2016 (8) TMI 1031 - AT - Service Tax

Recovery of CENVAT credit imposition of interest and penalty machine tool accessories, tips and Inserts CHA service for export of goods Held that - the ownership of the goods and the risk related thereto remains with the appellant up to the loading of the goods on the ship at the port of shipment. Further, Section 4 of the Central Excise Act, 1944, inter alia, states that the place of removal is any other place from where the excisable goods are to be sold after the clearance from the factory. Thus the place of removal in case of export of goods is port of shipment. CHA services are utilized by the appellant before the goods were loaded on to the ship and therefore the same falls within the definition of input services CENVAT credit allowed appeal allowed decided in favor of appellant.

Summary

Issues:
Availability of cenvat credit on CHA services used for export of goods.

Analysis:
The appeal challenged the denial of cenvat credit on CHA services used for exporting goods. The appellants, manufacturers of Machine Tool Accessories, tips, and Inserts, availed CHA services for export clearance from September 2005 to March 2010. A show-cause notice was issued, leading to an order by the Assistant Commissioner, confirmed by the Commissioner, imposing penalties and interest. The main contention revolved around the availability of cenvat credit on service tax paid for CHA services utilized for export. The appellant argued in favor citing Tribunal decisions like Adani Pharmachem Pvt. Ltd., Rolex Rings P. Ltd., Piramal Healthcare Ltd., and CCE, Raipur Vs. Bhilai Engineering Corporation Ltd. On the contrary, the AR relied on judgments like Excel Crop Care Limited Vs. CCE, Ahmedabad and Nirma Ltd. Vs. CCE, Bhavnagar.

The Tribunal considered the arguments and perused the records. The appellant referenced Circular No. 999/6/2015-CX by the Central Board of Excise and Customs, clarifying the position regarding the eligibility for cenvat credit. The circular highlighted that in cases of export clearance by manufacturer exporters, the place of removal is considered to be the port where the shipping bill is filed. The Tribunal noted that the issue was covered in favor of the appellant based on the circular and previous judgments cited. It was emphasized that the ownership and risk of goods remained with the appellant until loading onto the ship at the port of shipment. Referring to Section 4 of the Central Excise Act 1944, which defines the place of removal, the Tribunal concluded that in the case of export, the port of shipment is the place of removal. As CHA services were utilized before loading the goods onto the ship, they were deemed as input services. Consequently, the impugned order denying cenvat credit was set aside, allowing the appeal with any consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, establishing the eligibility of cenvat credit on CHA services used for exporting goods based on the interpretation of relevant laws, circulars, and precedents.