By TIOL News Service

MUMBAI, FEB 12, 2019: THE appellant is engaged in manufacture of engine valves and supply the same to M/s Ford Expana S.L. in Spain. As per agreement and to ensure just-in-time policy of its customer, it has taken warehousing and allied services in Spain. It exports manufactured goods and the same are stored in warehouse provided to the appellant by one Espack in Spain.

The appellant bears the risk of loss or damage to the goods during the transit to the warehouse and the ownership of the goods remains with the appellant till those are delivered to M/s Ford Expana S.L.

The appellant paid Service Tax under "Reverse Charge Mechanism" on the aforesaid services under the category of "Business Support Services" and availed CENVAT credit of the Service Tax so paid on the aforesaid services provided by Expack and another company Integrale.

It is the case of the department that the CENVAT credit availed is inadmissible since the services availed by it are received beyond the place of removal i.e. after the clearance have been effected.

Demands were confirmed by the original authority and upheld by the Commissioner(A). The period involved is from May 2014 to December 2015.

Resultantly, the appellant is before the CESTAT.

It is submitted that in their case, in respect of the earlier period, the CESTAT had vide Final Order No. A/89796/17/SMB dated 01.09.2017 - 2017-TIOL-4011-CESTAT-MUM set aside the demand and, therefore, the said judicial precedence needs to be continued for the subsequent period.

The Bench had held thus -

"4.1 In the instant case, the ownership of the goods remain with the appellant, and some are sold to abroad from their warehouse. The appellants bore the risk of loss or damage to the goods during the transit to the warehouse and obviously the charges of freight are borne by the appellants. In these circumstances, it cannot be said that warehouse abroad is not the place of removal…"

Furthermore, "Business Support Services" received by the appellant is an admissible credit as handling, warehousing, packing etc. received from the foreign service providers are used in or in relation to manufacture of the final product, directly or indirectly and, therefore, appropriately covered under the definition of input service, since service tax was paid under "Reverse Charge Mechanism" holding place of provisioning of service as in India.

The AR, with the support of case law - 2014-TIOL-2286-CESTAT-AHM-LB submitted that that port of dispatch of loading port is to be considered as place of removal and not the warehouse situated abroad; that place of removal under Section 4(3)(c)(iii) of the Central Excise Act, 1944 is the port of export for which interference in the order of Commissioner (Appeals) by the Tribunal is uncalled for.

The Bench considered the submissions and after distinguishing the decision cited by the AR, inter alia observed -

"6. …, in the appellant's own case concerning warehousing at USA, this Tribunal of Mumbai had earlier given its finding, as referred above. In the said decision, such duty demand, holding availment of CENVAT credit on warehouse charge at foreign land was held as inadmissible and was set aside and in carrying forward the judicial precedence for same set of facts the following order is passed."

The appeals were allowed by setting aside the order passed by the Commissioner of GST & Central Excise (Appeals), Nashik.

(See 2019-TIOL-470-CESTAT-MUM)