2011 (4) TMI 925 - AT - Central Excise

Cenvat credit in respect of courier services utilized by the Appellant for dispatch of documents and also for dispatching samples of final products - department is of the view that this service amounts to transportation of goods, and is related to post manufacturing activity, also disputes a credit entry relating to an invoice in the name of M/s J.S. Enterprises, on which the Appellant had claimed credit of duty paid - Held that - Activity of sending samples is for business promotion and without this business promotion, he cannot be selling these goods. Therefore, the service in question in this case has to be seen as service utilised for removal of the goods from the place of removal. In this case, the benefit of the samples and documents sent accrues to the Appellant. In respect of Credit taken on invoices in the name of M/s J.S. Enterprises it is held that there is lack of clarity as to the amount of credit involved. 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, there is no reason to deny this credit to the Appellant - Decided in favor of assessee.

Issues:
1. Classification of courier services as input services for Cenvat credit.
2. Discrepancy in Cenvat credit amount related to an invoice.
3. Applicability of Circulars for claiming Cenvat credit on goods sold in transit.
4. Interpretation of 'input service' definition under Cenvat Credit Rules, 2002.

Analysis:

1. Classification of Courier Services as Input Services:
The Appellant, a manufacturer of Rectified Power Supply System, availed Cenvat credit for courier services used in dispatching documents and samples. The department contended that these services constituted transportation of goods post-manufacturing, thus not falling under the definition of input services. The Appellant argued that courier services were essential for business operations, citing legal precedents and the Bombay High Court decision supporting their claim. The Tribunal acknowledged the necessity of these services for business promotion and upheld the Appellant's right to claim Cenvat credit for courier services.

2. Discrepancy in Cenvat Credit Amount:
Regarding a credit entry related to an invoice issued to M/s J.S. Enterprises, the Appellant highlighted a discrepancy in the duty amount claimed by the department. The Appellant received only one invoice from M/s J.S. Enterprises, and the duty amount mentioned in the Show Cause Notice did not match the actual invoice details. Despite the discrepancy being raised by the Appellant and not rebutted by the Adjudicating Authority, the demand was confirmed erroneously. The Tribunal accepted the Appellant's submission on the correct invoice details and duty amount, ruling in favor of allowing the credit.

3. Applicability of Circulars for Claiming Cenvat Credit:
The Appellant relied on CBEC Circulars to support their claim that Cenvat credit can be taken on goods sold in transit and minor procedural lapses should not lead to credit denial if goods were received and used in manufacturing without dispute. The Tribunal considered these Circulars and emphasized that as long as goods were received in the factory and used in manufacturing, credit should not be denied based on procedural issues. This stance supported the Appellant's claim for credit on the disputed invoice.

4. Interpretation of 'Input Service' Definition:
The Tribunal analyzed the definition of 'input service' under the Cenvat Credit Rules, 2002, emphasizing that services related to clearance of products from the place of removal were considered input services. The Tribunal differentiated between cases where goods were removed for the buyer's use and cases like sending samples for business promotion, where the benefit accrued to the Appellant. Referring to a previous Tribunal decision, the Tribunal ruled in favor of the Appellant, emphasizing that services facilitating business promotion and goods dispatch from the place of removal qualified as input services. The appeal was allowed in favor of the Appellant on both counts.

In conclusion, the Tribunal's judgment favored the Appellant's claims regarding the classification of courier services, discrepancy in Cenvat credit amounts, applicability of Circulars for credit claims, and interpretation of the 'input service' definition under the Cenvat Credit Rules, 2002, providing consequential relief to the Appellant.

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