At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Bangalore
By, THE HONORABLE JUSTICE: M.V. RAVINDRAN
For Petitioner: Neethu and Apoorva, Advocates And For Respondents: J. Harish, AR
1. These two appeals are directed against order-in-appeal No. 555/2014, dated 29-9-2014. Heard both sides and perused the records. The issue that arises for consideration in these appeals is whether the appellant herein is eligible to avail Cenvat credit of Service Tax paid on warehousing services performed outside the country (post export services). The appellant's records were audited and audit party raised objection for the availment of Cenvat credit of such Service Tax paid. Show cause notice was issued to the appellant for reversing the amount of Cenvat credit so availed. Appellant contested the show cause notice on merits. Adjudicating authority after following the due process of law rejected the contentions raised by the appellant and confirmed the demands raised with interest and also imposed penalties. Aggrieved by such an order, an appeal was preferred to the 1st Appellate Authority on merits. The 1st Appellate Authority also did not agree with the contentions raised and upheld the demands confirmed with interest and also penalties.
2. Learned counsel appearing for the appellant took me through the case records. It is her submission that Cenvat credit has been availed by the appellant on the warehousing services as the goods which are exported by them are final products and shipments are made from India to a warehouse situated abroad. Such warehouses abroad are the requirement of the purchasers, hence the appellant is required to maintain stocks in those warehouses. She would submit that the warehouses are essential for smooth and timely delivery of the final product to the customers hence the whole activity of storing and facilitating delivery of manufactured final products to the customers situated abroad is integral to the manufacturing activity of the appellant. Hence it is an input service used directly or indirectly in or in relation to the manufacture of final products. She would then read the definition of input services as it stood prior to 2011, submitting that any input service which is used in the activities relating to business, Cenvat credit is available and post 1-4-2011 it is her submission that it is inclusive to the business activities of the appellant. She would submit that the decisions of the Hon'ble High Court of Bombay in the case of Deepak Fertilizers and Petro Chemicals Corpn. Ltd. v. CCE [2013 (32) S.T.R. 532 (Bom.)] and the decision of the Apex Court in the case of Mahindra & Mahindra Ltd. [2015 (315) E.L.T. 161 (S.C.)] are applicable to the case in hand. She relies upon these decisions to submit that since the activity of storing the goods outside the country is in relation to the business activity of the appellant, Cenvat credit should not be denied.
3. Learned DR reiterates the findings of the lower authorities.
4. On consideration of the submissions made by both sides, I find that the issue is regarding the eligibility to avail Cenvat credit of Service Tax paid on the storage and warehousing services abroad, rendered to the appellant for storing the finished goods abroad.
5. On a specific query from the Bench as to who discharged the service tax liability on such services, it was informed that the invoice for rendering such services were issued by local warehousing service provider to the appellant. This factual matrix is absent in the impugned order before me. It is to be noted that the entire argument of the learned counsel for claiming the benefit of Cenvat credit of such Service Tax paid is based upon the contention that the place of removal for the goods in question is to be considered as warehouse situated abroad. I do not agree to such proposition for simple reason that in the case of Honest Bio-Vet Pvt. Ltd. v. CCE, Ahmedabad [2014 (310) E.L.T. 526 (Tri.-LB)] the Larger Bench has clearly recorded that the place of removal in respect of the goods cleared for export is the Port of dispatch or load port. In the case in hand, the goods are already exported from India and on landing abroad they are stored in the warehouses situated in such countries where the goods are despatched. It is an unacceptable proposition that the place of removal in the case in hand shifts to the warehouse situated aboard. In view of this, all the case laws relied upon by the learned counsel will not carry their case any further. I find that the 1st Appellate Authority in the impugned order has correctly come to the conclusion and the findings which I concur and reproduce.
"6. I find from the above provisions of law that insofar as input service relates to a manufacturer, it is clear that it has to be provided in or in relation to the manufacture of the final products and clearance of final products up to the place of removal. However, in the instant
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case, I find that the warehousing services are availed not only after the finished goods are fully manufactured and cleared from the place of removal but after it reaches its country of destination. Hence by no stretch of imagination, the impugned service would fit into the definition of "input service". Hence on this count alone I find that the appellants are not eligible for Cenvat on the impugned service." In view of the foregoing, I hold that the impugned order is correct and legal and does not suffer from any infirmity.