Successful appeal allows cenvat credit on courier services for excisable goods

The appeal was successful as the High Court quashed the order disallowing cenvat credit on courier services for excisable goods and output services. The court held that courier services were indeed eligible for credit under the Cenvat Credit Rules, especially in transactions involving the sale of excisable goods on a FOR destination basis. The appellant, a microscope manufacturer, utilized courier services for sending finished products and rightfully availed cenvat credit. The judgment favored the appellant, citing precedent and allowing the cenvat credit on courier services for both export and domestic sales without imposing any costs.

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Issues:
Cenvat credit on courier service for excisable goods and output services.

Analysis:
The appeal was made against the Order passed by the Commissioner (Appeals) rejecting the appeal against the Primary adjudication order disallowing cenvat credit on courier services. The appellant availed cenvat credit on courier services used for excisable goods and output services like Repair & Maintenance and Erection Commission and Installation. The Primary adjudication order disallowed the cenvat credit and ordered recovery along with interest and penalty. The authorities concluded that the appellant could not legitimately avail cenvat credit on courier services for remittance of service tax on output services as they were not used as input services for providing the output services. They also held that cenvat credit could not be availed for remittance of central excise duty on finished excisable goods as they were post-manufacturing activities.

The assessee, a manufacturer of microscopes and accessories, utilized courier services for sending finished products to buyers and availed cenvat credit paid on such courier charges. The High Court decision in Ambuja Cements Ltd. case declared that freight charges involved in transactions where excisable goods are sold on FOR destination basis are eligible for credit under Cenvat Credit Rules. This decision favored the assessee as they availed cenvat credit on courier services for export and domestic sales. The court held that courier and Goods Transport Agency services are input services for output services like Maintenance, Repair, Erection, Commissioning, or Installation, making cenvat credit admissible.

Based on the above reasons and the High Court decision, the appeal succeeded, and the impugned order disallowing cenvat credit on courier services was quashed. The judgment was delivered in favor of the appellant without imposing any costs.

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