2013 (9) TMI 709 - AT - Service Tax

Input Service Distributor - CENVAT credit - Assessee had availed cenvat credit of service tax paid on various input services on the basis of invoices issued by their head office which had been registered as Input Service Distributor (ISD) - In respect of nineteen services, the credit availed had been disallowed - The disallowance had been made on the ground that there was not nexus with manufacture and credit was admissible only up to the place of removal Held that - The stand taken by the Revenue that no credit was admissible after the place of removal of the goods was totally untenable - The substantive part of the definition input service covers services used directly or indirectly in or in relation to the manufacture of final products, whereas the inclusive part of the definition of input service covers various services used in relation to the business of manufacturing the final products. Commissioner of Central Excise, Nagpur vs. Ultratech Cement Limited 2010 (10) TMI 13 - BOMBAY HIGH COURT - the credit of service tax paid on Advertising Agency Services, Business Auxiliary Services, Business Support Services (in the case of this assessee, it is Advertising Agency Service), Management and Consultancy Services, Online Information and data base Access Service, Port service, Maintenance and repair Service, Consulting Engineer s service, Security Agency Service and Storage and Warehousing credit was admissible. Construction Services in respect of Office and Factory etc. - Credit was admissible and appellant voluntarily reversed the credit taken in respect of service availed for housing colony of the appellant - Similarly, appellants had also reversed the credit taken in respect of security agency services, Cleaning services, Survey and Map-making service in respect of services received other than for the purpose of factory/ office. Event Management Service - The services had to be held as relatable to business of manufacturing only since the services are directly relatable to promotion of goods - Technical inspection services were availed in respect of quality verification etc. and such services were definitely relatable to manufacture - credit was admissible in respect of such services also. Penalty Under Rule 15 of Cenvat Credit Rules, 2004 - Appellant had taken credit correctly and where credit had been taken inadvertently or by mistake for housing colony etc. they had promptly reversed the amount - availment of credit can be said by mistake and therefore no penalty was imposable - order set aside - Decided in favour of Assessee.

Summary

Issues:
Verification of cenvat credit availed by the assessee based on invoices issued by the Input Service Distributor (ISD), disallowance of credit on the grounds of no nexus with manufacture and admissibility only up to the place of removal, imposition of penalties on the company and specific employees.

Analysis:

1. The judgment pertains to the verification of cenvat credit availed by the assessee, M/s. Castrol India Limited, based on invoices issued by their registered Input Service Distributor (ISD). The Revenue initiated proceedings against the appellant, leading to the confirmation of a demand for cenvat credit of Rs. 15,29,76,083/- with interest and imposition of penalties under Rule 15 of Cenvat Credit Rules, 2004 on the company and specific employees.

2. The counsel for the appellant argued that since the credit was availed based on ISD invoices, any demand regarding credit admissibility should have been raised at the ISD level and not at the unit level. The definition of an Input Service Distributor and Rule 7 of Cenvat Credit Rules were cited to support this argument.

3. The tribunal acknowledged the validity of the counsel's argument, emphasizing that the Revenue should have verified whether the conditions under Rule 7 of Cenvat Credit Rules were fulfilled at the unit level. The absence of allegations indicating non-fulfillment of these conditions in the show cause notice weakened the case against the appellant.

4. Regarding the disallowance of credit for nineteen services due to a lack of nexus with manufacture and admissibility only up to the place of removal, the tribunal referred to the definition of input service, including services directly or indirectly used in or in relation to the manufacture of final products. The tribunal cited relevant case law to support the broad interpretation of input services, highlighting that the definition extends to services integral to the business of manufacturing.

5. The tribunal concluded that the appellant had correctly availed credit, promptly reversing any inadvertently taken credits. The tribunal found no grounds for imposing penalties on the company or specific employees, as the appellant succeeded on merits. Consequently, the impugned order was set aside, and the appeals were allowed with consequential relief to the appellants.

6. The judgment demonstrates a detailed analysis of the cenvat credit availed by the appellant, emphasizing the importance of adherence to statutory provisions and the broad interpretation of input services. The tribunal's decision provides clarity on the admissibility of credits and the imposition of penalties based on the merits of the case.