2013 (7) TMI 529 - AT - Central Excise

Cenvat credit of service tax paid on various input services like courier services, cargo handling services, CHA services and clearing and forwarding services available to manufacturer Held that - As per the decision in the case of Commissioner vs. Adani Pharmachem Pvt. Ltd. reported in (2008 (7) TMI 102 - CESTAT AHMEDABAD , the benefit of Cenvat credit of service tax paid on the CHA services as also the other services availed at the port stands extended to the assessee by observing that in case of export, place of removal gets extended to the load, port - Notification No. 41/2007-ST - There are conditions attached to the Notification and the refund of service tax is available to the exporter subject to the fulfillment of certain conditions. One of the condition is that no Cenvat credit of service tax paid on the specified services stands taken by the exporter. If the exporter avails the benefit of Cenvat credit, he would not be entitled to refund of service tax in terms of the said notification. The notification is in the alternative i.e. the exporter can either choose to avail the credit or to seek refund of the same. The notification cannot be adopted as a support to deny the Cenvat credit claimed by the exporter on the ground that the exporter should have followed the system of refund in terms of the said notification. It is the option of the exporter either to claim refund of service tax, without availing the benefit of the Cenvat credit or to avail the Cenvat credit in terms of Cenvat Credit Rules in which case refund of the service tax would not be available to them Decided in favor of Assessee.

Summary

Issues: Denial of Cenvat credit on input services for export, interpretation of Notification No. 41/2007-ST

In this judgment by Ms. Archana Wadhwa, the issue revolved around the denial of Cenvat credit to a manufacturer and exporter of motor vehicle parts, oven parts, and bath radiators. The denial was based on the contention that services like courier, cargo handling, CHA, and clearing and forwarding services, availed after goods clearance from the factory gate, did not qualify as input services. The Revenue cited Notification No. 41/2007-ST, which exempts specified services used for export from service tax, subject to conditions. The notification requires no Cenvat credit of service tax to be taken under the Cenvat Credit Rules, 2004 for availing the exemption.

The Tribunal, after hearing arguments from both sides, referred to precedents like Commissioner vs. Adani Pharmachem Pvt. Ltd. and other cases where it was held that services availed for export purposes till the port area are admissible as cenvatable input services. The Tribunal emphasized that in cases of export, the place of removal extends to the port area. Regarding Notification No. 41/2007-ST, it was clarified that the exporter has the option to either claim Cenvat credit or seek a refund of service tax, but not both. The notification cannot be used to deny Cenvat credit claimed by the exporter.

Ultimately, the Tribunal found the denial of Cenvat credit unjust and set it aside, allowing the appeal with consequential relief to the appellant. The judgment highlights the importance of understanding the scope of input services for exporters and the implications of notifications related to service tax refunds.