2013 (3) TMI 504 - AT - Central Excise

Entitlement to CENVAT credit on CHA service used in connection with export of certain goods - Held that - In the present case, the goods were exported and when export documents are presented to the Customs office, then that is the place of removal as per section 5 of C.E. Act. The same finding has been rendered by this bench in the case to Koeleman India Pvt. Ltd. v. CC, Bangalore 2005 (4) TMI 228 - CESTAT, BANGALORE . There is no reason to take a different view from the same. The Superintendent (AR) attempt to distinguish the above case by submitting that the above decision was rendered in respect of remission of duty and not in respect of CENVAT credit is inconsequential inasmuch as there is only one definition of place of removal under the Central Excise Act or the Rules framed thereunder whether for the purpose of valuation of excisable goods or for the purpose of determination of claim of CENVAT credit or for any other purpose whatsoever. On a harmonious construction of the provisions, in respect of the excisable goods cleared from factory for export and subsequently shipped from the port, the port of export could be held to be the place of removal . In view of this it has to be held that the respondents were entitled to treat CHA service/GTA service as input services under Rule 2(1) of the CENVAT Credit Rules, 2004 as these services were used for clearance of excisable goods from the place of removal . Entitlement to CENVAT credit on Business Auxiliary Services received from foreign and domestic commission agents - Held that - There is no valid ground for the department s appeals as its plea that there was no nexus between the Business Auxiliary Services and manufacture of the goods does not advance their case inasmuch as a nexus between Business Auxiliary Services and clearance of the goods from the place of removal has been established by the assessee. This nexus is enough for reckoning the service as input service under Rule 2(1) of the CENVAT Credit Rules, 2004. It is not the case of the department that the assessee was not entitled to claim CENVAT credit of the service tax paid by themselves under section 66A of the Finance Act, 1994. Therefore, in the result, the second issue also must be held in favour of the assessee.

Summary

Issues:
1. Entitlement to CENVAT credit on CHA service for export of goods.
2. Entitlement to CENVAT credit on Business Auxiliary Services from commission agents.

Entitlement to CENVAT Credit on CHA Service for Export of Goods:

The appeal involved consideration of whether the respondent could claim CENVAT credit on CHA service used for exporting goods during 2008-09. The appellant argued that the definition of 'place of removal' under the Central Excise Act was only for valuation purposes and not applicable to CENVAT credit issues. Reference was made to a High Court decision and a pending Division Bench case. The respondent contended that a Division Bench decision favored their position. The Tribunal analyzed the legal provisions and held that the definition of 'place of removal' was relevant to CENVAT credit cases. Referring to past cases, it concluded that the port of export could be considered the 'place of removal' for excisable goods, allowing the respondent to treat CHA service as an 'input service' for CENVAT credit under the CENVAT Credit Rules, 2004. The Tribunal also noted that the department's appeal against a similar case did not affect the current decision.

Entitlement to CENVAT Credit on Business Auxiliary Services:

Regarding the CENVAT credit on Business Auxiliary Services from commission agents, the appellant argued there was no nexus between these services and the manufacture of goods. However, the respondent demonstrated a nexus between the services and the clearance of goods from the 'place of removal.' The Tribunal found this nexus sufficient to consider the services as 'input services' under the CENVAT Credit Rules, 2004. Since the appellant did not dispute the respondent's entitlement to claim CENVAT credit for service tax paid under section 66A of the Finance Act, 1994, the Tribunal ruled in favor of the respondent on this issue as well.

In conclusion, all three appeals were dismissed by the Appellate Tribunal CESTAT, BANGALORE, based on the analysis and findings related to the entitlement to CENVAT credit on CHA service for the export of goods and on Business Auxiliary Services from commission agents.