2009 (7) TMI 142 - AT - Service Tax

This appeal is filed by the Revenue against the decision of the Commissioner (Appeals) who has held that credit of Service tax paid for outward freight for the export of goods and air ticket service charges are admissible. - whether the credit of Service tax is admissible in respect of Service tax paid on goods transportation charges for outward freight Held, yes - Revenue has not shown that air ticket service charges were paid in respect of air travels by the company officers for personal purposes only and not for the company business. As the air travel was performed for the purpose of company business, the credit is admissible.

Summary

Issues:
1. Admissibility of credit of Service tax paid for outward freight for the export of goods.
2. Admissibility of credit of Service tax paid on air ticket service charges.

Analysis:
1. The appeal was filed by the Revenue against the decision of the Commissioner (Appeals) regarding the admissibility of credit of Service tax paid for outward freight for the export of goods. The Member (T) noted that the issue had been finally decided by the Larger Bench of the Tribunal. The Member observed that in the context of exports, the place of removal is considered as the port from where the goods are loaded in case of exports made on Free on Board (FOB) basis. The Commissioner (Appeals) extensively discussed the issue and held that the credit of Service tax paid for outward freight is admissible. The Member found no merit in the Revenue's appeal and rejected it.

2. The second issue pertained to the admissibility of credit of Service tax paid on air ticket service charges. The Commissioner relied on the decision of another Commissioner (Appeals) and interpreted the term "in relation to manufacture" broadly to extend the benefit of Service tax paid on input services. The Commissioner opined that this inclusive definition covers all services directly or indirectly used in the manufacturing process. Regarding air ticket service charges, it was noted that the charges were incurred for company business purposes and not for personal use by company officers. As the air travel was undertaken for company business, the credit of Service tax paid on air ticket service charges was deemed admissible. Consequently, the Member found no grounds to support the Revenue's appeal and dismissed it.

The judgment was pronounced on 3-7-2009 by Shri B.S.V. Murthy, Member (T) at the Appellate Tribunal CESTAT, AHMEDABAD.