Credit admissibility on fumigation services for export of goods.

PJ/CASE LAW/2016-17/3126

Case:-VENUS WIRE INDUSTRIES PVT LTDVs COMMISSIONER OF CENTRAL EXCISE, MUMBAI-II

Citation:-2016-TIOL-1297-CESTAT-MUM

Brief Facts:- It is avowed principle of the GOI that exports should not be taxed and, therefore, if credit of service tax paid on fumigation services is not allowed, that would add to the cost of the goods exported. It is the case of the revenue that the Cenvat Credit is ineligible to be availed as the said service is not used in or in relation to the manufacture of the final product.

Appellant’s Contention:- The identical issue in respect of very same appellant in appeal before the Tribunal in E/1880/12 in final order dated 28.12.2012 as reported in 2014 (36) STR 475 2013-TIOL-624-CESTAT-MUM, the bench held that the fumigation services are expenses incurred in nature of packing expenses for the export of goods. He produced a copy of the said order.

Respondent’s Contention:-. Ld. Departmental Representative reads para 7 of the Order-in-Appeal and submits that the appellant has not produced any evidence to indicate that fumigation is required to be done and no literature or convention was produced. Hence there is no nexus with the fumigation services and goods manufactured and cleared.

Reasoning Of Judgment:- There is no dispute as to the fact that fumigation services are utilised by the appellant for fumigating containers in which goods were exported. On perusal of the judgment of the Tribunal in appellant's own case, Tribunal found that the issue is very same. Accordingly, following the same judgment, it was found that the impugned order is unsustainable and liable to be set aside. They do not carry the case of the revenue any further as it is avowed, principles of Government of India, that exports should not be taxed and if credit of service tax paid on fumigation services is not allowed, that would add to the cost of the goods exported.
In view of the above findings, the appeal was allowed.

Decision:-Appeal allowed.

Comment:- The substance of the case is that the cenvat credit of fumigation services is admissible as it was availed for fumigation of containers in which goods were required to be exported. It is avowed policy of the government that the taxes should not be exported and so the credit of service tax on fumigation services should not be denied as otherwise it will lead to increase in the cost of goods exported.

Prepared By: - Alakh Bhandari

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PJ/CASE LAW/2016-17/3126

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