2016 (4) TMI 975 - AT - Central Excise

Demand for recovery of credit - Dispatches made for export - non-production of any evidence regarding incurring the cost of transportation from the factory to the port - Held that - the show-cause notice has been issued solely on the ground that the factory gate is the place of removal. The CBEC vide Circular No. 999/6/2015-CX dated 28/02/2015 pointed out by the appellants clarified that in respect of manufacturers exporters, the place of removal is ICD/ports. In the instant case, there is no doubt that the appellants are manufacturers/exporters. In these circumstances, the only ground raised in the show-cause notice failed. The issue regarding cost of being incurred by the appellants or not is totally irrelevant. - Decided in favour of appellant

Summary

Issues: Denial of credit of service tax paid on transport services for export and domestic dispatches.

Analysis:
The case involved M/s. Bang Data Forms Pvt Ltd. and Bang Polypacks who were issued show-cause notices to deny credit of service tax paid on transport services for export and domestic dispatches. The Commissioner (Appeals) dropped the demand for credit taken on domestic dispatches but confirmed the demand for credit on export dispatches. The appellants appealed to the Tribunal challenging this decision.

The appellants relied on a Circular issued by CBEC clarifying that in the case of clearance of goods for export by manufacturer exporters, the place of removal is considered to be the port where the shipping bill is filed. This clarification indicated that the eligibility for CENVAT credit should be determined accordingly based on this understanding.

The learned Assistant Commissioner argued in favor of the impugned order, stating that the appellants failed to provide evidence of incurring the cost of transportation from the factory to the port. However, the Tribunal noted that the show-cause notice was primarily based on the premise that the factory gate is the place of removal. The CBEC clarification highlighted by the appellants established that for manufacturer exporters, the place of removal is the ICD/ports, not the factory gate.

Consequently, the Tribunal found that the ground on which the show-cause notice was issued failed, as the appellants were indeed manufacturer exporters, and the place of removal should be considered as the ICD/ports. The issue of whether the appellants incurred the transportation cost was deemed irrelevant in light of this clarification. Therefore, the appeals were allowed in favor of the appellants.

In conclusion, the Tribunal's decision was based on the clarification provided by CBEC regarding the place of removal for manufacturer exporters, which influenced the eligibility for CENVAT credit. The Tribunal's analysis focused on this key aspect, leading to the allowance of the appeals by overturning the demand for credit on export dispatches.