2014 (6) TMI 517 - AT - Service Tax

Cenvat credit - place of removal in case of export - Shipping Services, Documentation charges and Terminating Handling charges - Refund of the service tax paid on the services in terms of Notification No. 41/2007-ST dated 06.10.2007 and subsequent Notification No. 17/2009-ST dated 07.07.2009 - Held that - Tribunal in a number of decisions has held that inasmuch as for export purposes, the place of removal get extended to the load port, the Shipping services availed at the port have to be held as cenvatable input services within the meaning of clause (l) of Rule 2 of the Cenvat Credit Rules, 2004. Reference, in this regard, can be made to the Tribunal decision in the case of CCE V/s. Adani Pharmachem Pvt. Ltd. 2008 (7) TMI 102 - CESTAT AHMEDABAD . It stands held that as Port is place of removal for export cargo for the reasons that sale takes place only when the bill of lading is issued by the shipping company, which is issued only after the goods are loaded into the ships, the port area becomes the place of removal. Regarding contention of the department that appellant should have claimed refund of service tax instead of availing the Cenvat credit - Held that - two option having been extended to the assessee, it is his choice to avail any one such option. It is not the revenue s case that the notification in question, which permits refund, debars availment of credit, in case refund is not claimed. As such it is absolutely the assessee option to claim the Cenvat credit or to claim the refund. For the above proposition reliance is placed upon the Hon ble Supreme Court in the case of Commissioner of Central Excise & Customs (Appeals), Ahmedabad Vs. Narayan Polyplast- 2004 (11) TMI 112 - SUPREME COURT OF INDIA laying down that an assessee can choose to avail the benefit under any of the schemes, when benefits are available under two different schemes. Commissioner (Appeals) in the assessee own case, for a different period has held in favour of the assessee. It stands observed by the appellant authority that Cenvat credit was available to them and they cannot be pressurized to claim the refund in terms of notification No. 41/2007. He has also observed that the entire issue is revenue neutral inasmuch as if the appellant had not availed the credit, they were entitled to refund - Decided in favour of assessee.

Summary

Issues:
1. Cenvat credit availed on Shipping Services, Documentation charges, and Terminating Handling charges for export.
2. Denial of credit by lower authorities.
3. Admissibility of services as cenvatable input services.
4. Option to claim refund of service tax instead of availing Cenvat credit.

Analysis:

1. The appellant, engaged in manufacturing various products under Chapter 72-73 of the Central Excise Tariff Act, availed Cenvat Credit of Service Tax paid on Shipping Services, Documentation charges, and Terminating Handling charges for export purposes.

2. The dispute arose as lower authorities denied the credit, citing two reasons. Firstly, they argued that the services were not admissible as cenvatable input services. Secondly, they suggested the appellant should have claimed a refund of the service tax paid on these services based on specific notifications.

3. Regarding the first objection, it was noted that the Tribunal had previously held that Shipping services at the port for export purposes could be considered cenvatable input services. The Tribunal's decision in the case of CCE V/s. Adani Pharmachem Pvt. Ltd. supported this stance by defining the port as the place of removal for export cargo due to the issuance of the bill of lading only after goods were loaded onto ships.

4. Concerning the second objection, it was emphasized that the appellant had the option to choose between availing Cenvat credit or claiming a refund of the service tax. The appellant's choice was deemed valid, as per the Hon'ble Supreme Court's ruling in the case of Commissioner of Central Excise & Customs (Appeals), Ahmedabad Vs. Narayan Polyplast. The appellant's right to choose between schemes offering benefits was affirmed.

5. Notably, the Commissioner (Appeals) had previously ruled in favor of the appellant in a different period, acknowledging that the Cenvat credit was rightfully available to them. The appellant could not be compelled to claim a refund under a specific notification. The revenue's failure to challenge the previous order indicated a revenue-neutral scenario where the appellant could have opted for a refund if the credit was not availed.

6. In conclusion, the judgment set aside the lower authorities' decision and allowed the appeal, granting consequential relief to the appellant based on the findings discussed above.