2010 (1) TMI 424 - AT - Service Tax

Appeal granted on Cenvat Credit denial for service tax paid by Customs House Agents

JK TYRE & INDUSTRIES LTD. Versus COMMISSIONER OF C. EX., MYSORE

JK TYRE & INDUSTRIES LTD. Versus COMMISSIONER OF C. EX., MYSORE - 2010 (18) S.T.R. 637 (Tri. - Bang.), [2010] 26 STT 11 (BANG. - CESTAT) Issues:1. Denial of Cenvat Credit for service tax paid by the appellants under 'Customs House Agents' service.2. Interpretation of 'place of removal' in the context of Cenvat Credit Rules.3. Admissibility of credit for services used up to the place of removal for exported goods.Analysis:1. The impugned order affirmed the denial of Cenvat Credit of Rs. 31,625 for service tax paid by the appellants under 'Customs House Agents' service related to the export of goods. The Commissioner (Appeals) based the decision on a previous Tribunal case. The appellants argued that the services were incurred up to the port area and that they retained ownership of the goods until delivery to buyers abroad. They cited a CBEC Circular to support their position.2. The authorized representative of the appellant referenced a Tribunal decision in another case where it was held that credit for services used up to the place of removal was admissible. In the case of goods exported, where the sale took place at the port area, the appellant contended they were entitled to credit for service tax paid on CHA services at the port area.3. The learned SDR contended that the credit for service tax paid on input services up to the place of removal was not admissible. They argued that CHA services were not covered under the definition of input services as they were availed at the place of removal. The definition of 'input service' in the Cenvat Credit Rules was discussed, emphasizing activities related to business and physical handling of goods.4. The Tribunal considered the rival submissions and reviewed the definition of 'input service' in the Cenvat Credit Rules. It was noted that the clarification by the Board defined 'place of removal' as the point at which the assessee transferred ownership of the goods. The Tribunal found merit in the appellant's claim that ownership of the consignments was transferred at the destination point. The appeal was allowed by way of remand for the appellants to establish that the CHA services were available up to the place of removal, as exports were on FOR destination basis. The appeal was remanded to the original authority for further proceedings.