Whether the appellant is entitled for availing the CENVAT Credit of Service Tax paid on transportation in respect of empty containers from yard to the factory for stuffing of goods and thereafter transportation charges of the containers from the factory t

PJ/Case Laws/2012-13/1144

Case: CENTURY RAYON V/S COMMISSIONER OF CENTRAL EXCISE, THANE-I

Citation: 2012(280) E.L.T. 561 (Tri.-Mumbai)

Issue:- Whether the appellant is entitled for availing the CENVAT Credit of Service Tax paid on transportation in respect of empty containers from yard to the factory for stuffing of goods and thereafter transportation charges of the containers from the factory to the port?

Brief Facts: - The appellant is engaged in the manufacture of excisable goods namely Viscose Filament yarn and Chemicals falling under Chapter heading 54, 55, 59 and 28 of Central Excise Tariff Act, 1985. The appellant has availed the CENVAT Credit in respect of goods transport services for transportation of empty container to the appellant's factory at Shahad for stuffing of export final products and retransformation of stuffed container to the port of the export. The department was of the view that CENVAT Credit in respect of empty container transportation to the factory and after stuffing sent to the port of export was not admissible to them. Accordingly, a show-cause notice dated 2nd February, 2009 was issued to them which was adjudicated by Deputy Commissioner on 2nd July 2009 denying the CENVAT Credit to the appellant and imposing the interest and penalty on the appellant. The appellant preferred an appeal before the Commissioner (Appeals) against the Order-in-Original who vide the impugned order rejected their appeal and appellant is in appeal before the Tribunal.

Appellant’s Contention: - The appellants contended that the appellant has transported the empty containers from the yard for stuffing of the goods in the empty containers and thereafter container was sent to the port of export. Therefore, all the transportation services in respect of bringing empty containers and thereafter taking the loaded container to the port of export are in respect of the goods exported and therefore, they are eligible for availment of the CENVAT Credit of tax paid on GTA services in respect of transportation of empty containers to their factory as well as loaded container to the port of export.
He relied on the decision of the Tribunal in the case of Balkrishna Industries Ltd. v. C.C.E., Aurangabad reported in 2011 (24) S.T.R. 433 (Tri. - Mumbai) wherein it was held that transport of export goods includes transport of empty containers from yard to the factory for stuffing of the export goods. He also relied on the decision of the Tribunal in the case of C.C.E., Jaipur v. Nitin Spinners Ltd. - 2009 (16) S.T.R. 323 (Tri. - Del.) = 2012 (276) E.L.T. 112 (Tribunal), wherein the credit of services tax paid on freight of empty containers was allowed by the Tribunal. As regards the transportation of the goods from factory to the port of export, he submitted that since the goods are exported on FOB basis, the value of the exported goods includes transportation of the goods from the factory to port, therefore, they are eligible for CENVAT Credit of GTA service.

Respondent’s Contention: - The respondents reiterated the findings of the lower authority.

Reasoning of Judgment: - The Hon’ble Tribunal held that as regards the credit of the Service Tax paid on freight for empty containers for bringing containers from yard to the factory, the issue has been settled by the Tribunal in the case of Nitin Spinners Ltd. (supra) holding that Service Tax paid on freight for empty containers called for export of the goods is admissible. Therefore, in view of the above decision the appellant is also entitled for availment of CENVAT Credit in respect of freight charges paid by the appellant for bringing in the empty containers. As regards paying the transportation of goods in containers from the factory to the port of export, these charges are in relation to the transport of export goods. Notification No. 18 /2009-S.T., dated 7- 7-2009, exempts the taxable service received by an exporter in respect of the transport of goods from place of removal to port of export. Since the tax is exempted on these transportation charges, if tax has been paid by the appellant to department, credit of the same will be available to the exporter particularly when the value in respect of the goods is FOB basis which includes all expenses up to the port of export goods. Therefore, appellant is entitled to avail credit of Service Tax in respect of these charges also. Since amount credit is admissible to the appellant for bringing empty containers to factory and thereafter transporting the loaded containers to the port of export, mere not splitting of these charges separately will not disentitle them for CENVAT Credit.

Decision: - The appeal was allowed.

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PJ/Case Laws/2012-13/1144

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