2025 (12) TMI 708

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....hat the respondents, M/s Knorr Bremse India Pvt. Ltd. are registered as manufacturers of Airbrake system and parts thereof for railways and as a service provider. On conduct of an audit for the financial year 2014-15 it appeared to the revenue that the appellants have taken CENVAT Credit of the service tax paid in respect of the services availed by them from M/s VVS Concast Ltd. and others in realization of money from their buyer; it appeared that the services have not been utilized by the appellants directly or indirectly, in or relation to the manufacturing of the final products or clearance of final products up to the place of removal; therefore, these services do not qualify as input services under Rule 2(l) of CENVAT Credit Rules,2004.....

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....relevance to the impugned period. 4. Shri Amar Pratap Singh, learned counsel for the respondent submits that the services on which credit has been availed by the respondent are in the nature of "business auxiliary services" similar to "cash management services" covered under "banking and other financial services"; the services utilized are those provided are similar to the services provided by banks or similar institutions i.e. collection of receivables, execution of payments, managing liquidity; these services fall under the scope of banking and other financial services defined under Sec 65(12) of the Finance Act,1994. Learned Counsel further submits that CBEC vide DOF No. 334/1/2007-TRU dated 28.02.2007 clarified that cash management s....

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....perused the records of the case. We find that learned Commissioner finds that the department on the one hand levying the service tax on the service providers of the respondent treating the "collection of receivables" as a financial service and at the same time denying the credit to respondent holding that it's not a financial service as provided by bank or financial institution. Learned Commissioner relies on the cases cited above and finds that in the instant case the respondent is incurring cost in getting the financial services i.e. "collection of receivables" through private company offering "cash management services"; this cost goes into final product manufactured by the respondent; hence, the services would qualify for CENVAT Credit. ....