2010 (1) TMI 424 - AT - Service Tax

Cenvat Credit place of removal the appellants submit that the CHA services were incurred up to the port area and that the ownership of the goods continued with the appellants till the goods were delivered to its buyers abroad. revenue contented that CHA service availed by the assessee was not admissible as the same are availed at the place of removal. Moreover, the activities relating to business contained in the definition of input service covers only activities such as accounting, auditing, credit rating and quality control etc. It does not include services involving physical handling of goods. Held that - the clarification issued by the Board, place of removal is clarified to be place at which the assessee transferred ownership of the goods. In the instant case, the appellants claim is that the ownership of all the consignments involved were transferred to their buyers at the place of destination. The authorized representative submitted that given an opportunity, the appellant will be in a position to satisfy the authorities that the CHA services involved were available up to the place of removal. matter remanded back

Summary

Issues:
1. Denial of Cenvat Credit for service tax paid by the appellants under 'Customs House Agents' service.
2. Interpretation of 'place of removal' in the context of Cenvat Credit Rules.
3. Admissibility of credit for services used up to the place of removal for exported goods.

Analysis:

1. The impugned order affirmed the denial of Cenvat Credit of Rs. 31,625 for service tax paid by the appellants under 'Customs House Agents' service related to the export of goods. The Commissioner (Appeals) based the decision on a previous Tribunal case. The appellants argued that the services were incurred up to the port area and that they retained ownership of the goods until delivery to buyers abroad. They cited a CBEC Circular to support their position.

2. The authorized representative of the appellant referenced a Tribunal decision in another case where it was held that credit for services used up to the place of removal was admissible. In the case of goods exported, where the sale took place at the port area, the appellant contended they were entitled to credit for service tax paid on CHA services at the port area.

3. The learned SDR contended that the credit for service tax paid on input services up to the place of removal was not admissible. They argued that CHA services were not covered under the definition of input services as they were availed at the place of removal. The definition of 'input service' in the Cenvat Credit Rules was discussed, emphasizing activities related to business and physical handling of goods.

4. The Tribunal considered the rival submissions and reviewed the definition of 'input service' in the Cenvat Credit Rules. It was noted that the clarification by the Board defined 'place of removal' as the point at which the assessee transferred ownership of the goods. The Tribunal found merit in the appellant's claim that ownership of the consignments was transferred at the destination point. The appeal was allowed by way of remand for the appellants to establish that the CHA services were available up to the place of removal, as exports were on FOR destination basis. The appeal was remanded to the original authority for further proceedings.