2012 (12) TMI 648 - AT - Central Excise

Cenvat Credit denied - services related to clearance of finished goods beyond the place of removal - nexus to manufacturing activities - Held that - As decided in M/s. Lanco Industries Ltd. vs. CCE, Tirupathi 2009 (7) TMI 125 - CESTAT, BANGALORE the credit of service tax paid on commission to agents is admissible. M/s. Cadila Healthcare Ltd. vs. CCE, Ahmedabad (2009 (8) TMI 172 - CESTAT, AHMEDABAD) the clearing and forwarding agents services is eligible for cenvat credit of service tax & in case of M/s. Nilkamal Crates and Bins vs. CCE, Vapi (2010 (2) TMI 232 - CESTAT, AHMEDABAD) credit of service tax under business auxiliary services or commission on export sales was held admissible. Thus all the decisions support the claim of the appellant that they are eligible for the benefit of service tax credit taken by them - in favour of assessee.

Summary

Issues:
- Availment of Cenvat Credit on services related to export of finished goods
- Interpretation of input service definition in relation to manufacturing activities
- Applicability of service tax credit on commission paid to agents
- Admissibility of Cenvat Credit on services of overseas commission agents and clearing and forwarding agents

Analysis:
1. The appellant availed Cenvat Credit on services for finished goods exported during 2006-07 and 2007-08, including Customs House Agent's services, Shipping Agent's services, container services, and commission paid to these agents. The Revenue contended that these services were not related to manufacturing activities, leading to the initiation of proceedings resulting in the demand for Cenvat Credit availed, along with interest and penalty under rule 15 of Cenvat Credit Rules, 2004.

2. The appellant argued that in cases of FOB exports, the place of removal should be considered as the port, making the services availed until the goods reach the port admissible for Cenvat Credit. They emphasized the necessity of overseas agents for selling manufactured goods, linking their services to manufacturing activities. The appellant cited various Tribunal decisions supporting their stance, asserting the eligibility for Cenvat Credit on the services in question.

3. The Tribunal examined the input service definition, which includes services used directly or indirectly in or in relation to manufacture, clearance, and business activities. Referring to precedents like M/s. Lanco Industries Ltd. vs. CCE, Tirupathi, it was established that the credit of service tax paid on commission to agents is admissible. Additionally, decisions such as M/s. Cadila Healthcare Ltd. vs. CCE, Ahmedabad and M/s. Nilkamal Crates and Bins vs. CCE, Vapi supported the eligibility of Cenvat Credit on services like clearing and forwarding agents and commission on export sales. The Tribunal concluded that the appellant was entitled to the benefit of service tax credit, allowing the appeal with consequential relief.