AMALGAMATIONS REPCO LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) IN all these appeals, the question raised is whether the CHA and other services availed for export of the goods can be taken as credit by the manufacturers of the goods treating the same as input service. The 14 appeals which have been filed by the Department are against orders passed by the authorities below allowing such credit. The other appeal filed by the appellant -assessee is against orders of the authorities below denying such credit. In the course of hearing, a number of precedent decisions on this issue were cited. The same are listed below: -

(2.) IT was pointed out by the Tribunal in the case of Kbace Tech P. Ltd. v. CCE & ST, Bangalore - : 2010 (18) S.T.R. 281 (Tri. -Bang.) that the legal provision under Section 37(2)(xviaa) enabled making rules for provision of credit of service tax paid or payable on taxable services used in or in relation to the manufacture of excisable goods, whereas the definition of input service under the CENVAT Credit Rules, 2004 was different and that there is lack of harmonization between the expressions used in the Act and the Rules. The two decisions at Sl. No. (1) and (2) in paragraph 2 above appear to be quite legal in terms of what Section 37(2) of the Act allows the rule makers to provide for. CHA services have been held under the said two decisions not to be relatable to manufacture of the goods. Some of the other decisions are apparently based on the definition of input service found in the rules, which as mentioned above, are not harmonized with the Act. These decisions are not well founded as they are based on premises like place of removal being stretched to cover the actual place of delivery i.e. the port area, and the activities relating to business being stretched to cover activities like CHA service which takes place much after the manufacturing activity is over and in the course of despatch of the goods in the course of export. However, I am of the considered view that for the reasons stated below, it is not necessary to deal in detail with these decisions cited by both sides.

(3.) IT is the undisputed policy of the Government not to burden the export goods with domestic taxes as has been noted in various decisions of the Tribunal. The reasons are obvious. We do not want to make domestically produced goods, when exported to the foreign market, to become uncompetitive. Secondly, no country wants to export the domestic taxes meant to be levied on domestic consumption of goods and services. Each country either exempts such taxes in respect of export goods, including taxes relating to inputs used in the export goods, or there are alternative schemes for providing rebate, drawback of duties suffered by export goods. India is no exception as we also have similar schemes. There are also schemes making available duty -free goods and services for export production.