2009 (8) TMI 620 - AT - Service Tax

Appeals Tribunal Upholds Cenvat Credit Eligibility Beyond Factory: Business Needs Over Physical Limitations

The Commissioner (Appeals) set aside the demand for wrongly availed Cenvat credit under Service Tax on specific services, imposing penalty and interest. ... Cargo Handling Services – Cenvat Credit – The Revenue submits that freight charge was not included in the assessable value and, therefore, respondent is not eligible to avail the credit. Revenue also contending that credit is not admissible as services used beyond place of removal. In the light of decision of ABB Ltd. v. CCE & ST, 2009 -TMI - 34139 - CESTAT, BANGALORE, held that-order passed by the Commissioner (Appeals) is upheld. Appeal filed by the Revenue is rejected. Issues:1. Confirmation of demand for wrongly availed Cenvat credit under Service Tax on specific services.2. Imposition of penalty and interest.3. Interpretation of the definition of 'input service' in relation to the services provided.4. Eligibility of availing credit on cargo handling services and technical testing services.5. Inclusion of freight charges in the assessable value.6. Admissibility of new facts at the appeal stage.Analysis:The original authority confirmed a demand for wrongly availed Cenvat credit under Service Tax on 'Cargo Handling Service' and 'Technical Testing & Analysis service,' imposing penalty and interest. However, the Commissioner (Appeals) set aside the adjudication order, leading the Revenue to file an appeal. The Revenue argued that the services provided were not covered under the definition of input service as they were outside the factory premises and freight charges were not included in the assessable value, thus rendering the respondent ineligible for credit.Upon review, it was found that the show cause notice aimed to deny input credit based on services provided outside the factory premises. The Commissioner (Appeals) highlighted that services used directly or indirectly in relation to the manufacture of final products, including clearance from the place of removal, are eligible for credit. The Tribunal referred to a previous case where it was established that the definition of 'input service' should not be narrowly interpreted to confine only up to the factory or depot of manufacturers.Regarding the contention that freight expenses were not included in the assessable value, it was noted that such an allegation was not raised earlier in the proceedings, and introducing new facts at the appeal stage is impermissible. Consequently, the Order passed by the Commissioner (Appeals) was upheld, and the Revenue's appeal was rejected. The judgment emphasized the importance of interpreting the concept of input service in line with business requirements and not restrictively based on physical locations like factories or depots.