CHA services in the export chain were eligible for Modvat credit, supported by Tribunal precedent and the Board circular.

Service tax paid on CHA services used at the port area in the export chain was treated as eligible input service credit for Modvat purposes. Earlier Tribunal decisions had already recognised such services as part of the export process, and the Board circular on the place of removal supported that view. The departmental authority was bound to follow the circular, so the contrary reasoning in the impugned order could not stand. Modvat credit on the CHA service tax was therefore allowable.

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Issues: Whether service tax paid on CHA services availed at the port area for export of goods was eligible for Modvat credit.

Analysis: The issue was treated as covered by earlier Tribunal decisions holding CHA services used in the export chain to be eligible input services for Modvat credit. The Board circular clarifying the place of removal also supported the claim, and the departmental authority was bound to follow that circular. The contrary view taken in the impugned order was therefore not sustainable.

Conclusion: Modvat credit on service tax paid for CHA services at the port area was allowable.

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