Custom, Excise & Service Tax Tribunal
M/S. Save Industry vs Cce & St, Coimbatore on 23 June, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH
CHENNAI
E/41855/2013
[Arising out of Order-in-Appeal No. 207/2013 dated 18.06.2013 passed by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Coimbatore).
M/s. Save Industry : Appellant
Versus
CCE & ST, Coimbatore : Respondent
Appearance:
Shri A. Muddimannan, Advocate, For the Appellant Shri K.P. Muralidharan, AC (AR) For the Respondent CORAM :
Honble Shri P.K. Choudhary, Judicial Member Date of Hearing : 23.05.2016 Date of Pronouncement :
FINAL ORDER No. 41024 / 2016 M/s. Save Industry, the appellant herein are engaged in the manufacturer of water pumps and sell their final products in the domestic as well as in the foreign market and availed Cenvat credit on the inputs and input services in accordance with the provisions under Cenvat Credit Rules, 2004. The issue in dispute relates to availment of Cenvat credit on the CHA service and outward freight paid on export clearances during the period 2005-06 to 2010-11. A show cause notice dated 26.05.2011 was issued based on an audit objection alleging that the appellant has contravened the provisions of Rule 3 of CCR, 2004 in as much as for wrong availment of cenvat credit of service tax paid on CHA service and outward freight paid on export clearances. The department alleges that in view of the provisions contained in Notification No. 41/2007-ST dated 06.10.2007 as amended by Notification No. 17/2009-ST dated 7.7.2009, the service tax paid on CHA services cannot be taken as credit under Rule 3 of CCR, 2004, but exemption can be claimed as refund of service tax. It further alleges that the appellants did not bring it to the notice of the department that the credits have been taken on these services and hence proposed to invoke extended period of limitation. On adjudication, the adjudicating authority disallowed the Cenvat credit of service tax availed to the tune of Rs. 99,819/- along with interest and imposed equal penalty under Rule 15(4) of CCR read with Section 78 of the Finance Act, 1994. On appeal, the Commissioner (Appeals) upheld the order of the adjudicating authority and rejected the appeal. Aggrieved by this, the appellant is in appeal before this Tribunal.
2. Ld. Counsel Shri A. Muddimannan, Advocate, appearing on behalf of the appellant submitted that the adjudicating authority did not consider the defence raised by the appellant and came to a hasty conclusion that Cenvat credit availed by the appellant was not in order and not permissible. He further submitted that the adjudicating authority has not considered the case laws relied upon before him in support of their contention and also their specific defences of revenue neutrality and bonafide belief was not taken into consideration. He argued that as per Rule 2 (l) of CCR, 2004, the disputed services are input services and are eligible for availing Cenvat credit. He submitted that their contention with regard to availment of exemption as per the Notification relied on by the department and the relevant CBEC circulars and decisions of the Honble CESTAT were not even taken on record and the order passed suffers from legal infirmity and hence is not sustainable in law. Therefore, the impugned order upholding the order of the adjudicating authority may be set aside and Cenvat credit be allowed. He relied on the following decisions in support of his submissions:
1. Commissioner Vs. Dynamic Industries Ltd. 2014 (35) STR 674 (Guj.)
2. Premier Conveyors Pvt. Ltd. Vs. CCE, Thane-1 2015 (38) STR 171 (Tri.-Mum.)
3. Plus Paper Foodpac Ltd. Vs. CCE, Thane 2013 (30) STR 529 (Tri.-Mum.)
4. JSW Steel Ltd. Vs. CCE, Thane-I 2014 (36) STR 801 (Tri.-Mum.)
3. On the other hand, the Ld. AR, Shri K.P. Muralidharan, AC, appearing on behalf of the Revenue submitted that both the authorities below have correctly disallowed the Cenvat credit availed by the appellant and demanded the same along with interest and equal penalty for wrong availment of cenvat credit and contravention of the provisions of CEA, 1944. Hence, the appeal is liable to be rejected and the OIA is liable to be upheld.
4. Heard both sides and perused the records. The short issue involved in this appeal is whether CHA service and outward freight paid on export clearances qualify as input services and eligible for availment of cenvat credit or not. In the present case, considering the fact that the CHA services have been availed by the appellant in the course of export of goods, the place of removal is the port from where the goods have been exported. Rule 2 (l) of Cenvat Credit Rules, 2004, stipulates that
(l) input service means any service, -
(ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal;
Upto the place of Removal is the port from where the goods have been exported, for which the appellant is eligible for input service credit. Hence, I hold that the CHA service has been availed by the appellant till the place of removal. Decisions of the Mumbai Bench of the Tribunal in the cases of Premier Conveyors Pvt. Ltd. (supra, Plus Paper Foodpac Ltd.,(supra) and JSW Steel Ltd. (supra), relied on by the appellant are in favour of the appellant, wherein it has been held that being a manufacturer of excisable goods if the assesse availed any services, the assesse is entitled to take input service credit in the course of their business activity.
5. As far as Notification No. 17/2009 dated 7.7.2009 is concerned, it exempts the taxable services received by an exporter of goods and used by him for export of goods. This exemption is subject to certain conditions and one of the conditions stipulated is that no Cenvat credit of service tax paid on the specified service used for export of the said goods has been taken under the Cenvat Credit Rules, 2004. It clearly implies that in a case where the exporter avails Cenvat credit, he cannot avail the benefit of exemption. There is no bar stipulated in the said notification that he cannot avail cenvat credit and the availment of Cenvat credit will be entirely governed by the terms and conditions of CCR. The fact that input or input services, on which duty/tax has been paid, have been received and used in the manufacture of excisable goods which have been exported is not in dispute. The adjudicating authority denied the input service credit on the impugned services, on the ground that benefit of Notification No. 17/2009 should have been compulsorily availed by the exporter manufacturer. Since the notification being a conditional exemption notification, it is for the manufacturer to decide whether to avail the said exemption or not. Thus, there is no merit in Revenues contention that the appellant should have availed the benefit of Notification No. 17/2009 instead of taking Cenvat credit on the impugned services. Therefore, the assesse is entitled to take any input service credit in the course of their business activity.
6. In view of the forgoing discussions, I set aside the impugned order and allow the appeal with consequential relief, if any.
(Order Pronounced in the open Court on________________) (P.K. CHOUDHARY) JUDICIAL MEMBER BB 1