2017 (1) TMI 1129 - AT - Central Excise

CENVAT credit - Business Support Services - Appellant is availing the services of M/s. Keybell Solutions Ltd. for keeping a track of the movement of trucks, known as Truck Khoj services - eligible input services or not? - denial on the ground that the use of the services was post the clearance of the goods - Held that - It is to be noted that the definition of input services when used by a manufacturer has two parts - it is used directly or indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal. The definition also has an inclusive part within which comes the disputed service. It is the outlook of any manufacturer not only to manufacture the goods but also to ensure timely delivery of goods upto the ultimate destination. With technological advances it is now possible, through software packages, to track safe delivery of the goods loaded in the trucks until the premises of the customer - the said service qualifies as input service because the service has been used in or in relation to manufacture and clearance of the finished products upto the premises of the customer. CENVAT credit allowed - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to order passed by Commissioner (A) Jaipur denying Cenvat Credit for services post-clearance of goods.

Analysis:
The appellant, engaged in manufacturing Zinc and Lead Concentrates, availed services from M/s. Keybell Solutions Ltd. for vehicle tracking modules to ensure timely delivery of goods to customers. Tax on these services was paid under Business Support Services category. The appellant claimed Cenvat Credit for these services as eligible input services under Rule 2(l) of the Credit Rules 2004.

The appellant argued that denial of Cenvat Credit by lower authorities was based on the post-clearance nature of the activity, contending that ensuring timely delivery and security of goods is essential for business operations. The appellant highlighted the use of the same software package for tracking both finished goods delivery and input movement to the factory. Reference was made to a Bombay High Court decision in CCE Vs. Ultratech Cement to support the argument.

The Departmental Representative (DR) supported the lower authorities' decision, emphasizing that post-clearance services are not eligible for Cenvat Credit as per existing regulations.

The definition of input services under Rule 2(l) includes services used directly or indirectly in or in relation to the manufacture of final products and clearance of final products. The appellant's case fell within the second part of this definition, as explained by the Bombay High Court, extending to services related to the business of manufacturing final products. The appellant's use of tracking services for ensuring safe delivery of goods to customers and tracking input movement qualified as input services under the definition, including "procurement of inputs" and "activities relating to business."

Considering the arguments and the interpretation of the definition of input services, the Tribunal set aside the impugned order and allowed the appeal. The decision emphasized the importance of tracking services in ensuring timely delivery and safe transport of goods, qualifying them as input services under the relevant rules.

This detailed analysis of the judgment highlights the key arguments presented by the appellant, the response from the Departmental Representative, the interpretation of the definition of input services, and the ultimate decision of the Tribunal in allowing the appeal.