TMI Blog2021 (8) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... paid by the Appellant to their foreign commission agent for promoting the sale of their products in that country. Service Tax in respect of these services is paid by them on reverse charge basis. The issue in respect of admissibility of CENVAT Credit of the Service Tax paid on the Commission Charges paid for export of goods has been considered by Hon ble Madras High Court in THE COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI VERSUS INTIMATE FASHIONS INDIA (P) LTD. [ 2019 (8) TMI 1311 - MADRAS HIGH COURT] where it was held that the service tax paid on commission to foreign agents could not denied the benefit of Cenvat credit under Cenvat Credit Rules, 2004 - the Commission paid on export sales is nothing but for sale promotions and is covered by the definition of input services under Rule 2 (l) of the CENVAT Credit Rules, 2004. Bank Commission charges - HELD THAT:- Issue in respect of Bank Commission charges has been considered by tribunal on number of occasions, and tribunal has constantly held in the favour of allowing the CENVAT Credit of Service tax paid on these charges - reliance can be placed in the case of M/S SUNDARAM CLAYTON LTD. VERSUS CCE, CHENNAI - II [ 2016 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 014 in Central Excise Appeal No. 30 of 2013, order dated 2nd May 2014 in Central Excise Appeal No.116 of 2012, order dated 25th June 2014 in Central Excise Appeal No.44 of 2013 and order dated 20th March 2017 in Central Excise Appeal No.82 of 2015. While remanding the matter to CESTAT. Hon ble High Court observed in order dated 28th March 2014, as follows: 1 The Appeal challenges the order passed by the Customs Excise and Services Tax Appellate Tribunal, West Zone Bench at Mumbai, Court No.2 dated 26th February 2011. 2 The respondent assessee filed an Appeal before the said Tribunal against the order passed by the Commissioner of Central Excise, Thane-1. The respondent also applied for stay of recovery of the duty pending the Appeal. Such application was placed before the Tribunal and the Tribunal proceeded by the consent of both sides took up the Appeal itself and disposed it of finally. It is this final order which is challenged before us. 4 The issue involved is whether the services which have been availed of could be said to be input services within the meaning of Rule 2(1) of the CENVAT Credit Rules, 2004. It is submitted that the words input services has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n considered by the Tribunal. The Tribunal merely proceeds on the footing that being an exporter, all services have been availed of during the course of export of goods and that is how this CENVAT Credit was admissible. Which of the services during the course of export availed of by the present assessee would be covered by this definition and the judgment of this Court has not been considered or decided by the impugned order. Such unsatisfactory and unhappy disposal of Appeals in matters of Revenue and Taxes therefore leaves a lot to be desired. The expectation given from the Appellate Tribunal is therefore not fulfilled and particularly when it is manned by persons drawn from judicial services. In these circumstances, we have no alternative but to allow this Appeal only on this short, but substantial question of law and that is that the Appeals cannot be disposed merely by recording rival submissions and not discussing them elaborately but, in a perfunctory manner. 7 The impugned order is therefore quashed and set aside. The order of CENSTAT shall be treated as confined and restricted to the stay application. It will be held that the assessee has made out a strong prima faci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or repairs of a factory or premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs and activities relating to business. 16.04 The definition of input service is expressed in the form of 'means' and includes'. Means' part of the definition contains, inter alia, service used by the manufacturer whether directly or indirectly or in relation to the manufacture of final products and clearance of final products from the place of removal. This definition, of course, is worded to include variety of services used not only for, but in relation to manufacture of final products and also for clearance of final products up to the place of removal. The term activities relating to business has been further elaborated by giving examples, terming them as such as . These examples are accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security . Finally, the list also includes inward transportation of inputs or capital goods, and outward trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by many Courts of Law. On applying this principle it can be seen that the services which do not belong to the genre created by the list given in the definition will not fall under the definition. Thus, the services now under dispute, i.e. banking, aviation etc. can hardly be of the genre and so will not qualify as input service . 16.08 The assessee have contested the demand notice mainly based on only one argument, that is, that the definition of the input services under scrutiny now, is not a restrictive definition and that the word such as used at the end of the category, activities relating to business , expands its scope and so, not only those services given as example but other services of activities of business are also covered by the definition. It is also contended that by use of words, directly or indirectly' and 'in or in relation to the manufacture of the final products the scope is further widened. All the contentions of the assessee are emphasizing this basic argument. On examining this contention against the allegation in the SON and analysis of the definition done above, it is seen that the notice is not based on the restrictive meaning of the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f goods in the port ought to be viz. CHA charges, terminal handling charges incurred at the place of export ought to be considered as 'input service' and tax paid on it be allowed as CENVAT credit. Also, when goods are cleared for export on FOB basis, then the place of removal is the place of shipment. They have cited some case laws also in this regard. They have also drawn a parallel from the principle of valuation that all the expenses incurred up to port are included in the value for export goods (FOB) and so the services used till that point should be allowed as input service. However, since the valuation of the goods is governed by a separate Section of the Central Excise Act, 1944 and the Rules thereunder, the principle of valuation cannot be applied to the definition of the services. 16.12 To examine this contention further, again the definition of terms input service has to be referred to. In this definition, there is reference to the concept of place of removal for only two services. These are, storage up to the place of removal , and outward transportation up to place of removal . Place of removal as discussed above is defined under section 4 ibid, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel submitted a brief synopsis tabulating the nature of services etc, the same is reproduced below: Service Utilization Submission Summary Clearing Charges of (Export)- CHA (₹ 12796055) Clearing charges are relating to those services rendered by the Customs House Agents (CHA) relating to export of finished goods (i.e. for preparation of various documents and compliance with Customs Rules Regulations relating to export of finished goods) (i) In case of Export , 'Port Export' is Place of removal' and hence covered under Rule 2(1) of CCR, 2004; (ii) Section 4(3)(c) of the Central Excise Act, 1944; (iii) Section 5 of the Central Sales Tax Act; (iv) Section 23 and Section 39 of the Sale of Goods Act, 1930; (v) Honest Biovet - 2014 (310) ELT 526 (TLB), has held that in case of 'Port of Export' is 'Place of removal'; (vi) CBEC Circular No. 999/6/2015-CX dated 28.02.2015; (vii) CBEC Circular No. 1065/4/2018-CX dated 08.06.2018; (viii) Judgements Commission on Export Sales (₹ 21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 66290) For the purpose of advertising and promotion of the final products, the Appellants Senior executives/employees are required to attend seminars in various parts of the country as well as in foreign countries, which is in relation to the business. The Appellants also have units in different parts of the country. For travelling of technical engineers to their own factories in case of urgencies also, the Appellants avail the services of Aviation Service. (i) Specifically covered under Sales Promotion and hence covered under Rule 2(1) of CCR, 2004; (ii) Judgements Courier Charges (₹ 15947) Delivery of documents to customers and also the Statutory Bodies etc., (i) 'in or in relation to business of manufacture'; (ii) Judgements 3.3 Learned Authorized Representative reiterates the findings recorded by the Commissioner and places his reliance on the decision in case of UltraTech Cement Ltd vs CCE 2007(6) STR 364 (Tn.- Ahmedabad) 4.1 We have considered the impugned order along with the direction of Hon ble Bombay High Court while remanding the matter to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is the factory gate or the warehouse or the depot of the manufacturer which would be the place of removal since it is here that the goods are handed over to the transporter for the purpose of transmission to the buyer. It is in this backdrop that the eligibility to Cenvat Credit on related input services has to determined. 5. Clearance of goods for exports from a factory can be of two types. The goods may be exported by the manufacturer directly to his foreign buyer or the goods may be cleared from the factory for export by a merchant exporter. 6. 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 bill is filed by the manufacturer exporter and place of removal would be this Port/ICD/CFS. Needless to say, eligibility to CENVAT Credit shall be determined accordingly. 4.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge basis. The issue in respect of admissibility of CENVAT Credit of the Service Tax paid on the Commission Charges paid for export of goods has been considered by Hon ble Madras High Court in case of Intimate Fashions India [2019 (31) GSTL 22 (Mad)] and Hon ble High Court held: 6. Having heard the Learned Counsel for the parties, we are of the clear opinion that the Learned Tribunal has taken a correct view of the matter and has rightly found that the foreign agents of the assessee in question were rendering the services not only post-sales or post-export by the assessee but, were engaged in the activities of exploring the market, advising the designs for manufacture and supplies to specific orders procured by them and assisting the clearance of the garments in question and export the same to the foreign countries and earn foreign currency in terms of their obligations as 100% EOU and therefore, the service tax paid on commission to foreign agents could not denied the benefit of Cenvat credit under Cenvat Credit Rules, 2004. By referring to the Explanation inserted in Rule 2 (l) by Notification No 2/2016 CX (NT), Ahmedabad Bench of Tribunal has held as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are (sic not) confronted with any such situation here. In view of the decisions as above we hold that the Commission paid on export sales is nothing but for sale promotions and is covered by the definition of input services under Rule 2 (l) of the CENVAT Credit Rules, 2004. 4.6 Issue in respect of Bank Commission charges has been considered by tribunal on number of occasions, and tribunal has constantly held in the favour of allowing the CENVAT Credit of Service tax paid on these charges. In case of Sundaram Clayton Ltd [2016 (42) STR 741 (T)], following was observed: We appreciate that the financial service is a covered service under Rule 2(l) of CCR, 2004. Added to that finance being the necessary input for the purpose of carrying out the manufacturing activity and money is invested to carryout manufacture, credit cannot be denied for such services availed. Respectfully following the said decision, we hold that the Service Tax paid on Bank Commission Charges shall be admissible as CENVAT Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CENVAT Credit in respect of the travel expenses incurred towards the travel of senior executives/ employees. In case of, - Force Motors, tribunal was concerned with services rendered by the Airport Authority, in respect of Aircraft, parked at the Airport; Reliance Industries Ltd, tribunal considered the case of admissibility of CENVAT credit in respect of Airport/Civil Enclave/Airport Operator s Service and Air Travel Agent and Rail Travel Agents; Hindustan Petroleum Corporation, tribunal has considered catering services, commissioning services, housekeeping services, documentation services, conducting written test for non-mgt. ITC, the services under consideration are Air Travel Agents Service, Tour Operator Service and Membership of Club or Association Service None of the decisions would assist the case of Appellant further the case of the Appellant is for the period November 2005 to 2011, i.e. prior to the amendment of the definition of input services, whereas we find the decisions referred above in case of ITC, Hindustan Petroleum Corporation, are for the period post amendment. In case of Hindustan Petroleum Corporation, after taking the note of amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions of the Appellant that there was no suppression etc, in the case for invoking extended period of limitation. We also note except for the demand in respect of Appeal No E/1937/2010, all other demands have been made in normal period of time without invoking extended period. However as we have held in favour of the Appellants on merit in respect of all the disputed services except for those under category of Aviation Services the issue of limitation becomes infructuous in respect of these services. 4.9 Since we hold that there was no case for invoking extended period of limitation, as there was no suppression the penalties imposed on the Appellant equivalent to the demand confirmed cannot be upheld. Hon ble Supreme Court has in case of Rajasthan Spinning and Weaving Mills, specifically held as follows: 23. The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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