2011 (8) TMI 953 - AT - Service Tax

CESTAT Bangalore: Appellant entitled to CENVAT credit on Clearing & Forwarding Agent's Service

The Appellate Tribunal CESTAT, Bangalore held that the appellant was entitled to CENVAT credit on 'Clearing and Forwarding Agent's Service' for export ... CENVAT credit on Clearing and Forwarding Agent's services - admissibility of input service credit for export-linked clearing - place of removal to port - export of goodsCENVAT credit on Clearing and Forwarding Agent's services - place of removal to port - export of goods - Entitlement to CENVAT credit of service tax paid on Clearing and Forwarding Agent's services availed for clearing final products from factory to port for export during the period of dispute. - HELD THAT: - The Tribunal examined whether services of the Clearing and Forwarding Agent (CFA) used to clear goods from the factory to the port for export attract admissible CENVAT credit. Reliance was placed on the Tribunal's decision in Rawmin Mining and Indus. Ltd. v. CCE, Bhavnagar, which held that CENVAT credit on CFA services is admissible where the place of removal is the port and the goods cleared and forwarded by the CFA are exported. The contrary single-member decisions relied upon by the department were distinguished on their facts: in Nirma Ltd. the CFA service was availed at the port (with no indication it was for clearing from factory) and Excel Crop Care did not address the present factual question. The Division Bench decision in Rawmin Mining was not shown to have been appealed. Applying Rawmin Mining to the present facts, the Tribunal concluded that the appellant satisfied the condition of removal to port and export of goods, and therefore entitlement to the CENVAT credit was established. As the appeal succeeds on merits, the Tribunal did not decide the time-bar issue. [Paras 2, 3]The appellant is entitled to CENVAT credit on the CFA services; the impugned order is set aside and the appeal is allowed with consequential relief.Final Conclusion: Appeal allowed on merits; CENVAT credit on Clearing and Forwarding Agent's services used to clear goods from factory to port for export for April 2006 to June 2008 is admissible and the impugned orders are set aside. Issues:Entitlement to CENVAT credit on 'Clearing and Forwarding Agent's Service' for export goods.Analysis:The appeal involved the question of whether the appellant was entitled to CENVAT credit for the service tax paid on 'Clearing and Forwarding Agent's Service' (CFA services) used for clearing their final product for export from the factory to the port during the period of dispute (April 2006 to June 2008). The department issued a show-cause notice to deny the credit, recover the amount with interest, and impose a penalty. The original authority confirmed the demand, ordered recovery of interest, and imposed a penalty equal to the sum of service tax and education cess on the party. The appeal was filed against this order.Upon examination of the records, it was noted that the appellant had availed CFA services for clearing their final product to the port for export. The Tribunal's judgment in Rawmin Mining and Indus. Ltd. Vs. CCE, Bhavnagar was cited, which held that CENVAT credit on CFA service was admissible when the place of removal was the port and the goods cleared and forwarded by the CFA were exported. Other decisions supporting the admissibility of CENVAT credit on similar services were also cited by the appellant's consultant. The learned SDR cited decisions of learned single members that contradicted this view. However, these decisions did not involve the same factual scenario as in the present case.The judgment concluded that the appellant was entitled to the credit in question based on the precedents and the specific circumstances of the case. As the appeal succeeded on merits, there was no need to examine the time bar issue. The impugned order was set aside, and the appeal was allowed with consequential relief, if any. The judgment was pronounced and dictated in an open court.This detailed analysis of the judgment highlights the key legal issues, arguments presented by both parties, relevant case laws cited, and the final decision reached by the Appellate Tribunal CESTAT, Bangalore regarding the entitlement to CENVAT credit on CFA services for export goods.