Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Rachna Gupta (Judicial Member) allowed an appeal that was filed against the Order-in-Appeal of Commissioner (A).

That the appellant who was engaged in the manufacture of Zinc / Lead / Bulk Concentrate Sulphuric Acid, Zinc Cathode had availed various services at Kandla Port as that of C&F, Testing, Sampling, etc. as were necessary for relation to the export of the aforesaid goods. The appellant accordingly had availed the Cenvat Credit on such services. However, the vide show cause notice Department formed an opinion that the appellant had wrongly taken the input service tax credit in contravention of the provisions of Rules 3 & 4 of Cenvat Credit Rules 2004 (CCR Rules). Resultantly, recovery of the credit availed along with the interest was proposed along with the proposal of the imposition of the penalty upon the appellant. The said order was assailed before the Commissioner (A) who allowed the Cenvat Credit, of service tax paid on services But disallowed the Cenvat credit taken during the period April 2008 to September 2008 on the ground that the services which are availed only upto the place of removal are input services eligible to credit, however, the appeal was rejected. Thus, the instant appeal. It was submitted by the counsel of the appellant, Mr. Hemant Bajaj that penalty was not imposable and that interest wan not payable by the appellant for the reason that the appellant was legally entitled to avail the Cenvat Credit on the impugned services. Once the credit was admissible to him, the question of any penalty or interest does not arise.

The Tribunal while allowing the appeal explained that the availability of cenvat credit to the manufacture of goods floats from rule 3 (1) (2) of CCR Rules which provides that the manufacturer or producer of final product or provider of taxable service shall be allowed to take credit of any input service received by the manufacturer of the final product or by the provider of output service. This rule clarifies that to avail Cenvat Credit the services received by the manufacturer or by service provider should be such as may be covered under the definition of input service. The moot issue to be adjudicated herein is as to whether the services availed by a manufacturer at the port are the services availed by him upto the place of removal i.e. as to whether “at the port” is included in “upto the port”. For the purpose, the definition of place of removal acquires importance. This definition has not been given in CCR Rules 2004. In terms of Rule 2 (F) CCR Rules, we can rely upon the Central Excise Act 1944 for the purpose. The Tribunal further clarified that in no circumstance the handing over of the goods by the manufacturer exporter to the shipping line can happen at the gate of the port, the manufacturer exporter has to enter the gates of the port and has to comply with all the formalities of filing shipping bills and of getting the LeT export order at the port i.e. beyond the gates thereof. Thus “at the port” becomes the part of the phrase “upto the place of removal”. The Court further opined that the said services as that of CHA, CNF, testing and sampling, etc. are eligible to be classified as the input services resultantly the appellant is entitled to avail the cenvat credit for the tax paid on such input services.[Hindustan Zinc Ltd. v. Commr. of Customs, CE & CGST, 2020 SCC OnLine CESTAT 205, decided on 08-10-2020]

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