Whether place of removal in case of export is factory gate or port of shipment?

PJ/Case Laws/2012-13/1341

Case:- Oriental Containers Ltd. V Commissioner Of Excise, Thane

Citation: - 2012(28) S.T.R. 397 (Tri-Mumbai)

Brief fact: - The appellant is manufacturer of goods falling under Chapter 76 of the first schedule to the Central Excise Tariff Act, 1985 and export these goods abroad. The appellant availed credit of service tax paid on GTA services in respect of transportation of goods from factory premises to the port of shipment which according to the appellant was the place of removal in respect of export goods. The department was of the view that since these services are rendered outside the factory premises after clearance of the goods, the same is not an input service and hence the appellant is not eligible for availing the Cenvat credit on the service tax paid on these services.

Appellant Contention: - The appellant contended that as far as exports are concerned the place of removal is the port of shipment and not factory gate and in number of judicial pronouncements , the tribunal has allowed credit of service tax paid on GTA service on outward transportation.

Respondent Contention:- The ld. AR reiterated the findings given in the lower adjudicating and appellate authorities order.

Reasoning of Judgment: The appellant has availed service tax credit on GTA service, which was utilised for transportation of goods from factory to the port of shipment. The export order was FOB/CIF basis. As per provisions of Section 4 of Central Excise Act 1944, the transaction value is the value at which the goods are sold by assessee for delivery at the time and place of removal in an arms length transaction. As per Section 4(3)(c), the place of removal means a factory or other premises of manufacture of excisable goods or a warehouse or any other premises where the excisable goods have been deposited without payment of duty or a depot premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after there clearance from factory . In the case of export transaction where FOB price is the consideration, the goods have to be delivered on board the vessel which means the place of delivery is the port of shipment and the value has to be determined as the sale price of delivery at the time and place of removal. Therefore, the place of removal automatically extends upto the port of shipment when goods are to be delivered on board the vessel. Therefore the cost of transportation from factory to the port of shipment will automatically become part of value of the goods and whatever services have been availed upto that point would become an input service. This tribunal in the case of Kuntal Granites Ltd v CCE , Bangalore , reported in2007 (215)515 (Tri-Bang.) considered identical issue as regards which is the place of removal in respect of exports and it was held that in case of export , the place at which export documents are presented to the Customs officer would be the place of removal. This Tribunal in the case of Modern Petrofils v CCE , Vadodara reported in 2010 (253) ELT 609 (Tri.-Ahmd.) considered issue of admissibility of cenvat credit of service tax paid on GTA service. Following the ratio of these judgments, in the instant case also, the appellants are rightly entitled for the cenvat credit of the service tax paid on GTA service utilised for transportation of the export goods from the factory to the port of shipment. Accordingly, the appeal is allowed with consequential relief if any.

Decision:- Appeal allowed.

Comment:-This is yet another case depicting the well settled position of law that place of removal in case of export is port of shipment and cenvat credit of all the input services taken upto the port are admissible when the export orders are FOB/CIF basis.

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PJ/Case Laws/2012-13/1341

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