2012 (8) TMI 856 - AT - Central Excise

CENVAT Credit - custom house agent and clearing and forwarding services - Held that - reliance of the Commissioner (Appeals) on the decision of the Tribunal in the case of CCE Chennai Vs. Sports India Laboratories Ltd. 2009 (10) TMI 175 - CESTAT CHENNAI is appropriate. This Tribunal has taken the view that when the exports take place on FOB basis the place of removal cannot be considered as factory gate since the possession of the goods does not get passed on to the buyer. Further the CBEC circular No.97 dated 23.08.07 also supports the view as observed by the ld. Commissioner. Further it is also not correct to say that the CHA service and C&F agency service have no nexus with the manufacture. There cannot be any manufacture if the goods are not sold and once the place of removal is held to be port the services received up to that point have to be held as related manufacture only - Decided against Revenue.

Summary

Issues:
1. Availment of credit of service tax on custom house agent and clearing and forwarding services.
2. Determination of place of removal for service tax eligibility.
3. Nexus of services with the manufacture in case of exports on FOB basis.

Analysis:
1. The case involved the availing of credit of service tax on custom house agent and clearing and forwarding services by the respondents amounting to Rs.2,08,437/- for a specific period. The impugned order deemed the respondent eligible for the credit, leading to the Revenue appealing the decision on the grounds that the services were availed beyond the place of removal and lacked a nexus with the manufacture.

2. The argument presented by the Appellant was based on the contention that the services were indeed availed beyond the place of removal, with the factory gate being considered as the place of removal. On the other hand, the Respondent's representative highlighted that in cases of exports on FOB basis, the place of removal should be deemed as the port. Citing various Tribunal decisions supporting this view, it was emphasized that in FOB exports, possession of goods does not transfer at the factory gate, aligning with the CBEC circular No.97 dated 23.08.07. The Tribunal found the Commissioner's reliance on the decision in the case of CCE Chennai Vs. Sports India Laboratories Ltd. to be appropriate, affirming that services received until the port should be considered related to manufacture.

3. The Tribunal's analysis concluded that in the context of exports on FOB basis, the place of removal cannot be restricted to the factory gate, as possession of goods does not shift at that point. Additionally, the CHA service and C&F agency service were deemed to have a direct nexus with manufacture, as without the sale of goods, manufacturing would not occur. Therefore, the Tribunal rejected the Revenue's appeal, emphasizing that services received until the port in FOB exports should be considered related to the manufacturing process.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision regarding the availing of service tax credit and the determination of the place of removal in the context of manufacturing and exports on FOB basis.