2018 (2) TMI 1236 - AT - Central Excise

CENVAT credit - input services beyond port of export - whether the Appellant are eligible to cenvat credit of the service tax paid on ocean freight and airfreight charges? - Held that - The Hon ble Gujarat High Court in the Dynamic Industries Ltd. case 2014 (8) TMI 713 - GUJARAT HIGH COURT has observed while interpreting the scope of input service prescribed under Rule 2(l) of the Cenvat Credit Rules 2004 that in the case of export goods the place of export that is sea port/air port would be considered as the place of removal . Service tax paid on ocean freight and airfreight thus not admissible to credit - appeal dismissed - decided against appellant.

Summary

Issues:
Whether the Appellants are eligible to cenvat credit of the service tax paid on ocean freight and airfreight charges.

Analysis:

Issue 1: Eligibility of cenvat credit on ocean freight and airfreight charges

The Appellate Tribunal CESTAT AHMEDABAD addressed the issue of whether the Appellants are entitled to avail cenvat credit of the service tax paid on ocean freight and airfreight charges. The Appellant argued that even though service tax on ocean freight and airfreight is not mandatory, they should be allowed to claim credit for the tax paid on these charges. The Appellant cited various judgments in support of their argument, including cases like DHL Lemuir Logistics P. Ltd., Bax Global India Limited, and Gudwin Logistics Vs. C.C.E., Vadodara. On the other hand, the Respondent, represented by the ld. A.R., contended that the service tax paid on ocean freight and airfreight is not admissible to credit based on the interpretation of the 'place of removal' as defined by the Hon'ble Gujarat High Court in the case of CCE Vs. Dynamic Industries Ltd. The Respondent argued that as per the definition of 'input service,' there is no separate meaning of 'place of removal,' and therefore, the service tax on ocean freight and airfreight cannot be credited. The Tribunal analyzed the issue and found merit in the argument presented by the ld. A.R. for the Revenue. Referring to the precedent set by the Hon'ble Gujarat High Court in the Dynamic Industries Ltd. case, the Tribunal concluded that for export goods, the 'place of export' (sea port/air port) should be considered as the 'place of removal.' Consequently, the Tribunal held that the service tax paid on ocean freight and airfreight is not admissible to credit. Therefore, the impugned order was upheld, and the Appeal was dismissed.

In conclusion, the Appellate Tribunal CESTAT AHMEDABAD ruled that the Appellants are not eligible to avail cenvat credit of the service tax paid on ocean freight and airfreight charges, as the 'place of removal' for export goods is considered to be the 'place of export' (sea port/air port) based on the interpretation of 'input service' under Rule 2(l) of the Cenvat Credit Rules, 2004. The Tribunal's decision was based on the precedent set by the Hon'ble Gujarat High Court and the specific definition of 'place of removal' in the context of export goods.