Place of Removal is port from Where Goods are Exported, in case of Export: CESTAT [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that place of removal is the port from where goods are exported, in case of export.

The respondents, M/s. Nelcast Limited, are engaged in manufacture of castings. On verification of accounts, it was noticed that they have availed credit on the service tax paid on freight charges for outward transportation of goods upto port for export of the same. The respondent had also availed credit of service tax paid on the CHA charges. The Department was of the view that the said credit is not admissible for the reason that the factory gate is the place of removal.

Show Cause Notice was issued proposing to deny the credit and to recover the same along with interest and for imposing penalty. After due process of law, the original authority confirmed the demand along with interest and imposed penalty. On appeal, Commissioner (Appeals) set aside the order holding that the respondent is eligible to avail the credit. Aggrieved by such order, the department preferred the appeals.

The AR G. Anandalakshmi reiterated the grounds of appeals and submitted that the issue whether credit can be availed on freight charges upto the port has been referred to the Larger Bench of the Tribunal as per Interim Order No. 40002/2020.

The Consultant P.C.Anand appeared and argued for the respondent. It is submitted that the said reference made to the Larger Bench is not applicable to the respondent’s case as the goods were exported. In the case of export, the place of removal is the port from where the goods are exported. Theconsultant relied upon the Board Circular No. 999/6/2015-CX dated 28.2.2015 to support his argument.

The Bench comprising SulekhaBeevi CS, Judicial Member and M Ajit Kumar, Technical Member noted that “We find that the issue that is referred to the Larger Bench is whether the factory gate or the buyer’s premises can be considered as the place of removal for the purposes of availing credit on outward transportation charges. In the present case, the goods having been exported, there is no doubt that the place of removal is the port of export as clarified by the Board circular.”

To Read the full text of the Order CLICK HERE

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