2011 (10) TMI 73 - AT - Service Tax

Cenvat Credit - Input Services - seminar fees, exhibition fees, patent application work, international conference fees, octroi service and valuation of property - Neither in the order-in-original nor in the appellate order is there any discussion about the services on which the credit has been taken nor any reasoning has been given that these services could not be considered as input services under Rule 2(l) of the CENVAT Credit Rules, 2004. The adjudicating authority has merely made a statement as follows It looks to me that services under question are all for beyond production activity, do not find place in definition of Input Service and these are not input services and therefore I hold that credit is inadmissible. - Matter remanded back for fresh decision.

Summary

Issues: Admissibility of CENVAT credit on various services such as seminar fees, exhibition fees, patent application work, international conference fees, octroi service, and valuation of property.

Analysis:

1. Admissibility of CENVAT Credit:
The appellant, a manufacturer of polyester filaments, availed CENVAT credit amounting to Rs. 47,742 on input service tax paid for various services. The jurisdictional Dy. Commissioner disallowed the credit under Rule 14 of the CENVAT Credit Rules, 2004, proposing recovery of interest and imposing a penalty. The Commissioner (Appeals) upheld the decision, leading to the appeal before the Tribunal.

2. Arguments of the Appellant:
The appellant argued that the services on which they availed credit were directly related to their manufacturing activity. For instance, service tax paid on seminars and conferences was for employee training in production and business activities. Similarly, patent application work was linked to product registration under Patent Laws, and octroi services were for export-related transportation. The appellant contended that all services had a direct nexus with their production and business activities.

3. Lack of Reasoning in Previous Orders:
The Tribunal noted that neither the original order nor the appellate order provided detailed reasoning for disallowing the CENVAT credit. Rule 2(l) of the CENVAT Credit Rules defines 'input service' broadly, encompassing services used in or in relation to manufacturing activities. The Tribunal highlighted that services like exhibitions for advertising and sales promotion, coaching, and training should prima facie qualify as 'input services' under the defined scope.

4. Tribunal's Decision:
Given the lack of substantive discussion in previous orders, the Tribunal set aside the impugned decision and remanded the matter to the adjudicating authority. The Tribunal directed the authority to examine each service individually, considering the eligibility for CENVAT credit based on the defined criteria. The appellant was to be given a fair opportunity to present their case regarding credit eligibility.

5. Conclusion:
The Tribunal allowed the appeal by remanding the case for a detailed review of the services in question and a specific determination of their eligibility for CENVAT credit. The decision emphasized the importance of a reasoned order based on the nexus between the services availed and the appellant's manufacturing and business activities.