2012 (7) TMI 412 - AT - Service Tax

Tribunal allows credit for Service Tax on GTA services to port area exporters

The Tribunal affirmed the entitlement of the respondents to avail the credit of Service Tax paid on outward GTA services up to the port area. Relying on ... Credit of service tax on outward GTA services - place of removal for exported goods - services availed up to the port area treated as input service - export on FOB/CIF - place of removal at the load portCredit of service tax on outward GTA services - place of removal for exported goods - services availed up to the port area treated as input service - Respondents are entitled to claim credit of Service Tax paid on outward GTA services up to the place of removal (port area) in respect of goods cleared for export. - HELD THAT: - The Commissioner (Appeals) held that for goods cleared for export the sale is effected by transfer of documents of title after goods cross the customs frontiers, making the place of removal the port area; accordingly services availed up to the port area are related to business activities and qualify as input services, entitling the exporter to credit of duty paid on such services. The Tribunal and relevant High Court decisions were applied to support the view that where export is on FOB/CIF basis, the place of removal is the load port and the GTA service from factory gate to port of shipment constitutes an input service. The Appellate Tribunal, after hearing parties, found these authorities dispositive and saw no infirmity in the Commissioner (Appeals) view, and consequently rejected the Revenue's appeal. [Paras 1, 2]Revenue's appeals rejected; claim for credit of service tax on outward GTA services up to the port area allowed.Final Conclusion: Appeals dismissed; the order of the Commissioner (Appeals) allowing credit of service tax on outward GTA services up to the port area in relation to exported goods is affirmed. Issues involved:Whether the respondents are entitled to avail the benefit of credit of Service Tax paid on outward GTA services availed by them up to the place of removal, i.e., the port area.Analysis:Issue 1: Entitlement to credit of Service Tax on GTA services up to the port areaThe Commissioner (Appeals) granted relief to the respondents based on the definition of place of removal in the context of goods cleared for export. It was noted that the transfer of documents of title to the goods occurs after the goods have crossed the customs frontiers, specifically in the port area. The Commissioner relied on precedents, including the case of CCE, Rajkot v. Rolex Rings (P.) Ltd., where it was held that services availed by the exporter till the port area are to be considered as input services related to business activities. The credit of duty paid on such services was deemed admissible. The Tribunal also referenced other cases supporting this view, emphasizing that in scenarios of sale on FOB/CIF basis, the place of removal is the load port, and the ownership and risk of goods remain with the assessee until the port of shipment. Consequently, the Tribunal affirmed that GTA service from the factory gate to the port of shipment qualifies as an input service, making the credit of service tax paid on it admissible.Issue 2: Judicial decisions supporting the Commissioner's viewThe Tribunal noted that the issue had been previously addressed by the Hon'ble High Court in the cases of CCE&ST v. ABB Ltd. and CCE&C v. Parth Poly Wooven (P.) Ltd. The decisions in these cases aligned with the Commissioner's stance, finding no flaw in the view adopted by the Commissioner (Appeals). Consequently, the Tribunal rejected the Revenue's appeals based on the consistency of the interpretation with previous judicial pronouncements.In conclusion, the Tribunal upheld the entitlement of the respondents to avail the benefit of credit of Service Tax paid on outward GTA services up to the port area as per the established legal interpretations and precedents. The appeals, along with related applications and petitions, were disposed of accordingly.