2012 (11) TMI 300 - AT - Central Excise

CENVAT credit - manufacture of paper and paper products - input services - denial of claim on non availment of Notification No.17/2009 dated 07/07/2009 - Held that - This exemption is subject to certain conditions that in a case where the exporter avails Cenvat credit, he cannot avail the benefit of exemption. There is no bar stipulated in the said notification that he cannot avail Cenvat credit and the availment of Cenvat credit will be entirely governed by the terms and conditions of the Cenvat credit rules. The fact that input or input services, on which duty/tax has been paid, have been received and used in the manufacture of excisable goods which have been exported is not in dispute. The said notification being a conditional exemption notification, it is for the manufacturer to decide whether to avail the said exemption or not. Thus there is no merit in the department contention the appellant should have availed the benefit of notification No.17/2009 - in favour of assessee.

Summary

Issues:
- Appeal against order-in-appeal disallowing Cenvat Credit on CHA Services, Shipping Agent Services, Clearing & Forwarding agent services, and courier agency services.
- Interpretation of Notification No.17/2009 exempting taxable services used for export.
- Eligibility of impugned services as input services for Cenvat Credit.

Analysis:
1. The appellant, a manufacturer of paper products, availed Cenvat Credit on various services for which the department proposed denial based on Notification No.17/2009 exempting services used for export. The department disallowed the credit, citing non-eligibility under the notification and lack of nexus with manufacturing activity. The appellant argued that the notification does not mandate compulsory availing of exemption and that they have the option to claim credit under Cenvat Credit Rules. They relied on a tribunal decision supporting the eligibility of the services for credit.

2. The Tribunal examined Notification No.17/2009, which exempts services used for export subject to conditions, including not claiming Cenvat credit on such services under the Cenvat Credit Rules. The Tribunal emphasized that the decision to avail exemption or credit lies with the manufacturer, and there is no restriction on claiming credit. The Tribunal noted that the disputed services were used in manufacturing goods for export, confirming their eligibility as input services. The department's argument that the appellant should have compulsorily availed the exemption was dismissed.

3. Considering the above, the Tribunal set aside the order-in-appeal, allowing the appeal and granting consequential relief. The decision highlighted the manufacturer's discretion in choosing between exemption and credit under the notification, emphasizing the eligibility of the services for Cenvat Credit. The stay application was also disposed of in favor of the appellant.