Port services and Cenvat credit: export-related CHA, C&F, testing and sampling can qualify up to the place of removal.

The amended Cenvat definition of input service, using "upto" the place of removal, was applied to export clearances by a manufacturer-exporter by treating port clearance as the relevant endpoint. In that setting, property in the goods passes only when the shipping bill is filed and the Let Export Order is obtained, so CHA, C&F, testing and sampling services used at the port before that stage fall within clearance up to the place of removal. Services availed at the port were therefore treated as eligible input services for Cenvat credit, and the contrary view was rejected as based on an incorrect reading of "upto" and on inapposite authorities.

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Issues: Whether services such as CHA, C&F, testing and sampling availed at the port in relation to export of goods are input services eligible for Cenvat credit after the amendment substituting "from" with "upto" in the definition of input service, and whether the port constitutes the place of removal for exports.

Analysis: The definition of input service under the Cenvat Credit Rules, 2004 confines eligibility to services used in relation to manufacture and clearance of final products upto the place of removal. The expression "upto" was held to include the place itself, not merely a point before it. Since the rules do not separately define place of removal, guidance was taken from Section 4(3)(c) of the Central Excise Act and the Sale of Goods Act to determine when property in goods passes. In export transactions by a manufacturer-exporter, the property in the goods passes only at the port when the shipping bill is filed and the Let Export Order is obtained, after which the goods are handed over to the shipping line. Services availed at the port before that stage are therefore within the span of clearance upto the place of removal. The contrary view taken in the impugned order was found to be based on an incorrect reading of "upto" and on authorities dealing with different factual settings.

Conclusion: The port is the place of removal in the facts of export clearance by the manufacturer-exporter, and the impugned services were input services eligible for Cenvat credit. Denial of credit for the post-1.4.2008 period was set aside and relief was granted to the assessee.

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