2013 (1) TMI 579 - AT - Service Tax

Tribunal grants CENVAT credit for export services, overturns penalties.

INDIAN DYESTUFF & CHEMICALS MFG CO. Versus COMMISSIONER OF CENTRAL EXCISE. THANE-I

The Tribunal ruled in favor of the appellant, allowing the appeal and providing consequential relief. The appellant was deemed entitled to CENVAT credit ... Denial of CENVAT Credit - Whether services of CHA availed for export of goods on FOB basis is an eligible ‘input service' as defined in Rule 2(l) of the CENVAT credit Rules, 2004 as these are performed/received outside the place of removal - Service tax paid on CHA services - Travel agency service - Export of goods - Penalty under rule 15 - Held that:- Yes, Following the decision in case of LEELA SCOTTISH LACE PVT LTD (2010 (1) TMI 1188 - CESTAT BANGALORE) that the CHA services have been availed in respect of export of goods and as per the terms of contract of export, it is an FOB basis - In favour of assessee Travel agency services - CENVAT Credit availed for booking of tickets for travel of the employees for business purpose - Held that:- Following the decision in case of Ultratech Cement Ltd.,(2010 (10) TMI 13 - BOMBAY HIGH COURT) that any service which has a nexus with the business of manufacture comes within the scope of ‘input service' as defined in Rule 2(1) of the CENVAT credit Rules, 2004. The employees gone to abroad for purpose of export promotion, the same is integrally connected with the manufacturing activity of the appellant since export promotion is directly linked to the business of manufacture. In favour of assessee Issues:1. Denial of CENVAT credit on CHA services and travel agency service for export of goods.2. Interpretation of 'input service' under Rule 2(l) of the CENVAT credit Rules, 2004.3. Applicability of penalties under Rule 15 of the said Rule read with Section 11AC of the Central Excise Act, 1944.Issue 1: Denial of CENVAT credit on CHA services and travel agency service for export of goodsThe appellant availed CENVAT credit on CHA services and travel agency service for export of goods, but the department denied the credit stating that the services were performed outside the place of removal and thus did not qualify as 'input service.' The department demanded interest on the wrong availment of CENVAT credit and imposed a penalty under Rule 15 of the CENVAT credit Rules, 2004.Issue 2: Interpretation of 'input service' under Rule 2(l) of the CENVAT credit Rules, 2004The Tribunal considered previous decisions where it was held that in the case of export, the port of export is deemed as the place of removal, not the factory gate. Services received up to the place of export were deemed eligible input services. The travel agency service for overseas travel of employees for export promotion was considered an activity connected to the business of manufacture, following the precedent set by the Hon'ble High Court of Bombay in UltraTech Cement case. The Tribunal concluded that the appellant was entitled to CENVAT credit for the service tax paid on the mentioned services.Issue 3: Applicability of penalties under Rule 15 of the said Rule read with Section 11AC of the Central Excise Act, 1944The Tribunal, after considering the submissions and precedents, disposed of the appeal in favor of the appellant, allowing the appeal and providing consequential relief. The stay application was also disposed of in favor of the appellant, indicating that the appellant was rightly entitled to the CENVAT credit for the service tax paid on the CHA services and travel agency service during the impugned period.This detailed analysis of the judgment highlights the issues of denial of CENVAT credit, interpretation of 'input service,' and the applicability of penalties under the relevant rules and Acts. The Tribunal's decision in favor of the appellant was based on the interpretation of the law and previous judgments, ensuring the appellant's entitlement to the CENVAT credit for the services in question.