2018 (11) TMI 416 - AT - Central Excise

CENVAT Credit - input services - renting of supply of tangible goods service used beyond the place of removal - export of goods - reverse charge mechanism - Held that - the supply of tangible goods i.e. renting of ISO Tank Container is not used in relation to the manufacture of final product. It is also not covered in the inclusion clause to the definition. This service was used for clearance of final product beyond the place of removal, it is also not covered in the above clause 2. Therefore, the service of supply of tangible goods in the present case is not covered in any of the above 3 category of services, therefore, does not fall under the ambit of input service - credit not allowed - appeal dismissed - decided against appellant.

Summary

Issues involved:
Whether the appellant is entitled to Cenvat Credit for the supply of tangible goods service used for export of goods.

Analysis:
The issue in this case revolves around the eligibility of the appellant for Cenvat Credit in relation to the supply of tangible goods service used for exporting goods. The appellant rented an ISO Tank Container from a foreign entity for transporting Anhydrous Aluminium Chloride to a customer in Germany. The department contended that since the ISO Tank Container was used beyond the place of removal, the credit for renting the tangible goods service is not admissible. Both the adjudicating authority and the Commissioner (Appeals) denied the credit, leading to the present appeal.

The appellant argued that the credit should be allowed as the tangible goods service was used in connection with the overall manufacturing and supply of goods, not just for transportation. They emphasized that the restriction on credit up to the place of removal applies only to goods transport services, not to the supply of tangible goods. The appellant relied on various judgments to support their position, including Commissioner Vs. Dynamic Industries Ltd. and other relevant cases.

The Assistant Commissioner representing the Revenue reiterated the findings of the impugned order, supporting the denial of credit based on the service being used beyond the place of removal. Upon careful consideration of both sides' submissions and the records, it was observed that the service in question, involving the rental of the ISO Tank Container, was used for exporting goods to a foreign country beyond the port of export, constituting usage beyond the place of removal. The definition of input service was analyzed, and it was concluded that the service of supplying tangible goods did not fall under any of the three categories specified in the definition, thereby not qualifying as an input service.

The judgment cited by the appellant was distinguished based on the services being utilized out of the country, beyond the place of removal, unlike the services in the cited case. The findings of the Commissioner (Appeals) regarding the limitation issue were deemed correct, leading to the dismissal of the appeal. The decision was upheld, and the appeal was dismissed, as pronounced on 23.10.2018.