2012 (11) TMI 871 - AT - Central Excise

Tribunal allows CENVAT Credit for bank commission charges

The Tribunal ruled in favor of the respondent, allowing them to claim CENVAT Credit for bank commission charges related to business activities. The ... CENVAT credit of Service Tax on bank commission charges - Input service under Rule 2(l)(ii) of CENVAT Credit Rules, 2004 - Service used in relation to collection of export bills - Notification No.19/2009 ST - Connection of service to business of manufacture and saleCENVAT credit of Service Tax on bank commission charges - Input service under Rule 2(l)(ii) of CENVAT Credit Rules, 2004 - Service used in relation to collection of export bills - Notification No.19/2009 ST - Prohibition on double benefit - credit versus refund - Entitlement to CENVAT credit of Service Tax paid on bank commission charges levied for collection of sale proceeds - HELD THAT: - The Tribunal examined whether Service Tax charged by the bank on commission for collection of sale proceeds (April 2008 to February 2009) was an input service eligible for CENVAT credit. The adjudicating authority had denied credit, but the first appellate authority allowed credit on the view that the bank charges related to the business of manufacture and sale and thus fell within the definition of input service under Rule 2(l)(ii) of the CENVAT Credit Rules, 2004. The appellate authority further relied on Notification No.19/2009 ST (Sr. No.12(i)) which permits refund of Service Tax paid on services used in relation to collection of export bills, and held that refund and CENVAT credit are alternate remedies for taxes paid on export goods; consequently an exporter may take CENVAT credit of Service Tax on such services provided the exporter does not simultaneously claim refund. The Tribunal noted preceding coordinate decisions that applied the same reasoning and concluded the bank commission charges were in relation to the appellant's business and hence eligible for credit. Having considered the authorities and the first appellate findings, the Tribunal found no infirmity in the order allowing credit. [Paras 5, 7, 8, 9, 10]The CENVAT credit claimed on Service Tax paid on bank commission charges for collection of sale proceeds is admissible as input service under Rule 2(l)(ii) and the Revenue's appeal is rejected.Final Conclusion: Appeal by the Revenue is dismissed; the impugned order allowing CENVAT credit of Service Tax on bank commission charges (relating to collection of sale proceeds) is affirmed as correct and not infirm. Issues involved:Interpretation of CENVAT Credit Rules, 2004 regarding bank commission charges for collection of sale proceeds of goods and eligibility for CENVAT Credit.Analysis:The case involved a dispute regarding the eligibility of the respondent to claim CENVAT Credit for bank commission charges incurred during the period of April 2008 to February 2009. The respondent had taken the CENVAT Credit of the bank commission charges for the collection of sale proceeds of their goods. The Revenue contended that such charges were not eligible for credit as they were related to the sale proceeds of finished goods, which were considered to be beyond the place of removal. The first appellate authority allowed the appeal based on Notification No.19/2009-ST, stating that bank services in relation to business activities fell under the definition of input services as per CENVAT Credit Rules, 2004. The authority cited previous Tribunal decisions to support the decision.The Tribunal, after considering the arguments from both sides, found that the Service Tax charged by the bank was not for the collection of sale proceeds of export goods but rather for the business activities of the appellant. The Tribunal noted that the appellant was entitled to claim refund of Service Tax paid on specified services used in export of goods as per Notification No.19/2009-ST. The Tribunal held that the appellant was eligible for CENVAT Credit of Service Tax paid on bank commission charges based on the definition of Input Service in CENVAT Credit Rules, 2004 and the provisions of the notification. The Tribunal also referred to previous decisions supporting the appellant's position.The Tribunal emphasized that the first appellate authority's decision was in line with the law and highlighted that previous Tribunal decisions, such as Jeans Knit Pvt.Ltd. and JSW Steel Ltd., had addressed similar issues favorably for the assessee. The Tribunal concluded that the issue was no longer open to debate, considering the precedents and legal interpretations.In light of the above analysis and the legal principles discussed, the Tribunal found the appeal filed by the Revenue to be without merit and rejected it. The Tribunal upheld the impugned order as correct, legal, and free from any defects, ultimately dismissing the appeal filed by the Revenue.