2014 (10) TMI 682 - AT - Service Tax

Denial of CENVAT Credit - Penalty u/s 11AC - Same registered office of exporter and recipient of service - Whether the manufacturing unit at Mahad of the appellant which is a manufacturer and exporter of the goods can avail CENVAT credit of Service Tax paid on CHA services in respect of the goods exported, when the exporter has a registered office at Pune - Held that - goods were manufactured at Mahad unit and transported from there to the port of export and the CHA service was availed for the goods manufactured at the Mahad. Therefore, we do not find any infirmity or any provisions in law which prohibits the Mahad unit from availing credit of the Service Tax paid on the CHA service for export of the goods. Accordingly, we hold that the impugned order is not sustainable in law - Decided in favour of assessee.

Summary

Issues: Denial of CENVAT credit on CHA services for export goods due to registered office location.

Analysis:
1. Background: The appeal challenged the Order-in-Original denying CENVAT credit of Rs. 70,45,293 on CHA services for export products during 2007-2008 to 2011-12, imposing interest, and penalty under Section 11AC of the Central Excise Act.

2. Appellant's Argument: The appellant exported goods, availed CHA services, paid Service Tax correctly, and took credit as per CENVAT credit Rule, 2004. The goods were manufactured at Mahad unit, transported for export from there, and sometimes CHA was mentioned as consignee. Appellant argued the denial of credit based on the registered office location is legally incorrect, citing precedents where CHA services were deemed eligible input services.

3. Revenue's Argument: The Revenue contended that since the exporter's registered office was in Pune, only the registered office could avail CHA services, thus denying CENVAT credit to the Mahad unit.

4. Tribunal's Decision: The Tribunal noted the issue's narrow scope and proceeded to consider the appeal without pre-deposit. It deliberated on whether the Mahad unit, being the manufacturer and exporter, could claim CENVAT credit on CHA services despite the registered office being in Pune. The Tribunal found no legal basis to prohibit the Mahad unit from availing the credit as the goods were manufactured and exported from there. Consequently, it held the impugned order unsustainable, set it aside, and allowed the appeal, disposing of the stay application as well.

This judgment clarifies that the location of the registered office does not preclude a manufacturing unit from claiming CENVAT credit on eligible input services utilized for export goods, as long as the goods are produced and exported from the said unit.