Input services up to port of export are eligible for availment of CENVAT Credit since port is "place of removal" in case of exports.

Ballarpur Industries Ltd. vs. Commr. Of C. Ex., Pune-Ill 2014 (36) STR 1122 (Tri.-Mumbai)

 

 

Since issue of CENVAT Credit is highly disputed and subject to different interpretations by various Courts, penalties cannot be levied.

FACTS:

CENVAT Credit in respect of certain input services was disallowed contending that the services were not related to business. The appellant contended that CENVAT Credit of travel agents services, courier services and insurance services was allowed by the Tribunal in its own case vide Final Order Nos. Al74 to 78/2011/SMB/C-IV & 23 to 27/2011/SMB/C-IV dated 10/12/2010. With respect to catering services, it was agreed to reverse proportionate credit to the extent the amounts were recovered from its employees and compliance report regarding such reversal was stated to be filed before the concerned adjudicating authority with a copy to the Tribunal. Relying on various judicial pronouncements, it was contested that construction services, travel, car services, catering services and clearing & forwarding agency services, were related to the business. Airport services, CHA services and port services were received for export of goods and port being the place of removal in case of exports, these services squarely qualify as eligible input services to claim CENVAT Credit.

Replying on the decision of the Calcutta High Court in case of Vesuvious India Ltd. 2014 (34) STR 26 (Cal), the apartment argued that only serves upto the place of removal were eligible input service

HELD:

Courier services, storage & warehousing services, maintenance of xerox/fax machines and telephone services were related to the business of the appellants and service tax paid thereon was eligible CENVAT Credit. Security services were covered in the inclusive limb of the definition of input services. Since the factory of the appellants was located in a remote area, the said services were required for smooth running of the industry and therefore were allowed

As the appellants did not press any grounds with respect to insurance services and servicing of motor vehicles, CENVAT Credit on these services was disallowed. Since complete facts were not known to the Adjudicating Authority regarding transport services, disallowance on ad hoc basis was held against natural justice and having regard to the contention of the appellants that transport services were mainly used to transport finished goods to its dealers, the matter was remanded back. In case of export, port is the place of removal. Accordingly, airport services, CHA services and port services were eligible input services. Since issue of CENVAT Credit is highly disputed and subject to different interpretations by various Courts and in absence of malafides, penalties were set aside.