2017 (9) TMI 870 - AT - Central Excise

CENVAT credit - freight expenses - place of removal - whether in the case of export of the goods manufactured by them, the place of removal is the factory gate or the port of export and further whether they are entitled to Cenvat credit on freight expenses incurred from the factory gate to the port of export? - Held that - there is no proper basis for disallowing the Cenvat credit of freight incurred by the appellant-assessee from the factory gate to the place or port of export, which is the place of removal - reliance placed in the case of Commissioner Versus Dynamic Industries Ltd. 2014 (8) TMI 713 - GUJARAT HIGH COURT , where it was held that in case of export, services used upto port of export is upto place of removal hence credit is admissible on such services - credit allowed - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
1. Determination of the place of removal in the case of export of goods.
2. Entitlement to Cenvat credit on freight expenses from factory gate to port of export.

Issue 1 - Determination of the place of removal:
The appeal and cross-objection revolve around the issue of whether the place of removal for goods exported by the appellant-assessee is the factory gate or the port of export. The dispute also involves the admissibility of Cenvat credit on freight expenses incurred for transportation of goods in relation to export. The show cause notice alleged that outward freight beyond the factory gate cannot be considered as used in or in relation to the manufacture of final products. The Assistant Commissioner disallowed the credit, stating that outward transport service is not an input service. The appellant contended that the place of removal extends up to the port of export, making all services required for export admissible input services. The Ld. Commissioner (Appeals) upheld the disallowance, emphasizing the lack of proper evidence by the appellant.

Issue 2 - Entitlement to Cenvat credit on freight expenses:
The Tribunal analyzed previous rulings and observed that in cases of export, the place of removal extends up to the port of export, allowing credit on services used up to that point. The Tribunal referred to judgments supporting the admissibility of Cenvat credit for services related to export. The Ld. AR for Revenue argued that the disallowance was justified due to the appellant's failure to provide adequate evidence. However, the Tribunal found the Assistant Commissioner's findings erroneous and contrary. It noted that there was no proper basis for disallowing the Cenvat credit on freight expenses from the factory gate to the port of export, which is considered the place of removal. Relying on consistent Tribunal decisions and the Gujarat High Court ruling, the Tribunal allowed the appeal of the appellant-assessee and dismissed the cross-objection by the Revenue.

In conclusion, the Tribunal held that the appellant was entitled to Cenvat credit on freight expenses incurred for transporting goods from the factory gate to the port of export, considering the port of export as the place of removal in cases of export. The decision was based on established legal principles and previous judgments supporting the admissibility of such credit for services related to export activities.