2023 (9) TMI 1403 - AT - Central Excise

Assessee entitled to CENVAT credit on service tax paid through input service distribution under Rules 2(l), 7 and 9

CESTAT Kolkata allowed the assessee's appeal regarding CENVAT credit on service tax paid through input service distribution. The Revenue argued that the ... CENVAT Credit - input service distribution - assessee availed cenvat credit of service tax paid on invoices issued by ABMCPL - It was observed that ABMCPL was merely distributing credit despite not being an input service distributor and hence cenvat credit is not available to the assessee since it was a violation of provisions of Rule 2 (l),Rule 7 and Rule 9 of the Cenvat Credit Rules, 2004. HELD THAT:- It is found that the assessee’s own case for the earlier period, this issue came up before this Tribunal in M/S. HINDALCO INDUSTRIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II [2023 (6) TMI 457 - CESTAT KOLKATA] and this Tribunal has observed the services rendered by the ABMCPL is rightly classifiable under the category of ‘Business Support Service’ and ABMCPL has rightly paid Service Tax under the said category. The service tax paid by ABMCPL has been rightly distributed to their group companies, including Appellant.” As the issue has already been decided in favour of the assessee, therefore, the service rendered by ABMCPL is rightly classifiable under the category of BSS and ABMCPL has rightly paid the service tax under the said category and the service tax paid by ABMCPL has rightly been distributed to their group companies including the assessee - the assessee is entitled to take the cenvat credit on the services distributed by ABMCPL. The appeals filed by the assessee are allowed and the appeal filed by the Revenue is dismissed. Issues involved:The issue in this case revolves around the eligibility of the assessee to avail cenvat credit of service tax paid on Business Support Services (BSS) provided by a company, ABMCPL, to the group companies, including the assessee. The Revenue contends that the cenvat credit is not eligible as there is no direct nexus of the input services with the manufacturing of dutiable products, and ABMCPL was distributing credit without being an input service distributor, violating certain provisions of the Cenvat Credit Rules, 2004.Summary of Judgment:Issue 1: Eligibility of cenvat credit on BSS provided by ABMCPLThe Tribunal considered the definition of 'Business Support Service' under Section 65(104c) of the Finance Act, 1994, which includes operational or administrative assistance, infrastructural support services, and managing distribution and logistics services. The Tribunal observed that ABMCPL provided services falling under the ambit of BSS to the group companies, including the assessee, and paid service tax accordingly. Referring to relevant circulars and letters, the Tribunal held that the services provided by ABMCPL qualified as BSS, and the value of services rendered by ABMCPL, even if merely apportioned expenses, represented the taxable service of BSS. The Tribunal noted the close nexus of these services with the business activities of the assessee, such as advertisement, market research, procurement, accounting, legal services, etc. Therefore, the Tribunal concluded that the assessee was entitled to avail cenvat credit on the services provided by ABMCPL.Decision:The Tribunal allowed the appeals filed by the assessee, dismissing the appeal filed by the Revenue. The Tribunal held that the services rendered by ABMCPL were rightly classifiable under the category of BSS, and ABMCPL had correctly paid service tax under this category. Consequently, the assessee was deemed entitled to take cenvat credit on the services distributed by ABMCPL. The cross objection filed by the assessee was also disposed of accordingly.