Credit available for Service Tax paid on Courier Services for Sending Free Samples to Foreign Buyers: CESTAT [Read Order]

Free Samples - Taxscan

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) in Raj Petro Specialities Pvt. Ltd v. Pr. Commissioner of GST & Central Excise, held that the Cenvat Credit is allowable on  the amount of service tax paid on courier services for sending the free samples to prospective buyers in the foreign countries.

The appellants, in the instant case, are manufacturers of Transformer oil, Petroleum jelly and light liquid paraffin and are availing the facility of Cenvat credit on service tax paid on various input services. During the disputed period, they had availed credit of service tax paid on courier services for sending the samples of their products to buyers in foreign countries.

The department rejected the claim and held that these are export of goods as the courier services is akin to the outward transportation of finished goods from factory gate to the customer’s premises and therefore is not eligible for the credit.

Before the tribunal, the counsel for the appellant has submitted that the free samples were sent to the prospective foreign buyers as sales promotion/marketing/advertisement for trading and not in any way of transportation of finished goods.

Accepting the contentions of the appellant-assessee, the bench held that “the samples have been sent free of cost to the prospective buyers. It cannot be said to be the removal of finished goods, which involves sale of excisable goods. It is more akin to sales promotion or marketing or advertisement of the product which has been sent to the prospective foreign buyer. The same would fall within the inclusive part of the definition. Thus I find that the disallowance of credit alleging that these are outward transportation services involving removal of finished goods up to the buyers premises is highly erroneous. I hold that the denial of credit is unjustified and requires to be set aside which I hereby do. The impugned orders are set aside.”

Subscribe Taxscan Premium to view the Judgment
taxscan-loader