2017 (5) TMI 94 - AT - Central Excise

CENVAT credit - input services - courier service - export of final products from the factory - As per the department s stand, the courier service does not fall in the definition of input service and therefore, the appellant has irregularly availed the CENVAT credit - Held that - the impugned orders denying the CENVAT credit of service tax paid on courier service is not sustainable in law in view of the decision in the case Radical Instruments vs. CCE 2015 (11) TMI 779 - CESTAT NEW DELHI , where it was held that as availment of Service Tax credit incurred on courier charges for remittance of Service Tax on the assessee s output services of Maintenance or Repair and Erection, Commissioning or Installation Services, for the reasons alike since the courier and Goods Transport Agency Services are input services for rendition of output services, cenvat credit is equally admissible. In the present case, the property in the goods passes when the goods are actually delivered to the customer in the foreign country. Till the goods are delivered to the buyer, the ownership / property in the goods remain with the seller because the goods are sold on CIF basis. - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
- Appeals against three impugned orders passed by the Commissioner (A) involving common issues.

Analysis:
1. Common Issue in Appeals: The appeals were filed against three orders by the Commissioner (A), where one appeal was allowed by setting aside the Order-in-Original, and two appeals were rejected. The common issue in all three appeals was the denial of CENVAT credit related to courier services used for export of goods.

2. Facts of the Case: The appellant, engaged in manufacturing printed circuit boards, availed CENVAT credit under CENVAT Credit Rules (CCR) 2004 for export of goods via courier service. The Department alleged irregular credit availing, leading to a show-cause notice and subsequent confirmation of demand, interest, and penalty by the adjudicating authority.

3. Appellant's Arguments: The appellant contended that courier service for export of goods qualifies as an input service under Rule 2(l) of CCR, 2004, as it relates to the manufacture and clearance of final products. The appellant cited various judicial precedents to support their claim, emphasizing that the courier service is essential for export and should be eligible for CENVAT credit.

4. Department's Defense: The Department defended the impugned order, arguing against the eligibility of courier services as input services for CENVAT credit. They relied on specific judicial decisions to support their stance.

5. Judgment: After considering submissions and precedents cited by both parties, the Tribunal found in favor of the appellant. Citing the decision in Radical Instruments, the Tribunal noted that freight charges incurred for sale of excisable goods at the customer's doorstep are eligible for credit. Additionally, referencing the Circular of CBEC and relevant case law, the Tribunal concluded that the appellant's use of courier services for export aligns with the definition of input service under CCR, 2004. The Tribunal ruled in favor of the appellant in all three appeals, setting aside the impugned orders and granting consequential relief.

In conclusion, the Tribunal allowed the appeals by overturning the denial of CENVAT credit for courier services used in the export of goods. The judgment highlighted the importance of aligning service usage with the definition of input services under the relevant rules and cited legal precedents to support the decision.