Cenvat credit on export-related terminal handling and ground rent is admissible where services are used up to the place of export.

Cenvat credit was treated as available on service tax paid on terminal handling charges and ground rent used in connection with export clearances where the contractual arrangement showed that the exporter retained ownership until delivery at the buyer's premises. The circulars relied on by the tribunal clarified that, for export clearances, the place of removal can be the port, ICD or CFS, and services used up to that point qualify for credit. On those facts, the services were regarded as used up to the place of export, so the credit was admissible and the disallowance unsustainable.

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Issues: Whether Cenvat credit of service tax paid on terminal handling charges and ground rent at the port was admissible where the goods were exported and the contractual arrangement showed that ownership continued till delivery at the buyer's premises.

Analysis: The circulars issued by the Central Board of Excise & Customs clarified that export clearances continue to be governed by the earlier circular, and that where the manufacturer is the exporter, delivery to the shipping line at the place of export makes the port, ICD or CFS the place of removal, as the case may be. On the facts, the appellant remained the owner of the exported goods until the buyer took possession at the agreed destination. In that setting, services used up to the place of export were treated as eligible for Cenvat credit.

Conclusion: Cenvat credit on terminal handling charges and ground rent was admissible and the disallowance was unsustainable.

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