2017 (9) TMI 1792 - AT - Central Excise

Availment as well as utilization of Cenvat credit - outdoor catering services - sponsorship services - Held that - The definition of input service, as intended by the Legislature, is illustrative and not exhaustive - the appellants are eligible to avail credit on sponsorship service - appeal allowed - decided in favor of appellant.

Summary

Issues:
Admissibility of Cenvat credit on sponsorship services under the Cenvat Credit Rules, 2004.

Analysis:
The case involved M/s. Hindustan Coca-Cola Beverages Pvt. Ltd. availing and utilizing credit of Service Tax paid on services received pursuant to Notification No. 23/2004-C.E. (N.T.). A show cause notice was issued alleging inadmissible Cenvat credit on outdoor catering and sponsorship services. While the credit on outdoor catering was allowed, the credit on sponsorship services was rejected, leading to a penalty imposition. The Commissioner (Appeals) upheld this decision, prompting the appeal.

The appellant argued that sponsorship services, aimed at promoting the sale of manufactured goods, fell under the definition of input service as per Rule 2(l) of the Cenvat Credit Rules, 2004. They highlighted an agreement for promotional rights and the inclusion of advertisement or sales promotion in the definition of input service during the disputed period. The appellant also referenced a Tribunal decision supporting their stance.

On the other hand, the Revenue contended that sponsorship services lacked nexus with the manufacture of the final product, making them ineligible for credit. The definition of Sponsorship Service as per Section 65(104b) was examined, emphasizing the elements included and excluded under the term "sponsorship."

After considering the arguments, the Member (J) found merit in the appellant's submissions. It was held that the definition of input service was illustrative and not exhaustive, allowing the appellants to avail credit on sponsorship services. Consequently, the appeal was allowed, granting relief to the appellant.