2015 (12) TMI 811 - AT - Service Tax

Tribunal affirms input service credit for manufacturing business; emphasizes nexus between services and business operations.

The Tribunal upheld the Commissioner (Appeals)' decision allowing input service credit on courier service, air ticketing service, technical training & ... Denial of CENVAT Credit - courier service, air ticketing service/air travel agent service, technical training & coaching service and outward freight service - Nexus with manufacturing activity - Held that:- Services have been received to visit them in relation to procurement of inputs/sale of their final products. For technical training and coaching service, it is observed that the respondent is manufacturing automotive switches having joint venture with Japanese company. As all the technical know-how and documents in Japanese language, they are using Japanese language instructor for teaching Japanese language to their technician and availing the credit for this service. For outward freight service, this service has been availed by the respondent for transportation of the goods upto the place of the buyer and as purchase order, they are required to be delivered the goods at their door. And the respondent has paid Service Tax on outdoor catering service. - Commissioner (Appeals) has rightly held that these services being availed by the respondent in the course of business of manufacturing. Therefore, I do not find any infirmity in the impugned order of the Commissioner (Appeals) and the same is upheld. - Decided against Revenue. Issues:Allowance of input service credit on courier service, air ticketing service/air travel agent service, technical training & coaching service, and outward freight service.Analysis:The key issue in this judgment revolves around the allowance of input service credit on various services by the Commissioner (Appeals) and the subsequent appeal by the Revenue challenging this decision. The Revenue argued that these services lacked nexus with the manufacturing activities of the respondent, thus questioning their eligibility for input service credit. However, the Commissioner (Appeals) found merit in the respondent's utilization of these services in the course of their manufacturing business.Regarding the courier service, the Commissioner (Appeals) noted its essential role in despatching payments, invoices, and purchase orders to suppliers, considering them integral to the business operations. Similarly, for air ticketing service, it was highlighted that these services were utilized for selling or exporting manufactured goods, both domestically and internationally, emphasizing the connection to procurement and sales activities. The technical training and coaching service was justified based on the need for Japanese language instruction to understand technical documents, crucial for the manufacturing process. Lastly, the outward freight service was deemed necessary for transporting goods to buyers, aligning with purchase order requirements.Upon thorough consideration of the Commissioner (Appeals) findings, the Tribunal upheld the decision, affirming that the services in question were indeed availed by the respondent in the regular course of their manufacturing business. Consequently, the Tribunal dismissed the Revenue's appeal, emphasizing the legitimacy of the input service credit claimed by the respondent. This judgment underscores the importance of establishing a direct nexus between services availed and the core business activities to determine eligibility for input service credit, as demonstrated through a detailed analysis of each service's relevance to the manufacturing process.