2011 (10) TMI 272 - AT - Service Tax

Admissibility of Cenvat Credit on Courier Services by manufacturer - In view of ABB Ltd. vs. CCE & S.T. LTU (2009 -TMI - 34139 - CESTAT) BANGALORE. Decided in favour of assessee.

Summary

Issues:
1. Admissibility of CENVAT credit on courier services as 'input service' for medical equipment manufacturers.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Mumbai challenged the order-in-appeal passed by the Commissioner of Central Excise & Customs (Appeals), Mumbai. The case involved M/s. Medica Instrument Manufacturing Company, a manufacturer of medical equipment, who incurred courier service expenses as part of the price and taxable value of their products. The appellant availed CENVAT credit of service tax paid on courier services from September 2004 to March 2005. The jurisdictional Asst. Commissioner ordered recovery of the service tax credit, interest, and imposed a penalty, contending that courier services were post-manufacturing expenses and not eligible as 'input service'. The Commissioner (Appeals) upheld this decision, leading to the appeal before the Tribunal.

The appellant's counsel relied on a Larger Bench decision of the Tribunal in the case of ABB Ltd. vs. CCE & S.T. LTU, Bangalore, further upheld by the High Court of Karnataka, to argue that transportation charges incurred by manufacturers for product clearance constitute an eligible 'input service'. Drawing an analogy, it was contended that courier charges for goods supply should also be considered an eligible 'input service'. The period in question was September 2004 to March 2005, and the appellant claimed entitlement to the credit based on this argument.

The Revenue's representative, the A.R., conceded the matter, indicating agreement with the appellant's position. After considering the submissions, the Tribunal, in line with the Larger Bench decision and the High Court's ruling, held that the appellant was indeed entitled to the CENVAT credit for service tax paid on courier services. Consequently, the appeal was allowed, granting the appellant the relief sought, if any.

In conclusion, the Tribunal's judgment clarified the admissibility of CENVAT credit on courier services as an 'input service' for manufacturers of medical equipment, aligning with precedent and legal interpretations established in relevant cases.