Export service tax credit is allowed up to the port of removal, but denied for post-clearance destination services.

For a manufacturer-exporter, Cenvat credit is admissible on input services used up to the place of removal, which in export cases is the port, ICD or CFS; credit cannot be denied for that stage. Services availed after clearance at the destination and outside India fall beyond the place of removal and are not eligible for credit. Where such inadmissible credit is taken in a self-assessment regime, the assessee remains responsible for correct availment, and wrongful credit beyond the permissible scope can justify invocation of the extended period of limitation.

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Issues: (i) Whether Service Tax credit was admissible on services received up to the port of clearance in the case of a manufacturer-exporter; (ii) whether credit was admissible on destination-based services availed beyond the port and outside India; (iii) whether the extended period of limitation was invocable in respect of the inadmissible credit.

Issue (i): Whether Service Tax credit was admissible on services received up to the port of clearance in the case of a manufacturer-exporter.

Analysis: The Circular relied upon by the Court clarified that, in the case of a manufacturer-exporter, the place of removal for export is the Port, ICD or CFS. Services used up to that stage are within the area relevant for admissibility of credit.

Conclusion: Credit on services received up to the port of clearance was admissible and could not be denied.

Issue (ii): Whether credit was admissible on destination-based services availed beyond the port and outside India.

Analysis: Services availed after clearance at the destination were beyond the place of removal and also outside India. Such services fell outside the permissible limit for credit in the facts of the case.

Conclusion: Credit on destination-based services was inadmissible.

Issue (iii): Whether the extended period of limitation was invocable in respect of the inadmissible credit.

Analysis: In a self-assessment regime, the assessee bears responsibility for taking correct credit. Credit taken on services beyond the territory of India and beyond the place of removal was held to be without authority of law, which justified invocation of the extended period.

Conclusion: The extended period of limitation was rightly invoked.

Final Conclusion: The demand was restricted to credit taken on destination-based services, while credit relating to services up to the port of clearance was set aside, resulting in partial allowance of the appeal.

Ratio Decidendi: In the case of a manufacturer-exporter, credit is admissible for services used up to the place of removal identified as the port, but not for services availed beyond that point and outside India; wrongful availment of such credit can justify the extended period of limitation.

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