Export neutrality supports CENVAT credit for CHA services used in export consignments, relieving domestic tax burden on exports.

CENVAT credit was held admissible for service tax paid on CHA and allied services used in connection with export consignments, as export goods should not carry domestic tax burden. The Tribunal relied on the statutory scheme and the principle of export neutrality, and treated the later exemption notification as consistent with that policy, even though the dispute arose for an earlier period. Credit was therefore allowed for services used in exporting goods, with the exporter entitled to utilising or recovering the credit as permitted under the scheme.

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Issues: Whether service tax paid on CHA services used in relation to export of goods is admissible as credit under the CENVAT scheme.

Analysis: The Tribunal followed its earlier decision on the same issue and noted that export goods should not be burdened with domestic taxes. It held that the statutory scheme and the policy of export neutrality support allowing credit of service tax paid on CHA and allied services used for export consignments, so that the exporter is compensated through utilization of credit or refund where necessary. The later exemption notification was also noted as reinforcing the policy, though the present dispute related to an earlier period.

Conclusion: Credit of service tax paid on CHA services in respect of export goods is admissible, and the assessee's appeal succeeds.

Ratio Decidendi: Where services are used for export consignments, CENVAT credit should be allowed so that domestic taxes do not burden exports, consistent with the statutory scheme and export-neutrality policy.

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