2012 (12) TMI 177 - AT - Central Excise

GTA service on outward transportation - admissibility of Cenvat Credit Held that - Cenvat credit on GTA service from the factory to the port of export would be available - appellants are rightly entitled for the Cenvat credit of the service tax paid on GTA service utilised for transportation of the export goods from the factory to the port of shipment

Summary

Issues:
- Determination of the place of removal in respect of exports for availing Cenvat credit on service tax paid on GTA services.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Mumbai, involved the consideration of appeals against an order passed by the Commissioner of Central Excise (Appeals), Mumbai. The appellant, a manufacturer of goods for export, availed Cenvat credit on service tax paid on GTA services for transporting goods from the factory to the port of shipment in India. The dispute arose as the department contended that these services, rendered outside the factory premises after goods clearance, did not qualify as input services for availing credit. The key question before the Tribunal was to determine the place of removal in the context of exports - whether it was the factory premises or the port of shipment.

The appellant argued that for exports, the port of shipment should be considered the place of removal, citing previous Tribunal decisions allowing credit on GTA services for outward transportation. On the other hand, the revenue, represented by the Ld. AR, supported the lower authorities' findings denying credit on these services. After considering the submissions from both sides, the Tribunal decided to proceed with the appeals and examined the central issue at hand.

In its analysis, the Tribunal referred to the provisions of the Central Excise Act, 1944, particularly Section 4, which defines the place of removal as a location where goods are sold for delivery at the time and place of removal in a transaction. The Tribunal highlighted that in export transactions with FOB/CIF terms, where goods must be delivered at the port of shipment, the value is determined based on the sale price for delivery at the place of removal. Therefore, in cases where goods are to be delivered on board the vessel at the port of shipment, the place of removal extends up to that point. Consequently, the cost of transportation from the factory to the port of shipment becomes part of the goods' value, making services availed until that point eligible as input services for Cenvat credit.

Drawing on precedents like the case of Kuntal Granites Ltd. vs. CCE, Bangalore, and Modern Petrofils vs. CCE, Vadodara, the Tribunal established that in export scenarios, the place of removal extends to the port of shipment. Following the precedent's rationale, the Tribunal concluded that the appellant was rightfully entitled to Cenvat credit on the service tax paid for GTA services used in transporting export goods from the factory to the port of shipment. As a result, the appeal was allowed, granting consequential relief to the appellants as applicable.