2008 (2) TMI 295 - AT - Service Tax

Service tax on customs house agent and surveyor services up to port allowed as input credit since seller retains ownership

COMMISSIONER OF CENTRAL EXCISE, RAJKOT Versus ROLEX RINGS (P.) LTD.

CESTAT, Ahmedabad (AT) dismissed the revenue's appeals and held that service tax paid on Customs House Agent and surveyor services used up to the port are ... Entitlement to avail credit of service tax paid on the services of Customs House Agent (CHA) and Surveyors utilized - HELD THAT:- The ownership of the goods remain with the seller till the port area, it can be safely held that all the services availed by the exporter till the port area are required to be considered as input service inasmuch as the same are clearly related to the business activities. Activities relating to business are covered by the definition of input service and admittedly CHA and Surveyors' services are relating to the export business. As such, I agree with the reasonings adopted by Commissioner (Appeals) that the credit of duty paid on such services is admissible to the respondents. Revenue's reliance on the Tribunal's judgment in the case of Excel Crop Care Ltd v. CCE [2007 (4) TMI 15 - CESTAT, AHMEDABAD], laying down that CHA services availed in respect of export does not have any nexus with the manufacture and clearance of the product from the factory and as such are not available as input services for the availment of the credit is not being relied upon by me inasmuch as neither definition of input service was considered nor the Board's circular referred in the preceding paragraph was taken into consideration. Thus, I reject the appeals filed by the revenue. Issues:Whether the respondents are entitled to avail credit of service tax paid on the services of Customs House Agent (CHA) and Surveyors as input services.Analysis:1. The issue involved in the present appeals is whether the respondents can claim credit of service tax paid on CHA and Surveyors' services as input services under the Cenvat Credit Rules, 2004. The definition of input services under rule 2(1) includes services used in or in relation to the manufacture of final products and clearance of final products. The appellate authority noted that activities relating to business, such as services of CHA and Surveyors utilized by the appellant at the time of export, are covered under the definition of input services.2. The revenue contended that CHA and Surveyors' services are not utilized in relation to the manufacture and clearance of the final product. They argued that since the factory premises are the place of removal, these services should be considered post-clearance services. However, the appellate authority disagreed, stating that the services are utilized at the time of export when the respondents still own the goods until they reach the port area, which is considered the place of removal for exported goods.3. The appellate authority found support for their interpretation in a Board's Circular, which clarified that when the ownership of goods remains with the seller until the delivery at the destination point, the place of removal extends to that point. Since the ownership of the goods in this case remains with the seller until the port area, all services availed by the exporter till that point are considered input services related to business activities. Therefore, the credit of duty paid on CHA and Surveyors' services is deemed admissible to the respondents.4. The revenue relied on a previous Tribunal's judgment, which held that CHA services for exports do not have a nexus with manufacturing and clearance of products and thus are not eligible as input services for credit. However, the appellate authority rejected this reliance, as the judgment did not consider the definition of input services or the relevant Board's circular that supported the interpretation in the present case.5. Ultimately, the appeals filed by the revenue were rejected, affirming the entitlement of the respondents to claim credit for the service tax paid on CHA and Surveyors' services as input services under the Cenvat Credit Rules, 2004.