2015 (1) TMI 1142 - AT - Service Tax

CENVAT Credit - Suppression of facts - whether Cenvat credit is admissible for the port services and CHA services utilised by the appellant in respect of their exported goods - Held that - adjudicating authority has observed that the Board s Circular, dated 23-8-2007 is a clarification only with respect to the eligibility of Service Tax paid on GTA services and is not applicable in respect of the Custom House Agent and port service. The adjudicating authority also referred to a letter No. NSAL/2009-10/87, dated 30-9-2009 wherein the appellant has stated that the place of removal is the factory gate. The adjudicating authority further held that in their monthly returns they have simply mentioned the gross amount of Service Tax credit taken and never disclosed the input services on which it is taken and therefore they are guilty of suppression and wilful mis-statement. Adjudicating authority has not discussed the contentions of the appellant made in their submissions and have not recorded any definitive finding as to what is the place of delivery of the exported goods in the present case and yet has concluded that the place of removal for the exported goods is factory gate and not the port of shipment. The appellant s letter, dated 30-9-2009 stating that the place of removal is factory gate is with reference to the department s queries which did not refer to exported goods. It can be nobody s case that an assessee necessarily has to have only one place of removal for all their clearances. It does come out from the adjudication order that the adjudicating authority may not be averse of allowing the credit of service tax paid on port services and GTA services if the place of removal is determined to be the port of loading. The adjudicating authority has also not brought out as to how the appellant is guilty of wilful mis-statement or the suppression of facts. The adjudicating authority has merely stated that in their ER-1 returns they did not declare as to on which input services the credit was taken. He has not discussed whether the appellant was required under any provision of law to declare in ER-1 returns or otherwise the names/details of services in respect of which the appellant had taken the Cenvat credit. It is settled law that mere not telling is not suppression when there is no legal requirement to tell. - Matter remanded back - Decided in favour of assessee.

Summary

Issues Involved:
1. Interpretation of Cenvat credit eligibility for port services and CHA services in relation to exported goods.
2. Determination of the place of removal for exported goods.
3. Allegations of suppression and wilful mis-statement in filing ER-1 returns.

Interpretation of Cenvat Credit Eligibility:
The appellant, a company dealing with exported goods, contested the admissibility of Cenvat credit for port services and CHA services utilized in the export process. The appellant argued that as the ownership of goods remained with them until the port of loading, the port should be considered the place of removal. They emphasized that their ER-1 returns consistently reflected the disputed Cenvat credit without any suppression or misstatement. The appellant cited various judicial pronouncements supporting their claim that Service Tax paid on services up to the port of loading qualifies for Cenvat credit. The adjudicating authority, however, failed to adequately address these arguments in the Order-in-Original, leading to a lack of clarity on the eligibility of the credit.

Determination of Place of Removal:
The central issue revolved around determining the place of removal for the exported goods. The appellant contended that the port of loading should be considered the place of removal due to the ownership transfer at that point. Despite the appellant's arguments and judicial precedents supporting their stance, the adjudicating authority concluded that the factory gate, not the port, constituted the place of removal. This decision lacked a definitive finding on the delivery location of the exported goods, necessitating a re-examination of the place of removal to ascertain the eligibility of Cenvat credit for the services in question. The case highlighted the importance of accurately determining the place of removal to determine credit admissibility.

Allegations of Suppression and Wilful Mis-statement:
The adjudicating authority alleged that the appellant suppressed facts and made wilful misstatements by not disclosing the specific input services for which they claimed Cenvat credit in their ER-1 returns. However, the authority failed to establish any legal obligation mandating the appellant to disclose such details in the returns. The lack of a legal requirement to declare specific services indicated that the appellant's omission did not amount to suppression. Both parties acknowledged the need for a remand to re-evaluate the place of removal and address the allegations of wilful misstatement, emphasizing the importance of a thorough examination before making a conclusive decision.

In conclusion, the appellate tribunal set aside the impugned order and remanded the case to the adjudicating authority for a detailed re-evaluation. The directions included reconsidering the place of removal concerning the exported goods, assessing the eligibility of CHA services and port services for Cenvat credit, and clarifying any allegations of wilful misstatement or suppression. The order highlighted the significance of a comprehensive analysis to ensure a fair and accurate determination of Cenvat credit eligibility in the context of exported goods.