2010 (8) TMI 407 - AT - Service Tax

Cenvat credit of service tax paid for courier services - availed by them during the period November 2004 to June 2008, is under dispute - The courier services are used by the respondents for placing order, filing quotation for procurement as well as marketing, dispatch instructions, issuing cheque for procurement, sending stock transfer documents to depots, receiving dispatch instructions from marketing/depots/Head office etc. - Held that - services have been used in relation to all kinds of activities which have been said to used in relation to manufacture of final product and clearance of final product as well as business activities, as defined in the definition of input services - appeal filed by the Revenue is rejected

Summary

Issues:
1. Dispute over Cenvat credit of service tax paid for courier services.
2. Interpretation of whether courier services qualify as input services for Cenvat credit.
3. Appeal against the decision of Commissioner (Appeals) setting aside the demand and penalty imposed.

Analysis:
1. The case involved a dispute regarding the Cenvat credit of Rs. 1,57,380/- for service tax paid on courier services availed by the respondents between November 2004 to June 2008. The Revenue appealed against the decision of the Commissioner (Appeals) who had set aside the demand and penalty imposed by the original adjudicating authority.

2. The main argument put forth by the Revenue was that the service tax credit was incorrectly availed as the services were not used in or in relation to the manufacture of the final product. The Revenue contended that the Commissioner's reliance on a previous decision regarding outward transportation charges was misplaced. On the other hand, the respondents' advocate argued that the Commissioner correctly applied the definition of input services to allow the credit for courier services. The advocate highlighted that the courier services were utilized for various activities related to manufacturing and business operations, falling within the definition of input services.

3. Upon considering the submissions from both sides, the Member (T) observed that the courier services were indeed used by the respondents for a variety of activities crucial to their manufacturing and business processes. These activities included placing orders, filing quotations, marketing, dispatch instructions, and more. The Member (T) agreed with the Commissioner that the courier services qualified as input services as per the definition, covering services related to manufacturing and business activities. Consequently, the appeal filed by the Revenue was rejected, upholding the decision of the Commissioner (Appeals).

In conclusion, the judgment clarified the eligibility of courier services for Cenvat credit as input services, emphasizing their integral role in the manufacturing and business operations of the respondents.