Credit eligibility of service tax paid on CHA, Courier and C&F services.

PJ/CASE LAW/2014-15/2429

Case:-IM GEARS PVT LTD. Vs COMMISSIONER OF CENTRAL EXCISE, CHENNAI-III

Citation:-2014-TIOL-2134-CESTAT-MAD

Brief Facts:-All the four applications are arising out of a common order passed by Commissioner (Appeals) and therefore they are taken up together for disposal.
The issue involved in this case is denial of Cenvat credit of service tax paid on inputs services viz. Courier Service used for export of goods. The adjudicating authority denied the credit which was upheld by the Commissioner (Appeals).

Appellant contentions:- The learned advocate for the applicant submits that they are eligible for credit utilized on courier services and submits that by Notification No.41/2007, the government has allowed the facility of granting refund of unutilized credit on the export of goods and by Notification 3/2008 dt. 19.12.2008 at Sl. No.(10), the refund facility is extended to courier services. The advocate also submitted that they have produced invoices before authorities to show that the rate quoted is on FOB basis and they have not claimed separately freight and insurance. She relies on the following Tribunal's decisions:-
1) Fenner India Ltd. Vs CST Madurai vide Misc Order No.40559 to 40560/2014 dt.10.3.2014

2) CCE Madurai Vs Tata Coffee Ltd.

3) Amalgamations Rapco Ltd. Vs CCE Chennai – 2013 (31) STR 370 (Tri. –Chennai)

Respondent Contentions:- On the other hand, Ld. A.R submits that as per Rule 2(l) of CCR 2004, any input credit or input service would be integral to the manufacture of final products whereas in the present case, related to transportation of export goods and not related to manufacturer of final products cleared on payment of duty. He relied on the interim order passed by the Tribunal in the case of PMP Auto Components (P) Ltd. Vs CCE Mumbai-V – 2012 (284) ELT 536 (Tri.-Mumbai) wherein pre-deposit has been ordered.

Reasoning of Judgment:- Heard both sides. There is no dispute on the fact that the appellant has availed input service credit on courier services on export of excisable finished goods. It was found that this Bench in the case of Fenner India Ltd. (supra) on the very same issue has held as under:-

“After hearing both sides, and on perusal of records, I find that the issue involved is as to whether appellants are eligible to avail cenvat credit of service tax paid on CHA, Courier services and C&F service. It is seen that the Tribunal in the case of Nirma Ltd. (supra) rejected appeal filed by the assessee on this issue. However, the Tribunal in the case of Plus Paper Foodpac Ltd. (supra) held that CHA service, C&F service, shipping and courier service are eligible input services. The Tribunal in the case of Pokarna Ltd. (supra) has examined the scope of removal in respect of eligibility of cenvat credit on CHA services and has observed as under:- “The learned Superintendent (AR) made an attempt to distinguish the above case by submitting that the above decision was rendered in respect of remission of duty and not in respect of CENVAT credit. This distinction is inconsequential inasmuch as there is only one definition of ‘place of removal' under the Central Excise Act or the Rules framed thereunder – whether for the purpose of valuation of excisable goods or for the purpose of determination of claim of CENVAT credit or for any other purpose whatsoever. The question whether the port of export could be considered to be ‘place of removal' of excisable goods was examined by the division bench in the above case, with reference to the definition of ‘place of removal' under Section 4(3) of the Central Excise Act as also to Section 5 of the Central Sales Tax Act. On a harmonious construction of the provisions, it was held that, in respect of the excisable goods cleared from factory for export and subsequently shipped from the port, the port of export could be held to be the ‘place of removal'. In view of this decision, it has to be held that the respondents were entitled to treat CHA service/GTA service as ‘input services' under Rule 2(1) of the CENVAT Credit Rules, 2004 as these services were used for clearance of excisable goods from the ‘place of removal'.

By following the decision (supra), Tribunal held that the applicant has made out a prima facie case for waiver of pre-deposit of tax along with interest and penalty. Accordingly, the pre-deposit of tax along with interest and penalty is waived and its recovery is stayed during pendency of the appeal. All the four stay applications are allowed.

Decision:- Stay granted.

Comment:- The essence of the case is that as per Notification No.41/2007, the government has allowed the facility of granting refund of unutilized credit on the export of goods and by Notification 3/2008 dt. 19.12.2008 at Sl. No.(10), the refund facility is extended to courier services. ThusCenvat credit of service tax paid on inputs services viz. Courier Service used for export of goods cannot be denied & consequently the stay application was allowed.

Prepared By: Meet Jain

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PJ/CASE LAW/2014-15/2429

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