2016 (5) TMI 903 - AT - Service Tax

Recovery of Service tax credit - Business Support Services - availed credit in respect of services received upto the Port of clearance and beyond that as well - Appellant argued that Ministry has clarified the issue vide its Circular No. 999/6/2015-CX dated 28.2.2015 - Held that - so far as the services received up to the Port clearance, which is the place of removal for the purpose of manufacturer-exporter as per CBE&C Circular, the credit of Service Tax cannot be denied. However, in respect of services availed at the destination, which is not only beyond the place of removal but also outside India, the same is not admissible. Therefore, the demand for recovery of credit in respect of Terminal Handling Charges and Documentation charges is dropped. Rest of the demand in respect of Destination Terminal Handling Charges, Destination Documentation Charges & Destination Haulage and Shutout charges is confirmed. The penalty is also revised accordingly to the amount equal to the demand confirmed. Invokation of extended period of limitation - Demand - Held that - in respect of services availed beyond the territory of India and obviously outside the place of removal, there can be no doubt regarding its inadmissibility. Availment of such credit is obviously without authority of law and mala fide. In such circumstances, extended period for the purpose of demand is correctly invoked. - Decided partly in favour of appellant

Summary

Issues:
Appeal against confirmation of demand for recovery of Service Tax credit on Business Support Services including Terminal Handling Charges, Documentation Charges, Destination Terminal Handling Charges, Destination Documentation Charges, Destination Haulage and Shutout charges, and Ground Rent availed at the Port.

Analysis:
The appellant, M/s Khanna Industrial Pipes Pvt. Ltd., contested the rejection of Service Tax credit on certain Business Support Services beyond the place of removal. The appellant relied on a Ministry circular clarifying that for manufacturer-exporters, the place of removal for export purposes is the Port/ICD/CFS. Therefore, credit up to the Port clearance is valid. However, services availed at the destination beyond the Port and outside India are not admissible for credit.

The Revenue cited Tribunal decisions to support its argument. The Tribunal analyzed the circular and found that credit for services up to the Port clearance, the place of removal for manufacturer-exporters, cannot be denied. However, services availed at the destination beyond the place of removal and outside India are inadmissible for credit. The Tribunal emphasized that in the self-assessment era, the onus of correctly claiming credit lies with the appellant. Availing credit for services outside India and beyond the place of removal is deemed unauthorized and mala fide, warranting the correct invocation of the extended period for demand.

Consequently, the Tribunal ruled to drop the demand for Terminal Handling Charges and Documentation Charges but confirmed the demand for Destination Terminal Handling Charges, Destination Documentation Charges, and Destination Haulage and Shutout charges. The penalty was revised accordingly to match the confirmed demand, leading to a partial allowance of the appeal.

This detailed analysis of the judgment showcases the interpretation of the circular, application of legal principles, and the Tribunal's decision on the admissibility of Service Tax credit for specific Business Support Services in the context of manufacturer-exporters.