2008 (9) TMI 180 - AT - Service Tax

Input service credit of Rent-a-cab service, Air-travel agent s service, Construction service, CHA s service, Security serevice etc. - only ground for denial of credit is that the same were not used in or in relation to the manufacture of final products whereas adjudicating authority given a finding of the fact that the same are used in or in relation to the manufacture of the final products - In these circumstances, pre-deposit of duty is waived and stay petition is allowed

Summary

Issues:
1. Denial of credit for various services in relation to the manufacture of final products.
2. Interpretation of input service scope for credit eligibility.
3. Adjudication authority's findings and Commissioner(Appeals) decision.

Analysis:
1. The case involved the denial of credit for services like Rent-a-cab, Air-travel agent, Chartered Accountancy, Construction, Commission agent, Manpower recruitment, Customs House agent, and Security services, as they were not considered used directly or indirectly in the manufacture of final products. A show cause notice was issued, and the adjudicating authority dropped the proceedings. However, the Commissioner(Appeals) set aside the order, stating the services were not used in relation to the manufacture of final products.

2. The Tribunal analyzed the scope of input services eligible for credit, which includes services related to setting up, modernization, renovation, advertisement, sales promotion, market research, storage, procurement of inputs, and business activities like accounting and auditing. The primary reason for denying credit was the alleged lack of use in or in relation to the manufacture of final products. Despite this, the adjudicating authority found that the services were indeed used in or in relation to the manufacture of final products.

3. Considering the findings, the Tribunal waived the pre-deposit of duty and allowed the stay petition since the total denied credit was less than Rs.10 lakhs. The case was directed to be listed before the Single Bench for further proceedings. The decision highlighted the importance of establishing the connection between the services availed and their relevance to the manufacturing process to determine credit eligibility accurately.