2018 (12) TMI 1177 - AT - Central Excise

CENVAT Credit - input services - parcel services which were utilised for exports beyond the place of removal - Held that - Identical issue came up before the Bench of the Tribunal in the case of CCE vs. Imperial Auto Industries 2017 (4) TMI 1048 - CESTAT CHANDIGARH , where it was held that credit on courier and transportation charges to the respondent for transportation of the goods to the foreign buyer premises allowed - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availing irregular CENVAT credit on service tax paid on parcel services for exports.
2. Definition of "input service" under CENVAT Credit Rules, 2004.
3. Determination of place of removal for availing CENVAT credit.
4. Interpretation of CBEC circulars and judicial precedents regarding CENVAT credit eligibility.

Analysis:
1. The appeal challenged the demand for recovery of irregular CENVAT credit on service tax paid on parcel services used for exports beyond the place of removal. The appellants, manufacturers of Wire Wound Resistors and Potentiometers, contested the show cause notice on merits and limitation. The adjudicating authority and first appellate authority confirmed the demands, holding the place of removal as the factory premises and denying credit beyond that point.

2. The Tribunal considered a similar issue in the case of CCE vs. Imperial Auto Industries, where the respondent availed credit on courier/freight services for export goods. The Commissioner (Appeals) allowed the credit based on ownership and risk criteria till delivery to the buyer's premises. The Tribunal held that if the seller does not reserve the right of disposal of goods, the place of removal is the factory gate or warehouse where goods are handed over to the transporter. The ownership and risk factors determine credit eligibility.

3. The Revenue argued that the port of export is the place of removal for export goods, relying on circulars and judicial decisions. However, the Tribunal differentiated the case at hand, where goods were sold on Delivered Duty Paid basis, indicating ownership and risk with the seller until delivery. The Tribunal emphasized that CBEC circulars and precedents must align with the specific facts of each case to determine the place of removal for CENVAT credit eligibility.

4. The Tribunal highlighted the importance of ownership, risk, and contractual terms in determining the place of removal for availing CENVAT credit. By analyzing the facts and legal principles from the Imperial Auto Industries case, the Tribunal set aside the impugned order and allowed the appeal, emphasizing the relevance of specific circumstances in interpreting circulars and precedents for CENVAT credit eligibility.

This detailed analysis of the judgment from Appellate Tribunal CESTAT HYDERABAD provides a comprehensive overview of the issues involved and the Tribunal's reasoning in determining the eligibility of CENVAT credit for service tax paid on parcel services used for exports.