2012 (10) TMI 935 - AT - Central Excise

Availment of CENVAT Credit - Cenvat Credit paid on services like valuation report for property situated in the colony, construction work carried out in Yoga Centre at Sports Complex in their colony, Sodexho Pass pertaining to food coupons provided for employees and Management Consultancy Services received from abroad - Held that - definition of input services in the inclusive portion clearly includes market research services on which credit is available. The Hon ble High Court of Bangalore, in the case of ABB Ltd. & Ors reported in has taken the view that cenvat credit is admissible on the service tax paid on the services. Credit rating of customers also is relatable to sales promotion and business of manufacture. In any case, in this case the activity is specifically included in the definition and therefore it cannot be denied. From the above one can see that the appellants have made out a strong case in their favour - Decided in favour of assessee.

Summary

Issues:
1. Admissibility of Cenvat credit on various services availed by the appellants.
2. Eligibility of Cenvat credit specifically for management consultancy services.
3. Interpretation of the definition of input services in relation to market research and credit rating services.
4. Decision on the appeal regarding the wrongly availed Cenvat credit, interest, and penalty.

Admissibility of Cenvat Credit on Various Services:
The appellants had availed Cenvat Credit on services like valuation report, construction work, Sodexho Pass, and Management Consultancy Services. The audit revealed a total amount of Rs.66,601/- availed as Cenvat Credit. Proceedings were initiated to challenge the admissibility of Cenvat credit on these services, leading to the confirmation of demand for wrongly availed credit, with interest and penalty imposed.

Eligibility of Cenvat Credit for Management Consultancy Services:
The appellants did not contest the non-eligibility of Cenvat credit on services other than management consultancy services. However, they argued for the admissibility of Cenvat credit specifically for management consultancy services. They had engaged Price Water House Coopers for market research and customer credit rating in the international market to enhance their overseas market presence. The department denied the credit, citing a lack of nexus with manufacturing. The definition of input services includes market research services, as confirmed by a judgment from the Hon'ble High Court of Bangalore. The tribunal found a strong case in favor of the appellants, allowing the appeal and setting aside the impugned order.

Interpretation of the Definition of Input Services:
The tribunal noted that market research and credit rating are covered in the definition of input services, making the denial of Cenvat credit on these services incorrect. The judgment referenced a previous case where Cenvat credit was allowed on service tax paid for such services. Customer credit rating was deemed relevant to sales promotion and business of manufacture. The tribunal decided in favor of the appellants, allowing the stay application and proceeding with the final decision on the appeal.

Decision on the Appeal Regarding Wrongly Availed Cenvat Credit:
Ultimately, the tribunal set aside the impugned order, allowing the appeal with consequential relief to the appellants concerning the service tax credit contested by them. The demand for wrongly availed Cenvat Credit of Rs.5,401/-, along with interest and penalty under the Cenvat Credit Rules, was upheld in favor of the appellants.

This detailed analysis of the judgment highlights the issues surrounding the admissibility of Cenvat credit on various services, the eligibility of Cenvat credit for management consultancy services, the interpretation of input services, and the final decision on the appeal related to wrongly availed Cenvat credit, interest, and penalty.