for the purposes of modvat credit - held that - credit in respect of various services availed by an assessee is admissible if ownership of goods remain with seller till delivery at customers door steps. As such by taking note of the Board s Circular No.97/6/2007-ST dated 23.08.07 extending the place of removal from factory gate to export area and by holding that such circulars are binding on the departmental officers - the services of goods transport agency availed for outward freight paid by the manufacturer upto the steps of door steps are admissible as input services. - Decided in favour of assessee.

Summary

Issues:
- Denial of cenvat credit on CHA and port services
- Admissibility of CHA and port services as input services for modvat credit

Analysis:
The judgment by Appellate Tribunal CESTAT, Ahmedabad, addressed the issue of denial of cenvat credit on CHA (Customs House Agent) and port services. The appellants were initially issued a show cause notice proposing to deny cenvat credit of service tax paid on canteen services, air tickets, CHA, and port services. The Assistant Commissioner, Central Excise, passed an order denying the benefit on all services, confirming the demand, interest, and imposing a penalty. Upon appeal, the Commissioner (Appeals) allowed modvat credit for canteen and air ticket services but denied it for CHA and port services due to the export of goods, leading to the appeal before the Tribunal.

The main issue in the appeal was whether CHA and port services could be considered admissible input services for modvat credit. The Tribunal noted that this issue had been settled in previous decisions, citing cases such as Gujarat Ambuja Cements Ltd. Vs. CCE Ludhiana and Adani Pharmachem (P) Ltd. Vs. CCE Rajkot. The Tribunal also referenced a decision by the Hon'ble Punjab & Haryana High Court regarding the admissibility of various services for modvat credit based on ownership of goods until delivery. The High Court held that services of a goods transport agency for outward freight paid by the manufacturer up to the customer's doorsteps were admissible as input services.

The Commissioner (Appeals) had acknowledged these precedents but chose to rely on a subsequent decision of the Punjab & Haryana High Court in a different case involving the classification of a tattoo on a product. The Tribunal found this reliance misplaced as the issue in the present case was specific to the availability of modvat credit for CHA services at the port area. The Commissioner's failure to follow the Board's circular extending the place of removal to the port area was questioned, especially since the circular should be binding on departmental officers.

Considering the established precedents and the misapplication of the law by the Commissioner (Appeals), the Tribunal set aside the impugned order, allowing the appeal with consequential relief to the appellants. The stay petitions and appeals were disposed of accordingly.