2012 (12) TMI 141 - AT - Central Excise

Cenvat credit - CENVAT credit in respect of Service Tax paid on services namely clearing charges, commission on export sales, material handling charges, terminal handling charges, Bank Commission charges and Aviation charges have been availed by the appellant as input service CENVAT credit has been denied to the appellant on the ground that the above stated services do not qualify within the definition of input services as per Rule 2(I) of CENVAT Credit Rules, 2004 - Held that - Assessee is entitled to avail input service credit on the services availed by them in the course of their business of manufacturing - appellant has availed all the above services in the course of business of manufacturing - appellant is entitled to avail input service credit on the services

Summary

Issues:
Appeal against duty demand and penalty for availing CENVAT credit on specific services not qualifying as input services under Rule 2(1) of CENVAT Credit Rules, 2004.

Analysis:
1. The appellant contested the duty demand and penalty imposed for availing CENVAT credit on services like clearing charges, commission on export sales, and handling charges, which were deemed ineligible as per Rule 2(1) of CENVAT Credit Rules, 2004. The appellant argued that these services were valid input services based on judicial pronouncements.

2. The Tribunal noted that the appellant, being an exporter, had availed CENVAT credit on services post-clearance from the factory, which were considered non-qualifying under the rules. However, the appellant cited various judicial decisions supporting the admissibility of such services for CENVAT credit, emphasizing that these services were integral to their manufacturing business.

3. Relying on the precedent set by the case of Ultratech Cement, where the High Court of Bombay allowed input service credit for services utilized in the manufacturing process, the Tribunal ruled in favor of the appellant. The Tribunal acknowledged that the appellant had availed the disputed services during their manufacturing operations, thus entitling them to claim input service credit.

4. Consequently, the Tribunal overturned the impugned order, granting relief to the appellant by allowing the appeal against the duty demand and penalty. The decision was based on the interpretation of relevant legal provisions and established judicial precedents supporting the eligibility of the disputed services for CENVAT credit.

In conclusion, the Tribunal's judgment favored the appellant's position, recognizing the validity of claiming CENVAT credit on services that were initially deemed ineligible under the CENVAT Credit Rules, 2004. The decision highlighted the significance of judicial pronouncements in interpreting and applying tax laws, ultimately resulting in the reversal of the duty demand and penalty imposed on the appellant.