2018 (2) TMI 5 - AT - Central Excise

CENVAT credit - input services - transit insurance - marine insurance - C&F agency services - subscription to associations - dinner expenses - Held that - Regarding transit insurance and C&F Agency service, with reference to export goods, it is noted that these activities are prior to the shipment of cargo in the port in India. It is by now settled legal position that place of removal in case of export is port of shipment and as such expenses incurred on various input services prior to that shipment are eligible for credit unless excluded specifically - transit insurance and C&F Agency Service connected to export of goods which were availed prior to shipment of goods are rightly eligible for the appellant. Marine insurance - Held that - Since the present case is relating to the period prior to the amendment in Rule 2(l) CENVAT Credit Rules, 2004, which brought in certain restrictions regarding the credit available on business activities, the said credit cannot be denied. Credit on all services allowed - penalty set aside - appeal allowed.

Summary

Issues:
Dispute over eligibility of credit on input services - transit insurance, marine insurance, C&F agency services, subscription to associations, and dinner expenses under CENVAT Credit Rules, 2004.

Analysis:
The three appeals involved a common dispute regarding the eligibility of the appellant to avail credit on input services under various categories. The appellant, engaged in the manufacture of sugar and molasses, was registered to pay central excise duty and service tax. The original authority examined 42 activities claimed as input services and held that the appellant was not eligible for credit on certain services like transit insurance, marine insurance, C&F agency services, subscription to associations, and dinner expenses. A penalty of ?30,000 was imposed under Rule 15(3) of the CENVAT Credit Rules, 2004.

The appellant contested the denial of credit on three input service activities: transit insurance, marine insurance, and C&F Agency service related to export goods. The appellant argued that these services were availed before the shipment of goods and should be considered eligible for credit. They relied on legal precedents and decisions to support their claim, emphasizing the necessity and business relevance of these expenses.

After hearing both sides and examining the appeal records, the Tribunal found in favor of the appellant. They noted that expenses on transit insurance and C&F Agency Service connected to export of goods, incurred prior to the shipment of goods, were indeed eligible for credit. The Tribunal referenced established legal principles and case laws to support their decision in this regard.

Regarding marine insurance, the Tribunal agreed with the appellant's argument that such expenses should be considered under overall business activities due to their necessity. They highlighted that the case pertained to a period before certain restrictions on credit availability were introduced in the CENVAT Credit Rules, 2004, and therefore, the credit on marine insurance could not be denied.

Consequently, the Tribunal allowed the appeals, stating that the credit on the three input service activities in question was rightfully available to the appellant. They also set aside the penalties imposed on the appellant, deeming them unsustainable based on their analysis and discussions during the proceedings.