2014 (8) TMI 377 - AT - Service Tax

Denial of refund claim - Refund claim of CENVAT Credit under Notification No. 41/2007 - Assistant Commissioner allowed partial refund claim - Rejection of refund of Service Tax paid on transportation of the containers from the stock yard to appellants factory and detention charges - Held that - refund of Service Tax paid on the transportation of empty containers from yard to the factory for stuffing of the export goods is admissible inasmuch as the said activity is in relation to the transportation of the export goods. As such, by following the decision of the above judgement, we hold that the appellant is entitled to the refund of Service Tax paid on the said activity of movement of empty containers from the yard to factory premises. Refund of service tax paid by the appellant as Service Tax on the detention charges, the appellants contention is that such detention charges is a part of transportation charges which was used for transportation of export goods. The department has accepted the payment of Service Tax on such detention charges and as such, they cannot take the different view for the refund of the same - Such detention charges are paid on containers waiting for their turn to be cleared. As such, till the appellant is given the green signal for clearance of the containers, the appellant is not able to export the goods. As such, broadly speaking, such detention charges are in relation to transportation of the export goods - Till the transportation is factually completed the charges paid for detention of the same prior to the completion have to be held as in relation to transportation of the export goods - Decided in favour of assessee.

Summary

Issues:
Refund claim for Cenvat credit under Notification No. 41/2007 - Transportation of empty containers - Detention charges - Admissibility of refund.

Analysis:
The appellants, engaged in the manufacture and export of soya milk, filed a refund claim for Cenvat credit under Notification No. 41/2007 for the period January 2009 to March 2009. The Assistant Commissioner allowed most of the refund claim but rejected certain amounts related to Service Tax paid on the movement of empty containers and detention charges. The Commissioner (Appeals) upheld the rejection, stating that the Service Tax on transportation of containers and detention charges was not admissible under the notification.

Regarding the transportation of empty containers, it was noted that previous judgments, including CCE, Madurai v. Tata Coffee Ltd., Balkrishna Industries Ltd. v. CCE Aurangabad, and Garware Polyester Ltd. v. CCE Aurangabad, had established that the refund of Service Tax on such transportation for stuffing export goods is admissible. Following these precedents, the Tribunal held that the appellants were entitled to a refund for the Service Tax paid on moving empty containers from the yard to the factory.

Concerning the detention charges, the appellants argued that such charges were part of the transportation expenses for export goods and should be refunded. The Tribunal agreed, emphasizing that the charges were related to the transportation of export goods. Referring to the broad interpretation of "in relation to transportation of export goods," the Tribunal concluded that the detention charges incurred until the completion of transportation should be considered eligible for refund. Therefore, the Tribunal allowed the refund claim for the detention charges as well.

In light of the above analysis, the impugned order was set aside, and the appeal was allowed with consequential relief granted to the appellant. The decision was pronounced in open court on 29-11-2012.