2018 (2) TMI 775 - AT - Central Excise

CENVAT credit - storage and warehousing services abroad, rendered to the appellant for storing the finished goods abroad - whether the appellant herein is eligible to avail CENVAT credit of service tax paid on warehousing services performed outside the country (post export services)? - Held that - the goods are already exported from India and on landing abroad they are stored in the warehouses situated in such countries where the goods are despatched. It is an unacceptable proposition that the place of removal in the case in hand shifts to the warehouse situated aboard. The 1st Appellate Authority has correctly held that the warehousing services are availed not only after the finished goods are fully manufactured and cleared from the place of removal but after it reaches its country of destination. Hence by no stretch of imagination, the impugned service would fit into the definition of input service . Credit cannot be allowed - appeal dismissed - decided against appellant.

Summary

Issues involved:
1. Eligibility to avail CENVAT credit of service tax paid on warehousing services performed outside the country (post export services).

Detailed analysis:
The judgment pertains to two appeals challenging an order-in-appeal regarding the eligibility of the appellant to avail CENVAT credit on service tax paid for warehousing services performed abroad post-export. The appellant's records were audited, objections were raised, and a show-cause notice was issued for reversing the credit. The adjudicating authority rejected the appellant's contentions, leading to an appeal to the 1st Appellate Authority, which also upheld the demands and penalties imposed. The main contention was whether the warehousing services abroad could be considered as input services directly or indirectly related to the manufacturing activity of the appellant.

The appellant argued that maintaining stocks in warehouses abroad was essential for timely delivery of final products to customers, thus integral to their manufacturing activity. Referring to pre-2011 and post-2011 definitions of input services, the appellant cited relevant court decisions to support their claim that the warehousing activity abroad should not lead to denial of CENVAT credit. The learned counsel emphasized that the place of removal for exported goods should be considered as the warehouse abroad, contrary to the contention in the case of Honest Bio-vet Pvt Ltd VS CCE Ahmedabad.

The Tribunal considered the submissions and found that the core issue revolved around the eligibility to claim CENVAT credit on service tax paid for storage and warehousing services abroad post-export. It was revealed that the service tax liability was discharged by a local warehousing service provider, not the appellant. The Tribunal disagreed with the appellant's argument that the warehouse abroad should be considered the place of removal, citing the precedent set in Honest Bio-vet Pvt Ltd case. The Tribunal concurred with the 1st Appellate Authority's conclusion that the warehousing services did not qualify as "input services" as they were availed after the goods were fully manufactured, cleared from the place of removal, and reached their destination country. Therefore, the Tribunal upheld the impugned order, ruling that the appellant was not eligible for CENVAT credit on the disputed service.

In conclusion, the judgment clarifies the ineligibility of the appellant to claim CENVAT credit on service tax paid for warehousing services abroad post-export, emphasizing the importance of the place of removal and the timing of service utilization in relation to the manufacturing process.