2025 (4) TMI 104 - AT - Central Excise

CENVAT Credit Available for Courier Services for Samples and Documents Under Cenvat Credit Rules

Haldyn Glass Ltd Versus C.C.E. & S.T. -Vadodara-i

The Tribunal ruled that CENVAT credit is available for courier services used for sending samples, documents, and finished goods, both before and after the ... Availability of CENVAT Credit on courier service post amendment of 2011 - input services - period involved of July, 2012 to June 2017 - HELD THAT:- This Court finds that the decision as contained in final order of Dynaflex Pvt. Ltd. Vs. CCE and ST Vadodara- ii, [2017 (8) TMI 1217 - CESTAT AHMEDABAD] in which, inter alia, the present appellant was also a party, was concerned with the period post amendment of year 2011 and was considered by the Bench, while dealing with the matter held that 'includes services used in relation to modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs. accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security business exhibition, legal services, Inward transportation of inputs or capital goods and outward transportation upto the place of removal, but excludes services.' A simple reading of the said amended provision, makes it clear that though the expression 'activities relating to business, such as has been deleted, but the illustrative services viz., Accounting, Auditing, Financing, Recruitment and quality control, Coaching/training, Computer Networking, Credit Rating, Share Registry, Legal Services, Security, Business Exhibition etc., even though directly not related to manufacturing activity, being not used inside the factory premises, but continued to remain in the said definition of input service - It cannot be denied that 'Courier Service Involves a host of uses relating to the activity of manufacture and sale of goods. For example, the documents relating to technical expert's opinion, sample testing report, sending of samples, machine catalogue etc. are received and dispatched by utilizing the services of 'Courier' and it cannot be said that these are de hors of the activities of manufacturing business. This Tribunal in the cases of Long Meditech Ltd [2016 (7) TMI 468 - CESTAT CHANDIGARH] and Sunbeam Generators Pvt Ltd [2016 (7) TMI 895 - CESTAT CHENNAI] opined that credit avail on Service Tax paid on 'Courier Serves' is eligible to Cenvat Credit. Conclusion - The Service Tax paid on the 'Courier Services for various purposes viz., Sending Samples, Documents, finished goods etc., would be eligible to Cenvat Credit before and even after amendment to the definition to the 'Input Services' with effect from 01.4.2011. Appeal allowed. ISSUES PRESENTED and CONSIDEREDThe primary issue considered in this judgment is the availability of CENVAT Credit on courier services post the 2011 amendment to the Cenvat Credit Rules. The core legal question revolves around whether the deletion of the phrase 'related to business' from the definition of 'Input Service' in the Cenvat Credit Rules affects the eligibility of CENVAT Credit for courier services used in sending/receiving samples, documents, and finished goods.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe legal framework centers on the Cenvat Credit Rules, particularly the definition of 'Input Service' under Rule 2(1) as amended effective April 1, 2011. The amendment involved the removal of the phrase 'activities relating to business' from the definition. The Tribunal considered precedents, including its own previous decisions and judgments in cases such as Dynaflex Pvt. Ltd. Vs. CCE and ST Vadodara-II, Long Meditech Ltd, and Sunbeam Generators Pvt Ltd, which addressed similar issues.Court's Interpretation and ReasoningThe Tribunal interpreted the amended definition of 'Input Service' to mean that while the phrase 'activities relating to business' was removed, the definition still includes various services that, although not directly related to the manufacturing process within the factory, are integral to the business of manufacturing and selling goods. The Tribunal emphasized that services like accounting, auditing, and courier services remain within the scope of 'Input Service' as they are essential to the broader business activities associated with manufacturing.Key Evidence and FindingsThe Tribunal noted that the appellant utilized courier services for sending samples, documents, and finished goods, which are critical for the business operations of manufacturing and selling goods. The Tribunal found that these activities are not separate from the manufacturing business and thus should be eligible for CENVAT Credit.Application of Law to FactsThe Tribunal applied the amended definition of 'Input Service' to the facts of the case, concluding that courier services used for business-related activities, such as sending samples and documents, qualify for CENVAT Credit. The Tribunal distinguished the present case from the Ultratech Cement Limited decision, noting that the latter did not address the specific issue of input credit post the 2011 amendment.Treatment of Competing ArgumentsThe Tribunal addressed the respondent's reliance on the Ultratech Cement Limited case, which argued that input service credit is only available up to the place of removal. The Tribunal found this argument inapplicable, as the Ultratech case did not pertain to the post-2011 amendment scenario and the specific use of courier services.ConclusionsThe Tribunal concluded that the appellant is entitled to CENVAT Credit on the service tax paid for courier services used for sending samples, documents, and finished goods, both before and after the 2011 amendment to the definition of 'Input Service.'SIGNIFICANT HOLDINGSThe Tribunal held that the amended definition of 'Input Service' does not exclude services that are essential to the business of manufacturing and selling goods, even if they are not directly related to manufacturing activities within the factory premises. It stated, 'Service Tax paid on the 'Courier Services for various purposes viz., Sending Samples, Documents, finished goods etc., would be eligible to Cenvat Credit before and even after amendment to the definition to the 'Input Services' with effect from 01.4.2011.'The core principle established is that the removal of the phrase 'activities relating to business' does not preclude the eligibility of CENVAT Credit for services that are integral to the broader business activities of manufacturing and selling goods.The final determination was to allow the appeal with consequential relief, affirming the appellant's right to CENVAT Credit on courier services.