2012 (9) TMI 51 - AT - Service Tax

Input services credit - services of the Commission Agent Held that - Input services must be availed before removal of the goods is not correct as there are a number of services required to be used in or in relation to the manufacture of finished goods, mentioned in the inclusive portion of the definition of input service , cannot be linked with the removal of the goods.

Summary

Issues:
1. Whether the services of Commission Agent procuring sale orders for the appellant constitute input services for the purpose of availing cenvat credit.
2. Whether the appellant is entitled to waiver from the requirement of pre-deposit for cenvat credit demand, interest, and penalty.

Analysis:

1. The case involved the appellant, a manufacturer of cement and clinker, who availed the services of a Commission Agent to procure sale orders, for which they paid a commission. The department contended that these services did not qualify as input services as they were availed after the clearance of goods, issuing a show cause notice for denying cenvat credit, interest, and penalty. The Asstt. Commissioner confirmed the demand, and the Commissioner (Appeals) upheld it, albeit reducing the penalty. The issue revolved around whether the services of the Commission Agent could be considered as input services under the Cenvat Credit Rules, 2004. The definition of 'input service' under Rule 2(1) includes services used in relation to business activities like sales promotion. The Tribunal, after considering the definition, concluded that the services of the Commission Agent fell under 'sales promotion' and 'activities relating to business,' qualifying as input services. The Tribunal disagreed with the department's view that input services must be availed before goods removal, stating that various services mentioned in the definition are not necessarily linked to goods removal. Therefore, the Tribunal waived the requirement of pre-deposit for cenvat credit demand, interest, and penalty, allowing the appeal and staying the recovery until its disposal.

2. During the hearing, the appellant did not appear, leading to an ex parte decision. The learned SDR opposed the appellant's plea for a waiver from the pre-deposit requirement, emphasizing that the services of the Commission Agent were not covered under the definition of 'input services' as they were availed after goods clearance. However, the Tribunal, after considering the submissions and the appeal documents, found that the Commission Agent's services did fall under the definition of 'input services.' The Tribunal granted the waiver for pre-deposit, stay of recovery, and allowed the appeal. The judgment highlighted the importance of interpreting the definition of 'input services' broadly to encompass various services essential for business operations, even if not directly linked to goods removal.