Case Law Details

Case Name : Raj Petro Specialities Pvt. Ltd Vs. Principal Commissioner of GST & Central Excise (CESTAT Chennai)
Appeal Number : Appeal No.E/40314 to 40316/2018
Date of Judgement/Order : 18.7.2018
Related Assessment Year :
Courts : All CESTAT (749) CESTAT Chennai (98)

Raj Petro Specialities Pvt. Ltd Vs. Principal Commissioner of GST & Central Excise (CESTAT Chennai)

The samples have been sent free of cost to the prospective buyers. It cannot be said to be removal of finished goods, which involves sale of excisable goods. It is more akin to sales promotion or marketing or advertisement of the product which has been sent to the prospective foreign buyer. The same would fall within the inclusive part of the definition. Thus I find that the disallowance of credit on Courier services alleging that these are outward transportation services involving removal of finished goods upto the buyers premises is highly erroneous. I hold that the denial of credit is unjustified and requires to be set aside which I hereby do.

FULL TEXT OF THE CESTAT JUDGMENT

Brief facts are that the appellants are manufacturers of Transformer oil, Petroleum jelly and light liquid paraffin and are availing the facility of Cenvat credit on service tax paid on various input services. During the disputed period, they had availed credit of service tax paid on courier services for sending the samples of their products to buyers in foreign countries. The department was of the view that these are export of goods as the courier services is akin to outward transportation of finished goods from factory gate to the customer’s premises and therefore is not eligible for credit.

2. Show Cause Notice was issued proposing to disallow the credit for the periods from January 2012 to December 2014, January 2015 to March 2015 and April 2015 to March 2016. After due process of law, the original authority confirmed the demand, interest and imposed penalties. In Appeal, the Commissioner (Appeals) upheld the same. Hence these appeals.

3. On behalf of the appellant, the Ld.Counsel, Sh.V.Ravindran submitted that the appellant had sent the products to their foreign buyers as sample and this was done only to obtain purchase orders from the prospective foreign buyers. The free samples sent to the foreign buyers cannot be considered as export of goods or removal of goods from the factory gate to the customer’s premises. The courier services availed by the appellant for sending the sample products was in the nature of marketing / promotion of products and therefore would fall within the inclusive part of the definition. He prayed that the credit may be allowed.

4. The Ld. AR, Sh. R. Subramaniyan supported the findings in the impugned order. He submitted that the appellant has sent the finished products to their prospective foreign buyers free of charge. Since the finished products were sent upto the customer’s premises, the services availed for outward transportation by courier is not eligible for credit.

5. Heard both sides.

6. The counsel for appellant has submitted that the free samples were sent to the prospective foreign buyers as sales promotion / marketing / advertisement for trading and not in any way of transportation of finished goods. I do find the force in the said argument. The samples have been sent free of cost to the prospective buyers. It cannot be said to be removal of finished goods, which involves sale of excisable goods. It is more akin to sales promotion or marketing or advertisement of the product which has been sent to the prospective foreign buyer. The same would fall within the inclusive part of the definition. Thus I find that the disallowance of credit alleging that these are outward transportation services involving removal of finished goods upto the buyers premises is highly erroneous. I hold that the denial of credit is unjustified and requires to be set aside which I hereby do. The impugned orders are set aside. The appeals are allowed with consequential reliefs, if any.

(Order pronounced in open court on 18.7.2018)

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