2014 (8) TMI 219 - AT - Central Excise

Denial of CENVAT Credit - whether CENVAT credit of services like document processing charges paid by the appellant is admissible or otherwise - Held that - The services of document processing are availed by the appellant for processing of export related documents from the place of removal to the point of export and also for claiming of rebate claims from the Central Excise department after export of the goods. Proper flow of funds for manufacturing activity/business of a unit are required as financial management where such finances are arranged from the banking channels or by speedy recovery of amounts due from clients or from any government department. Prima-facie, appellant has made out a case for complete waiver of the confirmed dues as the services for document processing can be considered as a service in relation to managing the finances of the appellant - Stay granted.

Summary

Issues:
Whether CENVAT credit of services like document processing charges paid by the appellant is admissible or not.

Analysis:

Issue 1: CENVAT Credit Eligibility
The appellant filed a stay application regarding the operation of a specific order, questioning the admissibility of CENVAT credit for document processing charges. The appellant argued that such services were essential for managing finances, facilitating manufacturing activities, and conducting business. Citing relevant case laws, the appellant contended that the services were utilized for claiming rebates and ensuring proper flow of funds. On the other hand, the respondent relied on a judgment emphasizing that activities undertaken by the manufacturer should align with the definition of input service under the Cenvat Credit Rules. The Tribunal noted that the services for document processing were crucial for fund management and financial flow for business activities. The Tribunal acknowledged the significance of financial management services in the pre and post-amendment definitions of input services. Consequently, the Tribunal found merit in the appellant's argument and granted a stay on the recovery of amounts and penalties based on the previous order in favor of the appellant.

Conclusion:
The Tribunal upheld the appellant's contention regarding the admissibility of CENVAT credit for document processing charges, emphasizing the services' role in managing the appellant's finances. The decision highlighted the importance of financial management services for business activities, leading to a stay on the recovery of amounts and penalties until the appeal's disposal.