Appellant wins service tax credit for export transport beyond place of removal

The Tribunal ruled in favor of the appellant, allowing the credit of service tax paid on outward transportation beyond the place of removal, particularly in export scenarios where the port is considered the place of removal. The decision distinguished the case from precedent and set aside the orders demanding repayment of Cenvat credit, penalty, and interest. The judgment was issued on 21/03/2018 by the Tribunal.

---

---

Issues:
Availment of Cenvat credit on service tax paid for outward transportation beyond the place of removal.

Analysis:
The case involved the appellant, a manufacturer of Cold Rolled galvanized color coated coils, sheets, etc., availing Cenvat credit facility for input/capital goods and input services used in manufacturing the final product. Show cause notices were issued alleging inadmissible availment of Cenvat credit on service tax paid for outward transportation of goods beyond the place of removal. The department contended that such transportation does not qualify as an input service under Cenvat Credit Rules. The adjudicated orders confirmed the demand for Cenvat credit, penalty, and interest. The appellant challenged these orders in the present appeal.

The appellant's representative argued that credit for outward transportation is permissible as the 'place of removal' extends beyond the factory gate to any location where excisable goods are intended for sale post-clearance. Citing precedents like Rathi Dye Chem Pvt. Ltd. and Welspun Corporation Ltd., it was contended that even in the case of exports, the port serves as the place of removal, allowing credit for service tax on transportation services up to the port. A significant portion of the disputed credit pertained to the transportation of export goods.

The department's representative reiterated the findings of the impugned orders and relied on the Tribunal's decision in the case of Maharashtra Scooters Ltd. However, upon careful consideration of arguments and records, the Tribunal distinguished the present case from Maharashtra Scooters Ltd. by emphasizing that in export scenarios, the port of export constitutes the place of removal. As the ownership of goods remains with the exporter until reaching the port, all expenses related to clearance up to the port are borne by the exporter. Consequently, the credit for service tax on transportation up to the port was deemed admissible. The Tribunal's decision was influenced by precedents like Rathi Dye Chem Pvt. Ltd. and Welspun Corporation Ltd., leading to the allowance of the appeal and setting aside of the impugned order.

In conclusion, the Tribunal ruled in favor of the appellant, holding that they were entitled to the credit of service tax paid on outward transportation, especially in the context of export transactions where the port serves as the place of removal. The judgment was pronounced on 21/03/2018 by the Tribunal.

---