2023 (11) TMI 469 - AT - Central Excise

CENVAT credit allowed on CHA and GTA services for export goods transportation to port

CADILA HEALTHCARE LTD. Versus C.C.E. AHMEDABAD-II (Vice-Versa)

CESTAT Ahmedabad held that CENVAT credit on CHA service and GTA service for outward transportation of export goods up to port of export is admissible. The ... CENVAT Credit - CHA Service and GTA service for outward transportation in respect of export goods, upto port of export - HELD THAT:- In case of KUNTAL GRANITES LTD. VERSUS COMMISSIONER OF C. EX., BANGALORE [2007 (3) TMI 540 - CESTAT, BANGALORE], Hon’ble Tribunal has held that place of removal for export goods is place where export document was presented to Custom office i.e. port of export. Though the said judgment is in respect of remission of duty, the ratio of judgment is applicable to present case also. The Hon’ble Gujarat High Court in the case of CENTRAL EXCISE VERSUS INDUCTOTHERM INDIA P LTD [2014 (3) TMI 921 - GUJARAT HIGH COURT] has held that in case of export of Cargo Handling Service, the Service Tax paid thereon is available as input services, as in such case, the place of removal is Port.Further, the judgment relied upon by the appellant has also allowed the credit of service tax paid on services received at the port. Board’s Circular No. 97/8/2007-S.T. dated 23-8-2007 also recognizes the situation where the place of removal can be different from the normal place of removal and in such case, the credit of service tax paid on GTA services used for transportation of goods upto place of removal is admissible. As per Section 4(3)(c)(iii) of the Central Excise Act, 1944, place of removal’ includes any other place or premises from where the excisable goods are to be sold after their clearance from the factory. As per definition of sale, a transaction is recognized as ‘sale’ only when a seller has realized or has a high chance of realizing payment against delivery of goods - In case of export goods, therefore, the place of removal has been held to be port of export and hence, credit of service tax paid on CHA service and GTA service used for transportation upto port of export is admissible. The Cenvat credit on the outward GTA and CHA is admissible - impugned order set aside - appeal allowed. Issues Involved:The appeal involves the confirmation of Cenvat Credit demand and the imposition of penalties under the Cenvat Credit Rules 2004 and the Central Excise Act, 1944. The main issue revolves around whether the appellant is eligible to avail CENVAT credit on service tax paid on CHA Service and GTA service related to outward transportation of export goods up to the port of export.Details of the Judgment:Confirmation of Cenvat Credit Demand:The appellant, engaged in manufacturing pharmaceutical products, availed CENVAT Credit on CHA Services and outward freight for export of goods. The revenue contended that these services were not 'input services' under Rule 2(l) of the Cenvat Credit Rules. The impugned order confirmed the entire Cenvat demand, along with interest and penalties. The appellant argued that services availed up to the port of export qualify as input services, citing relevant judgments and circulars supporting their claim.Eligibility of Cenvat Credit:The appellant argued that the place of removal for export goods is the port of export, where the sale is deemed completed. Citing legal precedents, they maintained that the credit of tax paid on services related to transportation up to the port of export is admissible. The Tribunal referenced various judgments and circulars supporting the appellant's position, ultimately ruling in their favor and allowing the appeal with consequential relief.Penalty Imposition and Revenue's Appeal:Regarding the penalty imposed, the Tribunal found that since the demand itself was not sustained, the penalty would not stand. Additionally, the revenue's appeal seeking to impose a penalty below the threshold limit for filing an appeal was deemed not maintainable under the government's litigation policy. As a result, the revenue's appeal was dismissed both on merit and maintainability.Conclusion:The Tribunal set aside the impugned order, allowing the appellant's appeal and dismissing the revenue's appeal. The judgment clarified the admissibility of Cenvat credit on outward transportation services related to export goods up to the port of export, based on legal interpretations and precedents.