2023 (10) TMI 8 - AT - Service Tax

100% EOU - Refund of accumulated cenvat credit - rejection of refund claim on the ground that the credit availed on input services namely outward freight from the place of factory to the place of export i.e. port is not admissible as the place of removal is only the factory gate not the port of export - HELD THAT - The issue of admissibility of cenvat credit on outward freight from the place of manufacture to the place of export i.e. port by a manufacturer-exporter is no more res integra covered by the judgment of the Hon ble Himachal Pradesh High Court in COMMISSIONER OF CENTRAL EXCISE VERSUS DRISH SHOES LTD. 2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT . Also the Board accepted the principles of law settled by the Courts and Tribunal in various cases circulated in the Circular dated 28/02/2015 where it was held that In the case of clearance of goods for export by manufacturer exporter shipping bill is filed by the manufacturer exporter and goods are handed over to the shipping line. After Let Export Order is issued it is the responsibility of the shipping line to ship the goods to the foreign buyer with the exporter having no control over the goods. In such a situation transfer of property can be said to have taken place at the port where the shipping bills filed by the manufacturer exporter and place of removal would be this Port/ICD/CFS. There are no merit in the appeals filed by the Revenue - appeal dismissed.

Summary

Issues Involved:
- Admissibility of cenvat credit on outward freight from the place of manufacture to the place of export.
- Interpretation of the definition of 'input service' in relation to outward freight.

Admissibility of Cenvat Credit on Outward Freight:
The appeals were filed by the Revenue against an Order-in-Appeal passed by the Commissioner of Central Excise, Mangalore. The appellants, a 100% EOU, sought a refund claim under Rule 5 of the Cenvat Credit Rules, 2004 for the period April 2008 to September 2008. The dispute arose when the Assistant Commissioner rejected the refund claim on the grounds that the credit availed on input services, specifically outward freight from the factory to the port of export, was not admissible. The Commissioner (Appeals) partially allowed the refunds, leading to the Revenue challenging this decision. The Revenue contended that the place of removal, in this case, the port of export, could not be considered for availing the credit.

Interpretation of 'Input Service' in Relation to Outward Freight:
The respondent argued that the issue of admissibility of cenvat credit on outward freight from the place of manufacture to the port of export had been settled by the High Court of Himachal Pradesh and later upheld by the Supreme Court. Additionally, they referred to a circular by the Board clarifying that in cases of export by a manufacturer-exporter, the port of export should be considered as the place of removal. The respondent cited relevant judgments supporting their stance, emphasizing that the property in goods passes from the seller to the buyer at the factory gate, making it the place of removal.

Judgment:
Upon hearing both sides and examining the records, the Tribunal found that the issue of admissibility of cenvat credit on outward freight had been settled by the Himachal Pradesh High Court and was supported by the circular issued by the Board. The Tribunal noted that in cases of export by a manufacturer-exporter, the port of export should be considered as the place of removal. Therefore, the appeals filed by the Revenue were dismissed, as the Tribunal did not find merit in their contentions based on the established legal principles.