CX – Since cost of freight and insurance incurred on transportation of goods to buyer's premises is not included in AV, credit of security guard service availed for transit from factory to buyer's premises is not admissible: CESTAT
By TIOL News Service
MUMBAI, NOV 17, 2017: THE appellant was denied CENVAT credit in respect of security services, courier services and repair and maintenance service availed by them.
In appeal before the CESTAT, the appellant submitted that they are manufacturing expensive products and, therefore, in order to deliver such goods safely to the clients, they have to employ service of security agency, in the shape of armed guards, to accompany the goods to the premises of the buyers. Moreover, in terms of contract with the buyers, the delivery is FOR basis at the premises of the buyer and in these circumstances, the premises of the buyer should be considered as the place of removal and credit should be allowed. Reliance is placed on the decision of the Tribunal in Heubach Colour Pvt. Ltd.- 2012-TIOL-1720-CESTAT-AHM. It is further submitted that they are availing service of courier for dispatch of documents and small components to the buyers and the repair and maintenance service was used in the matter of office furniture and the credit has been rightly taken.
The AR supported the order of the lower authorities.
The Single Member Bench observed –
Security Service:
++ Counsel (for the appellant) informed that they are not availing CENVAT credit of the Goods Transport Agency service and transit insurance for supply of goods to the buyers. He also informed that they are not including the value of freight and insurance incurred on transportation of goods to the buyer's premises in the value. In the above circumstances, the claim of the appellants that the buyer's premises should be treated as place of removal cannot be sustained as they cannot take contradictory stand in respect of freight / insurance and transit security service.
Distinguishing the cited decision of Heubach Colour (supra), the Bench noted that the said decision was passed in respect of security service provided for transport of export goods to the port of export and, therefore, not applicable to the instant case.
Consequently, the CESTAT held that the credit of security guard service availed for transit from the factory to the buyer's premises is not admissible.
Courier Service:
The appellant relied on the decisions in Radical Instrument – 2015-TIOL-2019-CESTAT-DEL, Perfetti Van – 2016-TIOL-1686-CESTAT-CHD .
The Bench observed that whereas the decision in Radical Instrument is in respect of courier service availed in respect of documents and the decision in Perfetti Van related to courier service availed in respect of procurements of inputs and was in respect of service provider.
Held:
+ Credit insofar as it relates to courier service availed for documentation purpose is allowed.
+ In so far as courier service used for procurement of inputs would be allowed.
+ So far as it relates to clearance of finished goods the credit would not be admissible.
Repair & Maintenance Service:
Service in respect of repair and maintenance service availed for the purpose of repair of office furniture. It has been asserted that the said office is within the factory premises, the cenvat credit of such input service cannot be denied.
Limitation and Penalty:
The appellants have claimed that the present dispute relates to issue of interpretation and therefore penalty should not have been imposed. From the discussion above, it is apparent that the law on the issue is very clear and there is no scope of interpretation.
The appeal was partly allowed.
(See 2017-TIOL-4041-CESTAT-MUM)
