2017 (9) TMI 1252 - AT - Central Excise

Export Services Eligible for CENVAT Credit: Tribunal Decides in Favor of Appellant

M/s. Electrosteel Casting Ltd. Versus Commr. of Central Excise, Kolkata-III

The Tribunal allowed the appeals, granting the appellant entitlement to CENVAT credit for services used in exporting goods, including CHA, Port Services, ... CENVAT credit - input services - Customs House Agent (CHA) service - Port Services - Steamer Agent Services - denial on the ground that the services were used outside the factory premises not being in relation to manufacture of their finished goods and therefore, did not qualify as an input service? - Held that: - There is no dispute of the fact that the goods have been exported. In such cases the place of removal is the port where the exports are loaded on to the vessel - Hon’ble High Court of Gujarat in the case of Inductotherm India Pvt. Ltd [2014 (3) TMI 921 - GUJARAT HIGH COURT] has granted the credit of CENVAT Credit for Cargo Handling Services used for clearance of final product from the port for export. Even though, the Hon’ble High Court has held that in the Cargo Handling service, the same ratio will be applicable to calculate free service which are in dispute before us since, all of them have been rendered in the port for export of goods. Appeal allowed - decided in favor of appellant. Issues:Appeal against denial of CENVAT credit on services used for export of goods.Analysis:Issue 1: Denial of CENVAT credit on services used for exporting finished goods- The appellant, engaged in manufacturing and export of Ductile Iron pipes, availed CENVAT credit of service tax on services like CHA, Port Services, and Steamer Agent Services for export.- Department initiated proceedings to deny CENVAT credit on the grounds that these services were used outside the factory premises and did not qualify as input services.- Adjudicating authority denied CENVAT credit, leading to the filing of appeals against the impugned orders.Issue 2: Arguments and Case Laws- The appellant's counsel argued that services used up to the place of removal, including the port, should qualify as input services for export of goods.- Cited various case laws to support the argument, emphasizing that services utilized for export activities should be considered input services.- The Department's representative justified the denial of credit, stating that the services were used for clearance from the port but not up to the place of removal.Issue 3: Interpretation of CENVAT Credit Rules- The appeals challenged the denial of CENVAT credit for CHA, Port Services, and Steamer Agent service during the period 2008-2009 until January 2011.- The definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004 was crucial in determining the eligibility for credit.- Despite goods being exported, the Adjudicating authority denied credit, leading to a detailed analysis of the definition of input services.Issue 4: Precedent and High Court Decision- The Tribunal referred to a High Court decision where credit for Cargo Handling Services used for export clearance was allowed.- The High Court's interpretation emphasized that services used up to the port of shipment for exports should be considered in relation to the manufacture and clearance of final products.- Based on the High Court's decision and the nature of services provided at the port for export, the Tribunal concluded that the appellant was entitled to CENVAT credit.Conclusion:- The Tribunal set aside the impugned orders and allowed the appeals, granting the appellant the entitlement to CENVAT credit for the disputed services used in the export of goods.- The decision was pronounced on 21/09/2017, providing clarity on the interpretation of input services for export-related activities.