[2014] 43 taxmann.com 34 (Gujarat) Central Excise vs. Inductotherm India (P.) Ltd.

Facts:
The assessee, manufacturer – exporter claimed CENVAT credit in respect of cargo handling services. The department denied the credit on the ground that, in absence of express mention of such service in the definition Clause in Rule 2(l) of CCR, the same cannot be termed as “input service”. Both the Commissioner (Appeals) and the Tribunal held in favour of the assessee. Before the High Court, Revenue contended that cargo handling service cannot be treated as input service since the place of removal cannot be said to be the port of shipment. The question before the High Court was that, whether the input credit of Service Tax paid by the assessee-respondent on the cargo handling service would be admissible and whether the same would fall under the purview of the definition of “input service.”

Held:
The Hon’ble High Court observed that the cargo handling service is rendered on clearance of the final product from the port for the purpose of export. In light of the various decisions rendered in this area, the High Court adopted such interpretation to hold that in case of export of the final product, place of removal would be the port of shipment and not factory gate and therefore, the manufacturer would be entitled to avail the amount claimed towards cargo handling as ‘input service’ under the CENVAT Credit Rules. Considering the expression used in the ‘means’ part of the definition of “input service” in Rule 2(l) of CCR, i.e., it includes services used by the manufacturer directly or indirectly in or in relation to manufacture of the final product and in relation to the clearance of the final product from the place of removal, High Court held that, the definition is very wide in its expression, since number of services used by manufacturer are included in the same, whether used directly or indirectly.