Case Law Details

Case Name : Commissioner of Central Excise, Ahmedabad Vs Ahmedabad Strips (P.) Ltd. (CESTAT Ahmedabad)
Appeal Number : Order No. A/254/WZB/AHD OF 2012
Date of Judgement/Order : 28/02/2012
Related Assessment Year :
Courts : All CESTAT (748) CESTAT Ahmedabad (104)


Commissioner of Central Excise, Ahmedabad


Ahmedabad Strips (P.) Ltd.


APPEAL NO. E/1392 OF 2010

FEBRUARY 28, 2012


1. M/s Ahmedabad Strips Private Ltd., Plot No. 62, Nr. Khatrej Chowkadi, Tal. Kalol, Distt. Gandhinagar (hereinafter referred to as the assessee) availed CENVAT Credit of Rs. 6,52,207/- in March 2008 in respect of Service tax paid to Shri Ajay Kumar Gupta for “Professional and Liaison fees” for claiming export incentives under the EXIM Policy. As the service received by the assessee was not used directly or indirectly in or in relation to the manufacture of the final products, it appeared that the assessee had wrongly availed the said credit. Further, the service could not be treated as “Input service” as per Rule 2(1) of the CENVAT Credit Rules, 2004 on account of the fact that (a) the service provided was a post exportation service rendered after the export of goods and (b) the services rendered did not fall under the ambit of “input service”. A notice dated 16.2.2009 was issued to the assessee demanding the CENVAT Credit wrongly availed along with interest and proposing penalty under Rule 15 of the CENVAT Credit Rules, 2004. The adjudicating authority vide the aforementioned Order-in-original No. 07/JC(KS)/2010 dated 22.3.2010 held that the liaison service was neither used for providing any output service nor used by the manufacturer whether directly or indirectly in or in relation to the manufacture of final products and clearance of final products. Further, he confirmed the demand along with interest and imposed penalty under Rule 15 of the CENVAT Credit Rules, 2004 by holding that services were clearly and indisputably in relation to post-manufacture and post-clearance and were availed to get export incentives. Aggrieved, the assessee filed an appeal before the Commissioner(Appeals) who vide his OIA No. 124/2010(Ahd-III)/KCG/Comm(A)/Ahd dated 6.7.2010 held that the case of the assessee was covered under the judgment of the Bombay High Court in the case of Coca Cola India (P.) Ltd. v. CCE [2009] 22 STT 130. He further held that claiming export incentives are akin to activities relating to business and therefore sale can be considered as complete only after the exporter receives the export incentives and thus allowed the appeal and set aside the aforementioned Order-in-Original.

2. Revenue is in appeal on the ground that the reliance of the Commissioner (Appeals) in the order on the decision of the Hon’ble High Court of Mumbai in the case of Coco Cola India (P.) Ltd. (supra) is premature inasmuch as the department has already filed an appeal against that order before the apex court.

3. Heard both sides. It was submitted that the cross-objections filed by the respondents have not been placed on the file. Accordingly, subsequently cross-objections were also placed on the file. Appeal has been filed against this decision. Further, it was also submitted that the input service has to be in or in relation to manufacture. It was contended that in this case, the service tax has been paid in respect of services in connection with export incentives.

4. I have considered the submissions and also cross-objections filed by the respondent. I find that obtaining export incentives is directly relatable to manufacture. Manufacturer while manufacturing goods for export and for working out the cost takes into account the export incentives. Export incentives play a very big role in the manufacture and export of goods. This being the position, service tax incurred in respect of services for obtaining export incentives can be definitely related to manufacturing activity and therefore the decision of the learned Commissioner holding that respondent is eligible for the input service tax credit is to be sustained. Accordingly appeal filed by the revenue has no merit and the same is rejected.

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