Tribunal decision: Appeal partially allowed, demand on services set aside, penalty annulled, relief granted.

The Tribunal partially allowed the appeal, setting aside the demand on services from Axis Bank due to the appellant's ISD status and upholding the demand on foreign remittances. The penalty under Section 77 was annulled, granting relief under Section 80.

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Issues:
1. Denial of credit on services received from Axis Bank
2. Demand of service tax on foreign remittances made to International Finance Corporation

Analysis:

Issue 1: Denial of credit on services received from Axis Bank
The appellant, engaged in coal tar products manufacturing, faced a demand for service tax on foreign remittances and Cenvat credit disallowance. The Commissioner's order confirmed some demands but also dropped certain portions. The appellant challenged the denial of credit of Rs. 40,17,000 on services from Axis Bank. The appellant argued that the Bank provided finance services for which service tax was paid, even though the loan was canceled later. The Commissioner's denial was based on assumptions without concrete evidence. The appellant, being an Input Service Distributor (ISD), contended that recovery under Rule 14 of Credit Rules can't be made from an ISD, citing relevant legal precedents. The Tribunal concurred, citing a CBEC letter and previous decisions, setting aside the demand as legally unsustainable.

Issue 2: Demand of service tax on foreign remittances
The second issue involved a demand of Rs. 63,207 on foreign remittances to International Finance Corporation. The appellant did not contest this demand but disputed the imposition of a general penalty under Section 77, citing Section 80 of the Act. The Authorized Representative supported the Commissioner's findings, stating that since credit was availed by the Registered Office and not utilized by the appellant, no service receipt occurred. The Tribunal upheld the demand due to non-contestation by the appellant but set aside the penalty under Section 77, providing relief under Section 80.

In conclusion, the Tribunal partially allowed the appeal, setting aside the demand on services from Axis Bank due to the appellant's ISD status and upholding the demand on foreign remittances. The penalty under Section 77 was annulled, granting relief under Section 80.

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