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2017 (4) TMI 1048 - AT - Service TaxCENVAT credit - courier/freight services used for delivery/transportation of the goods from port of export to foreign buyers premises - denial on the ground that the goods have been sold by the appellant on Delivered Duty Paid (DDP) basis - whether in the case of export of the goods, place of removal is port of export or not? - Held that - CBEC circular No. 999/6/2015-Cx dt.28.2.2015 clarifies that that if the seller does not reserve its right for delivery of the goods then destination in the case is the port of export is place of removal of the goods. The same is not in the case in hand. In fact, the respondent has sold the goods on Delivered Duty Paid basis which means that the seller bear all the cost and risks involved in bringing the goods to the place of destination and has an obligation to clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all Customs formalities. The ownership right of the goods remains with the respondent. Therefore, CBEC circular is not relevant to the facts - credit on courier and transportation charges to the respondent for transportation of the goods to the foreign buyer premises allowed - appeal dismissed - decided against Revenue.
Issues:
1. Availment of credit on courier/freight services used for delivery/transportation of goods for export. 2. Interpretation of Delivered Duty Paid (DDP) basis and ownership of goods. 3. Applicability of CBEC circulars and judicial precedents on credit eligibility. 4. Determining the place of removal for availing Cenvat Credit on input services in export cases. Analysis: 1. The case involved a dispute regarding the availment of credit on courier/freight services used for delivering goods for export. The respondent, engaged in manufacturing motor vehicle parts, availed credit which was later denied by the Revenue through a show cause notice. The Commissioner (Appeals) allowed the credit based on the interpretation of Delivered Duty Paid (DDP) basis, where the seller bears all costs and risks until delivery to the buyer, as per judicial precedents and CBEC circulars. 2. The Revenue contended that credit is available only up to the port of export, relying on CBEC circulars and a Tribunal decision. However, the respondent argued that the ownership of goods remained with the seller until delivery to the buyer, citing relevant judicial decisions and circulars. The respondent's counsel highlighted the importance of ownership and payment of service tax on courier/transportation charges to support credit eligibility. 3. The Tribunal analyzed the circulars and judicial precedents cited by both parties. It noted that the CBEC circular referred to the place of removal as the port of export unless the seller retains the right of disposal. In this case, since the seller bore all costs and risks until delivery, the ownership of goods remained with the seller, making the CBEC circular irrelevant. The Tribunal also emphasized the conditions laid down by the Hon'ble Punjab & Haryana High Court regarding ownership, risk, and freight charges in determining credit eligibility. 4. Ultimately, the Tribunal upheld the Commissioner (Appeals)' decision to allow credit on courier and transportation charges to the respondent. It found that the respondent had met the conditions specified by the High Court, and as there was no dispute regarding payment of service tax, the impugned order was upheld, and the Revenue's appeal was dismissed.
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