2016 (11) TMI 1085 - AT - Central Excise

Denial of CENVAT credit - input services - clearing and forwarding agent service - Held that - the service falls within the definition of input services. The same has also attract nexus with the activity of manufacture and thus the same is admissible. In so far as use of clearing and forwarding services for the purpose of export of goods is concerned the CBEC vide Circular No.999-6-16-CX dated 28/02/2015 has clarified that for the purpose of export the place of removal would be the part of clearance - In view of the aforesaid circular the credit of service tax paid on services of clearing and forwarding agency cannot be denied. Insurance service on finished goods in transit - Held that - reliance placed on the decision of the case of UOI Vs. Raipur Rotocast Ltd. 2015 (3) TMI 743 - CHHATTISGARH HIGH COURT where it was held that service tax paid on the transit insurance, group personal accidental policy and group health guard policy of company staff would be admissible as credit as the said sservices would fall within the definition of input service - the credit of insurance on finished goods in transit would be admissible. Maintenance and repair service for vehicle - vehicle does not belongs to the Managing Director of the company but it belongs to the company itself - Held that - reliance placed on the decision of the case of Bharat Fritz Werner Ltd., Vs. CCE, Bangalore 2011 (2) TMI 1276 - CESTAT, BANGALORE where the credit of service tax paid on the repair/maintenance of the vehicles used by the executives involved in production, marketing, administration and fianci at factory and branch offices was allowed. - the credit of service tax paid on the vehicles belonging to the company and used by the Managing Director cannot be denied. Appeal allowed.

Summary

Issues:
1. Denial of Cenvat credit on clearing and forwarding agent service.
2. Denial of Cenvat credit on insurance service for finished goods in transit.
3. Denial of Cenvat credit on maintenance and repair service for vehicles.

Analysis:
1. The appellant argued that clearing and forwarding services were essential for both importing inputs and exporting finished goods. They cited CBEC clarification that for export, the place of removal is the port of export, not the factory gate, making them eligible for credit. Various judgments were cited to support this argument.
2. Regarding insurance service for goods in transit, the appellant relied on judgments that held such services as creditable. The High Court decision in UOI Vs. Raipur Rotocast Ltd. supported the admissibility of transit insurance, group personal accidental policy, and group health guard policy for company staff as input services.
3. The appellant contended that maintenance services for vehicles owned by the company were eligible for credit based on previous decisions allowing service tax credit on vehicle repair/maintenance used by executives involved in various company functions. The Tribunal's decision in Bharat Fritz Werner Ltd. Vs. CCE, Bangalore supported this argument.

4. The Assistant Commissioner (AR) relied on Unitop Chemicals Pvt. Ltd., Vs. CCE to argue that vehicle repair services lacked nexus with manufacturing activities, thus not qualifying as input services. They emphasized the necessity of a nexus between services used and goods manufacture, citing the case of CCE Vs. Manikgarh Cement.

5. The Tribunal found that clearing and forwarding services qualified as input services with a nexus to manufacturing activities. A CBEC circular clarified that for export, the place of removal is the port of clearance, making the credit for such services admissible. The judgment in UOI Vs. Raipur Rotocast Ltd. supported the admissibility of insurance on finished goods in transit as an input service.

6. Regarding vehicle repair services, the Tribunal allowed the credit for services tax paid on vehicles owned by the company and used by the Managing Director, following the precedent set in Bharat Fritz Werner Ltd. Vs. CCE, Bangalore. The appeal was allowed based on these findings.