2016 (7) TMI 895 - AT - Central Excise

Cenvat Credit - eligible input services - Insurance on Plant & Machinery - Courier Services - Royalty Charges - Credit taken on ISD invoices - Held that - The period of dispute is post April 2011 and it is relevant to state that the words procurement of inputs accounting auditing financing were a pact of definition of input service . Without courier it is not possible for the invoices to be despatched from one place to another. The denial of credit on the courier service is therefore erroneous and is accordingly set aside. Cenvat credit on the input services on the amount paid towards Royalty charges as eligible for credit and is used by the manufacturer is in or in relation to the manufacture of the final products. Credit taken on ISD invoices - The marketing office work towards the objectives such as revenue generation cost reduction or risk mitigation of the units engaged in the manufacture and clearance of the final products. - There is no finding nor an allegation that these conditions stand violated and accordingly the credit taken by them is in order. Credit allowed - Decided in favor of assessee.

Summary

Issues:
- Eligibility of CENVAT credit on courier services
- Eligibility of CENVAT credit on royalty charges
- Eligibility of CENVAT credit on ISD invoices

Eligibility of CENVAT credit on Courier Services:
The appeal addressed the eligibility of CENVAT credit on courier services for the period of April 2011 to March 2012. The Commissioner (Appeals) initially denied the credit, stating that courier services were not used in the place of manufacture and lacked nexus with manufacturing activities. However, the appellate tribunal disagreed, highlighting that courier services were essential for sending factory-related documents like COA and invoices, crucial for manufacturing and clearance of final products. The tribunal emphasized that without courier services, it would be impossible for invoices to be dispatched, thus overturning the denial of credit on courier services.

Eligibility of CENVAT credit on Royalty Charges:
Regarding the eligibility of CENVAT credit on royalty charges, the Commissioner (Appeals) contended that these services were not directly or indirectly linked to the manufacture of final products, as they were utilized post-manufacture for finished goods and not for sales promotion. However, the appellate tribunal disagreed with this view, citing a recent judgment by the Larger Bench of the Supreme Court that clarified the interpretation of the term "include" in the statutory definition. The tribunal referenced a similar case in Kolkata where credit on royalty charges was deemed eligible as it was used by the manufacturer in or in relation to the manufacture of final products, ultimately overturning the denial of credit on royalty charges.

Eligibility of CENVAT credit on ISD Invoices:
The third aspect of the appeal focused on the eligibility of CENVAT credit on ISD invoices. The Commissioner (Appeals) had denied the credit, arguing that services used at the marketing office were remote from the factory and did not imply a nexus with manufacturing activities. However, the appellate tribunal disagreed, emphasizing that the marketing office played a crucial role in facilitating growth, sales, and marketing strategy for products manufactured in the factory. The tribunal highlighted the conditions under Rule 7 of CCR 2004, noting that as long as the credit distribution did not violate these conditions, the credit taken was deemed valid. Consequently, the tribunal set aside the denial of credit on ISD invoices, along with the associated penalty and interest, ultimately allowing the appeal with any consequential relief.