2011 (4) TMI 634 - AT - Service Tax

Cenvat credit - courier services - input service - since the Appellant could not have carried on his business without sending the samples to its dealers and prospective buyers and also without transmitting documents - It is very clear that all services used in relation to the clearance of the product from the place of removal was within the ambit of input service - The case is different from the case where the final products is removed from place of removal for use by the buyer. In this case, the benefit of the samples and documents sent accrues to the Appellant and not any other person - Since there is no dispute of the facts that the goods were received in the factory and used inside the factory and duty thereon was paid, I find that there is no reason to deny this credit to the Appellant - Appeal is allowed

Summary

Issues:
1. Availment of Cenvat credit for courier services and samples despatch.
2. Disputed credit entry on an invoice not addressed to the Appellant.

Analysis:

Issue 1: Availment of Cenvat credit for courier services and samples despatch

The Appellant, a manufacturer of Rectified Power Supply System, availed Cenvat credit for courier services used for despatching documents and samples of final products. The department argued that such services amounted to transportation of goods post-manufacturing, not falling under the definition of input services as per Cenvat Credit Rules, 2002. A Show Cause Notice was issued demanding duty amounting to Rs.1,60,808/-. The Appellant contended that the services were essential for business operations, citing relevant case laws and decisions supporting the inclusion of courier services as input services. The Tribunal agreed, emphasizing that sending samples for business promotion was integral to the Appellant's operations, ultimately benefiting the Appellant. The appeal in favor of the Appellant was allowed on this count.

Issue 2: Disputed credit entry on an invoice not addressed to the Appellant

Regarding the disputed credit entry on an invoice not addressed to the Appellant, discrepancies in the amount of credit involved were highlighted. The Appellant argued that despite the invoice not being in their name, the goods were received and used in the manufacturing process, with duty duly paid. The Appellant referenced relevant circulars supporting the acceptance of credits even in cases of minor procedural lapses. The Tribunal noted the lack of clarity in the amount of credit involved and the absence of disputes regarding the receipt and use of goods. As a result, the appeal on this count also succeeded in favor of the Appellant.

In conclusion, the Tribunal allowed the appeal on both counts in favor of the Appellant, providing consequential relief. The judgment emphasized the importance of considering the business context and operational necessities while interpreting Cenvat credit rules, ensuring that legitimate credits are not denied based on technicalities or procedural discrepancies.