2019 (2) TMI 5 - AT - Central Excise

CENVAT Credit - Business Support Services by the appellant towards warehousing and logistics support services taken in Spain for timely delivery of goods - reverse charge mechanism - place of removal - Held that - In the instant case, appellant contents that it had taken up the risk of shipment of goods to its warehouse located outside India against any lass or damage and the sale is made from the said warehouse to M/s Ford in Spain for which place of removal is to be considered as warehouse located in Spain and since appellant company registered in India, the Central Excise Act is applicable to it irrespective to the fact that its goods are sold from within the territory of India or outside it. Further obligation to discharge the duty is on the appellant company as a legal entity and not on the goods manufactured by it as the goods cannot be treated as legal entity for which the observation of the Commissioner (Appeals) is erroneous furthermore, clarifactory circular cannot have overwriting effect against statutory provision made by the legislature which by itself defines a warehouse as a place of removal. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Inadmissibility of CENVAT credit against "Business Support Services" for warehousing and logistics support services in Spain.

Detailed Analysis:

Issue 1: Admissibility of CENVAT credit for services availed in foreign land
The appellant availed CENVAT credit for warehousing and allied services in Spain under the "Reverse Charge Mechanism." The department deemed these credits inadmissible as services were considered post-manufacturing inputs beyond the place of removal. The appellant argued that the services were essential for manufacturing the final product and should be eligible for credit. The Commissioner (Appeals) relied on a CBEC Circular to support the denial of credit, stating that services beyond the place of removal are not considered input services under the CENVAT Credit Rules, 2004.

Issue 2: Interpretation of place of removal
The department contended that the place of removal should be the loading port, not the warehouse abroad, citing judicial precedents. The appellant argued that the warehouse in Spain should be considered the place of removal as it bore the risk of goods until delivery to the customer. The appellant highlighted that the Central Excise Act applies to Indian entities irrespective of where goods are sold, emphasizing that a clarificatory circular cannot override statutory provisions defining a warehouse as a place of removal.

Issue 3: Precedential relevance and factual dissimilarity
Both parties presented contradictory decisions, with the department emphasizing a Tribunal decision from Bangalore. However, the Tribunal found that the cited cases were materially distinct from the appellant's situation. The Tribunal also referenced its own previous decision regarding warehousing in the USA, where it set aside a duty demand for inadmissible CENVAT credit, establishing a consistent judicial precedent.

Conclusion:
After considering the arguments and case records, the Tribunal allowed the appeals and set aside the order of the Commissioner of GST & Central Excise (Appeals), Nashik. The judgment emphasized the importance of interpreting the place of removal correctly and ensuring that essential services for manufacturing are eligible for CENVAT credit, maintaining consistency in judicial precedents.