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2017 (10) TMI 280 - AT - Central ExciseCENVAT credit - place of removal - warehousing located in foreign country - Credit of tax paid under reverse charge for taking warehouse on rent abroad - Held that - the ownership of the goods remain with the appellant, and some are sold to abroad from their warehouse. The appellants bore the risk of loss or damage to the goods during the transit to the warehouse and obviously the charges of freight are borne by the appellants. In these circumstances, it cannot be said that warehouse abroad is not the place of removal. Reliance placed in the case of SUNDARAM CLAYTON LTD. Versus COMMISSIONER OF CENTRAL EXCISE, CHENNAI 2014 (6) TMI 30 - CESTAT CHENNAI , where it was held that Since the warehouses were hired in the USA beyond the jurisdiction of the Indian authorities, no Service Tax can be levied and collected on such services rendered and received abroad. Since tax was not, in the first instance, payable and the appellants merely have taken credit of what was not payable by them, the impugned demand cannot be justified. Demand of credit not sustainable - appeal allowed - decided in favor of appellant.
Issues:
Denial of Cenvat Credit on services received outside India. Analysis: The appellant, a company exporting engine valves, was denied Cenvat Credit on services received outside India. The appellant argued that the services availed were related to their business activities and thus eligible for credit. They contended that services performed outside India are not taxable under the Taxation of Services Rules, 2006. The appellant also relied on a Tribunal decision regarding the taxability of such services. Additionally, they claimed entitlement to a refund under Notification No.41/2007 for services used in export. The appellant highlighted that they had paid service tax and availed credit in good faith, as evidenced by an interview with their Senior Manager. The appellant emphasized that there was no intention to evade taxes, challenging the invocation of the extended limitation period. The Revenue contended that the services were availed after goods were removed from the factory and not used in or related to manufacturing. They argued that the issue of limitation based on the Senior Manager's interview was not raised before the Commissioner (Appeals) and thus could not be considered by the Tribunal. The Tribunal analyzed the situation and noted that the impugned order considered the factory gate as the place of removal, emphasizing that the Central Excise Act applied only within India. The Tribunal referenced a case involving the credit of courier services for exports and clarified the concept of place of removal. It was observed that in cases of export, the place of removal could be the port of export, depending on the terms of the sale. The Tribunal differentiated the present case from previous decisions based on ownership, risk, and freight charges. Referring to another Tribunal decision, it was highlighted that services rendered and received abroad were not subject to service tax. Consequently, the Tribunal found the demand for Cenvat Credit unsustainable, setting aside the impugned order and allowing the appeal. In conclusion, the Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the demand for Cenvat Credit on services received outside India. The decision was pronounced on 28/9/17.
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