Input service credit for CHA services used in FOB exports was allowed as refundable under Cenvat Credit Rules

CHA services used before export of goods were treated as input services under the Cenvat Credit Rules, 2004, where the exports were on FOB basis and the relevant clarification linked the place of removal to transfer of ownership. On that reasoning, services connected with export handling and the movement of final products to the port area were held to fall within the scope of eligible input services. Refund of the service tax paid on such CHA services was therefore admissible, and credit was allowed in favour of the assessee.

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Issues: Whether service tax paid on CHA services used in connection with export of goods is admissible as input service and refundable under the Cenvat Credit Rules, 2004.

Analysis: The relevant clarification treated the place of removal as the point where ownership of finished goods is transferred. The export sales were on FOB basis and the CHA services were availed before export of the goods. On that basis, the services were considered to be used in relation to the export of final products and to fall within the scope of input service. The Tribunal relied on its earlier decisions recognizing credit for services connected with business activities and with export-related handling at the port area.

Conclusion: The refund of service tax paid on CHA services was admissible and the issue was decided in favour of the assessee.

Final Conclusion: Credit and refund were allowed for services used in the export process as eligible input services.

Ratio Decidendi: Services availed before export and connected with the export of final products can qualify as input services where, on the applicable clarification, the place of removal extends to the point of transfer of ownership.

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