• Dec
  • 01
  • 2012

In case of export, place of removal is to be taken as port of export

CESTAT, AHMEDABAD BENCH

Dynamic Industries

Versus

Commissioner of Central Excise, Daman

ORDER NO. A/952/WZB/AHD of 2012

APPEAL NO. E/1545 of 2010

JUNE 11, 2012

ORDER

B.S.V. Murthy Technical Member

During the period 2006-07 and 2007-08 the appellant had availed Cenvat Credit on services such as Customs House Agent’s services, Shipping Agent’s and container services and commission paid these agents in respect of input services for finished goods which were exported. Revenue entertained a view that the services related to clearance of finished goods beyond the place of removal and sales activities and they are not related to manufacturing activities. Proceedings were initiated against the appellant which has resulted in the impugned order wherein the Cenvat Credit availed by the appellant has been demanded with interest and penalty has been imposed under rule 15 of Cenvat Credit Rules, 2004.

2. The learned Counsel for the appellant submitted that the issue is no more res integra. The Tribunal has taken a view that where exports are FOB basis, the place of removal has to be taken as port and therefore the service availed by them till the goods reach the port would be admissible. Without the assistance of overseas agents, manufactured goods cannot be sold and therefore the services of overseas agents have to be treated as the one relating to manufacture. He relied upon several decisions of the Tribunal to support his submission.

3. We have considered submissions made by both sides. As submitted by the learned counsel in respect of FOB exports, the place of removal has to be treated as the Port. Further input service definition is an inclusive definition of services used by the manufacturer directly or indirectly in or in relation to manufacture and clearance and also relating to business activities and specified categories would be admissible. In case of Lanco Industries Ltd. v. CCE [2009] 22 STT 380 (Bang. – CESTAT) it was held that the credit of service tax paid on commission to agents is admissible. Therefore the credit of service tax availed on the services of overseas commission agents cannot be denied. In the case of Cadila Healthcare Ltd. v. CCE [2009] 23 STT 224 (Ahd. – CESTAT), it was held that the clearing and forwarding agents services is eligible for cenvat credit of service tax. In case of Nilkamal Crates & Bins v. CCE [2010] 19 STR 431 (Tri. – Ahd.)= (2010-TIOL-510-CESTAT-AHM) credit of service tax under business auxiliary services or commission on export sales was held admissible. In the case of Adani Pharmachem (P.) Ltd. v. CCE, 2008 (232) ELT 804 (Tri. – Ahd.) it was held that credit of service tax on Custom House Agent’s service is admissible. We find that all the decisions support the claim of the appellant that they are eligible for the benefit of service tax credit taken by them. Accordingly the appeal is allowed with consequential relief to the appellant.

Sandeep Kanoi

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