2010 (8) TMI 231 - AT - Service Tax

Input service credit on service tax paid to the brokers - respondents availed the services of the brokers for sale of their finished goods in domestic as well as export sale and brokerage was paid to these brokers, service tax paid on this brokerage was availed by the respondents as input service credit - credit was alleged to be not available to the respondents holding that the said services have been availed by the respondents beyond the place of removal - Held that - finished products were removed after pointing out the buyers by the broker - respondents has availed the services of the broker before clearance of the goods from their factory - assessee is entitled for input service credit for clearance of their final product - Appeal filed by the Revenue is rejected

Summary

Issues:
Allowance of input service credit on service tax paid to brokers.

Analysis:
The appeal was filed by the Revenue challenging an order that allowed input service credit to the respondents on service tax paid to brokers for availing services related to the sale of finished goods. The Revenue contended that the services were availed post-manufacturing, making the respondents ineligible for input service credit, citing a relevant case law. On the other hand, the respondents argued that they availed the broker services before the clearance of finished products, thus qualifying for input service credit.

The Tribunal carefully considered both arguments. It noted that the allegation of availing services beyond the place of removal was incorrect, as the broker services were utilized before the goods were cleared from the factory. The Commissioner (Appeals) correctly interpreted Rule 2(1) of Cenvat Credit Rules, 2004, stating that input service credit is permissible for the clearance of final products. The case law referenced by the Revenue was deemed irrelevant as it pertained to 'input' rather than 'input service.' Consequently, the Tribunal upheld the impugned order, finding no grounds to interfere with it.

Ultimately, the appeal by the Revenue was rejected, affirming the decision that allowed input service credit on service tax paid to brokers for services related to the sale of finished goods.