2024 (8) TMI 593 - AT - Central Excise

CENVAT Credit - port services - place of reoval - SCN issued on the ground that the services were rendered beyond the place of removal and therefore they do not fall within the definition of Cenvat Credit in terms of Rule 2(l) of the Cenvat Credit Rules 2004 - time limitation. Merits of the case - HELD THAT - This very issue was before the Hon. Gujarat High Court in the case of CENTRAL EXCISE VERSUS INDUCTOTHERM INDIA P LTD 2014 (3) TMI 921 - GUJARAT HIGH COURT where the Hon ble High Court has held the cargo handling service is availed essentially for the purpose of exporting the goods and in such case the services of cargo handling used by the manufacturer for transportation of the finished goods from the place of removal shall have to be essentially the port from where goods are actually taken out of the country. Time limitation - Show Cause Notice for the period 2008 to March 2012 was issued on 3rd May 2013 - HELD THAT - The issue as to whether the exports done through port can be taken as a place of removal was a matter of interpretation and the same was resolved by the Gujarat High Court in the case of Inductotherm India Pvt. Ltd. Therefore at the most the issue can be said to be that of interpretation and not a case of suppression. Therefore there are no justification for the Revenue to have invoked the extended period provisions to issue the first Show Cause Notice demanding reversal of Cenvat Credit of Rs. 1, 14, 24, 881/-. Therefore, the Revenue s Appeal to this extent dismissed even on account of time bar. The Revenue s Appeal stands dismissed.

Summary

Issues:
1. Eligibility of Cenvat Credit for port services rendered beyond the place of removal.
2. Time limitation for issuance of Show Cause Notice for Cenvat Credit taken on ISD invoices.

Detailed Analysis:

Issue 1:
The judgment revolves around the eligibility of Cenvat Credit for port services rendered beyond the place of removal. The Respondents, manufacturers of Aluminium, export their products through the port of Vishakhapatnam. The Service Tax Department raised concerns regarding the Cenvat Credit claimed by the Respondents for port services. The Department argued that since the services were rendered beyond the place of removal, the Respondents were not entitled to the credit. The Adjudicating Authority initially dropped the proceedings, but the Revenue challenged the decision before the Tribunal. The key contention was whether the port of export could be considered a place of removal for the purpose of availing Cenvat Credit.

The Learned AR for the Department contended that services provided at the port post-removal of goods from the factory did not qualify for Cenvat Credit. In contrast, the Counsel for the Respondent cited precedents, including a decision by the Gujarat High Court, to support the claim that services rendered at the port for export purposes should be eligible for Cenvat Credit. The Circular No. 999/6/2015-CX was also referenced to argue in favor of considering the port as a place of removal. The Tribunal analyzed these arguments and precedents to determine the eligibility of the Respondents for the Cenvat Credit on port services.

The Tribunal referred to various decisions, including the Gujarat High Court case and previous Tribunal rulings, which supported the interpretation that services utilized for export purposes at the port should be considered as input services eligible for Cenvat Credit. The Tribunal noted that the issue was well-settled and that the Respondents were entitled to the credit based on the ISD invoices issued by their Vizag office. Ultimately, the Tribunal dismissed the Revenue's appeal on the grounds that the issue of Cenvat Credit for port services was adequately addressed by existing legal precedents and circulars.

Issue 2:
Regarding the time limitation for the Show Cause Notice issued for the period of April 2008 to March 2012, the Respondent argued that the notice was time-barred. They contended that the Cenvat Credit claimed based on ISD invoices was transparently reflected in their ER Returns, indicating no suppression of facts. The Respondent highlighted that the issue of whether exports through the port could be considered a place of removal was a matter of interpretation, as clarified by the Gujarat High Court. Therefore, the Respondent argued that the extended period provisions for issuing the Show Cause Notice were unjustified. The Tribunal agreed with the Respondent's argument and dismissed the Revenue's appeal on the basis of time limitation as well.

In conclusion, the Tribunal ruled in favor of the Respondent on both issues, affirming their entitlement to Cenvat Credit for port services rendered beyond the place of removal and rejecting the Revenue's appeal based on time limitation grounds.