Realization of export sale proceeds within a definite time frame is not a pre-condition to claim refund under Rule 5

Brief of the case:

• The CESTAT New Delhi in the case of P&P Overseas held that the realization of export sale proceeds within a definite time-frame is not a pre-condition for claiming refund of unutilized Cenvat credit under Cenvat Credit Rules , 2004 .

• It also held that the CHA and courier services are input services availed for or in relation to manufacturing of goods exported out of India and thus, the unutilized credit in respect thereof can be claimed as refund under Rule 5.

Facts of the case:

• The assessee claimed refund of unutilized Cenvat credit u/Rule 5 of Cenvat Credit Rules, 2004 in respect of input services availed in relation to manufacturer of the finished goods exported out of India. The input services in respect of which refund claimed were courier and Custom House Agent services (CHA).

• The Assistant Commissioner disallowed the claim on two grounds:

i) The services of courier and CHA are not input services as defined u/Rule 2(l) of Cenvat credit Rules, 2004

ii) The export proceeds have not been received by the assessee.

• The order of Asst. Commissioner was upheld by the CCE (Appeals). Aggrieved by the same assessee is in appeal before the tribunal.

Contention of the Assessee:

• CHA service is input service because as per the definition of input service as per Rule 2(l) of Cenvat Credit Rules, 2004 input service includes outward transportation up to the place of removal. In case of export sale port from where the goods are exported is place of removal as the sale take place only on the handing over the title documents to port authorities
• Courier service is input service because it is used in relation of manufacture of goods exported out of India and it has indirect nexus with the manufacturing operations.
• As regards, the second ground of rejection that export sale proceeds note received it was argued by the assessee’s learned counsel that such condition is nowhere mentioned Rule 5 nor in the Notification No. 5/2006-CE issued by the Government under Rule 5 of the Cenvat Credit Rules, 2004.

Contention of the Revenue:

• The learned counsel for the department reiterated the findings of CCE(Appeals) and contended that the claim is not allowable as the services in respect of which refund claimed are not input services and also on the ground that export sale proceeds not received at the time of filling quarterly refund claim.

 Decision of the Tribunal:

• The issue relating to eligibility of courier as input service have been dealt in many judicial pronouncements and the crux of them is that CHA service availed for export of goods is specifically included in the definition of input service because input service specifically include outward transportation upto the place of removal.
  

• As per the CBEC circular 137/85 of 2007 In case of export goods, ownership of such goods remained with the manufacturer-exporter till port area and it gets transferred at the Port upon hand over of documents of title to export goods. Therefore, based on the said circular CENVAT credit of service tax paid on CHA service for export of goods is admissible.

• As regards, the eligibility of courier service the same is input service because of its indirect nexus with the business operations (which include manufacturing also).
  

• Further, the tribunal agreed with the assessee’s argument that realization of sale proceeds within a definite time frame was not at all any condition for claiming refund claim it was not at all any condition for claiming refund claim
• Appeal filed by the assessee was allowed fully.