2016 (9) TMI 193 - AT - Service Tax

Cenvat credit - service tax paid on security services, courier services CHA services and renting of immovable property services received and used in their other units - Held that - the term input services used in Rule 2(l) of CCR 2004 is much wider in as much as it is not restricted to services used in or in relation to manufacture of final products, but extends to all services used in relation to the business of manufacturing the final product as has been held by various judicial pronouncements. By respectfully following the ratio of the decision of this Tribunal in the case of Greaves Cotton Ltd. Vs CCE 2014 (8) TMI 654 - CESTAT CHENNAI after taking into consideration the ruling of the Hon ble Karnataka High Court in the case of CCE Bangalore Vs Ecof Industries Pvt. Ltd. 2011 (2) TMI 1130 - KARNATAKA HIGH COURT , the appellant is entitled to input service tax credit subject to verification of cenvatable invoices and other relevant records by the adjudicating authority. For this purpose, the impugned order is set aside and appeal is remanded to adjudicating authority. - Appeal allowed by way of remand

Summary

Issues Involved:
Whether the appellant-assessee is eligible for CENVAT credit of service tax paid on various services used in their other units.

Detailed Analysis:

Issue 1: Eligibility for CENVAT credit
The main issue in this appeal was whether the appellant, engaged in manufacturing, could avail CENVAT credit of service tax paid on security services, courier services, CHA services, and renting of immovable property services used in their other units. The appellant had taken credit of service tax on these services, which were not utilized at the manufacturing unit directly related to the final products. The appellant was not registered as an Input Service Distributor (ISD), leading to a show cause notice proposing disallowance and recovery of the credit. The adjudicating authority confirmed the notice, which was upheld by the Commissioner (Appeals), resulting in the present appeal.

Analysis:
The appellant argued that the definition of "input service" under Rule 2(l) of CCR is broad and covers various services not directly connected to manufacturing. They cited judicial precedents to support their claim that a direct correlation between input services and final products is not required under the CENVAT scheme. The appellant also contended that non-registration as an ISD should not be a ground for denying credit if substantial compliance with the rules is met. The Revenue, on the other hand, emphasized the violation of Rule 3 of CCR due to non-registration as an ISD and argued that the decision cited by the appellant was applicable only for a specific period.

Judgment:
After considering the arguments, the Tribunal found that the term "input services" under Rule 2(l) of CCR is not limited to services directly used in manufacturing final products but extends to all services related to the business of manufacturing. Referring to previous cases, the Tribunal concluded that the appellant was entitled to input service tax credit, subject to verification of invoices and relevant records by the adjudicating authority. The Tribunal set aside the impugned order and remanded the case for further examination and appropriate orders.

In conclusion, the Tribunal allowed the appeal by way of remand, emphasizing the broader interpretation of "input services" and the need for verification of invoices for availing CENVAT credit.