Input service credit and trading activity

[shaji thomas]

Dealer registered under Central Excise engaged in imports is also registered under S.Tax and providing output service under the category of Business Auxiliary Service( local market exploration ) and have avialed input service credit on CHA Service and other import realted services and discharged the service tax liabilty from the credit so earned. Whether he is eligible to avail such credit and the services can be considered as input services or otherwise?

[CA Rachit Agarwal]

Business Auxilliary Service being the output service.

As the CHA service coming under the definition of Input Service of Rule 2(l) and the CHA services is being used  for providing the output service hence the Cenvat Credit can be availed pursuant to Cenvat Credit Rules, 2004

[Radha Arun]

It seems to me that CHA service is not connected with the output service of local market exploration, and therefore the credit would not be available. (The definition of input service is 'service used for providing output service'.)

AI Summary

Cenvat Credit eligibility for CHA services contested; one view allows credit when used for Business Auxiliary Service, another denies it. A dealer providing Business Auxiliary Service sought to claim credit for Customs House Agent and import-related services. One view treats CHA services as Input Service used in providing the output service and permits availing Cenvat Credit under the Cenvat Credit Rules, 2004. A contrary view contends CHA services are not connected with the specific output service of local market exploration and thus do not qualify as input services for credit.