2009 (8) TMI 752 - AT - Service Tax

Cenvat credit input service Cargo handling service - Revenue submits that service tax paid on transportation of finished goods (Cargo Handling service and service provided on Technical Testing & Analysis provided outside the factory premises) from the place of removal to the customer destination, not covered under the definition of input service - Tribunal in the case of ABB Ltd. v. CCE & ST held that definition of Input service has to be interpreted in the light of requirement of business and cannot be read restrictively so as to confine only up to the factory or only up to depot of manufacturers - contention of the Revenue not sustainable Appeal rejected

Summary

Issues:
Demand of Cenvat credit under Service Tax on Cargo Handling Service and Technical Testing & Analysis service; imposition of penalty and interest; interpretation of input service definition; eligibility of availing credit for services provided outside factory premises; inclusion of freight charge in assessable value.

Analysis:
The original authority confirmed a demand for wrongly availed Cenvat credit on Cargo Handling Service and Technical Testing & Analysis service, along with penalty and interest. The Commissioner (Appeals) set aside this decision, leading the revenue to file an appeal. The revenue contended that the services provided outside the factory premises were not eligible for credit as they did not directly or indirectly relate to the manufacture of final products. However, the Commissioner (Appeals) interpreted the definition of input service to include services even after the clearance of final products from the factory, making the tax paid on such services eligible for credit.

The Tribunal referred to a previous case where it was held that the definition of "Input service" should not be narrowly construed to confine only up to the factory or manufacturer's depot, emphasizing the importance of interpreting it in the context of business requirements. This broader interpretation supported the decision that services like cargo handling and testing of inputs are essential for the manufacture of final products, making the tax paid on such services eligible for credit even post-clearance of goods from the factory.

Regarding the contention that freight expenses were not included in the assessable value of goods, the Tribunal noted that this argument was not raised earlier in the show-cause notice, adjudication order, or before the Commissioner (Appeals). It was established that new facts cannot be introduced at the appeal stage, leading to the rejection of the revenue's contention. Ultimately, the Tribunal upheld the Commissioner (Appeals)'s order, rejecting the revenue's appeal and affirming the eligibility of availing credit for the disputed services provided outside the factory premises.