2009 (8) TMI 172 - AT - Service Tax

Cenvat credit allowed for technical, commission, courier, C&F, maintenance services under wide 'input services' definition Rule 2(1) CCR 2004

CADILA HEALTHCARE LTD. Versus COMMISSIONER OF C. EX., AHMEDABAD

CESTAT (Ahmedabad, AT) allowed the appeals and set aside the impugned order, holding that Cenvat credit of service tax is admissible for technical and ... Availment of Cenvat credit of service tax paid on Technical and Analysis Services, Commission paid to the foreign agents, Courier services and C & F Agent services - input services has been defined in Rule 2(1) of Cenvat Credit Rules 2004 - HELD THAT:- In any case, as rightly pointed out by the learned advocate and also seen from the several decisions of the Tribunal, what is to be seen for considering the eligibility of service tax paid as Cenvat credit is as to whether they are covered by the inclusive definition or not. Definition as reproduced shows that it is a wide definition and in terms of the definition, credit is admissible. As regards C&F Services also, we find that observation of the Commissioner is that a service of C&F cannot be considered as a sale promotion, is not correct. C&F has a definite role to play in promotion of sales by storing the goods and supplying the same to the customers, thus he is actually promoting the sales. Further the decision of the Larger Bench of the Tribunal in the ABB Limited case [2009 (5) TMI 48 - CESTAT, BANGALORE-LB] has made it clear that the benefit of credit on service tax is admissible even where the services rendered is beyond the place of removal. The benefit of the decision of the Larger Bench was not available to the Commissioner at that point of time. As regards courier services, the Tribunal decisions in the case of Deloitte Tax Services (India) Pvt. Limited -[2008 (3) TMI 35 - CESTAT, BANGALORE] and CCL Products (I) Limited -[2009 (3) TMI 136 - CESTAT, BANGALORE] squarely cover the specific service and therefore the same is admissible. Similarly, Foreign Commission Agent services are also admissible, since it is a sale promotion. Without maintenance and repair or management, the factory cannot be nun and therefore, service tax paid on these services is also admissible. Thus, we find that the Cenvat credit of service tax paid on different services and availed by the appellant is in order and accordingly, we set aside the impugned order and allow the appeals with consequential benefit. Issues:Admissibility of Cenvat credit on service tax paid on various services including Technical and Analysis Services, Commission to foreign agents, Courier services, and C & F Agent services.Analysis:1. The appellants, engaged in manufacturing medicaments, availed Cenvat credit of service tax on specific services. The Revenue contended that the credit was inadmissible, leading to an order for recovery with interest and imposition of a penalty.2. The appellant's advocate argued that the services for which tax was paid and credit taken fell within the definition of input services as per Rule 2(1) of Cenvat Credit Rules 2004. The advocate cited the definition, emphasizing various activities like market research, accounting, and quality control, to support the eligibility of the credit.3. The advocate relied on the decision of the Larger Bench of the Tribunal in ABB Limited case and several other judgments to establish that direct relation to manufacturing was not necessary for service credit eligibility.4. The Revenue argued that Technical Testing and Analysis services were for a product not commercially produced, making the credit inadmissible for manufacturing. Other services were to be assessed based on the Tribunal's Larger Bench decision.5. The Tribunal analyzed the manufacturing process of medicaments, highlighting the stages of testing and analysis products undergo. It disagreed with the Revenue's view that credit was inadmissible if goods did not reach commercial production stage. The Tribunal emphasized the wide definition of input services and the admissibility of credit based on the definition.6. The Tribunal found that C&F services played a role in sales promotion, making them eligible for credit. It also referenced Tribunal decisions on courier services and foreign commission agent services to support their admissibility. The Tribunal allowed credit for repair and maintenance services based on precedent decisions.7. Ultimately, the Tribunal concluded that the Cenvat credit on various services availed by the appellant was in order. The impugned order was set aside, and the appeals were allowed with consequential benefits.