2017 (8) TMI 1217 - AT - Central Excise

CENVAT credit - scope of input services - Courier Service - whether the appellants are eligible to CENVAT credit of the Service Tax paid on Courier Services? - Held that - on perusal of the amended definition of Input Service prescribed at Rule 2(l) of CCR,2004 with effect from 01.4.2011, makes it clear that though the expression activities relating to business, such as has been deleted, but the illustrative services viz., Accounting, Auditing, Financing, Recruitment and quality control, Coaching/training, Computer Networking, Credit Rating, Share Registry, Legal Services, Security, Business Exhibition etc., even though directly not related to manufacturing activity, being not used inside the factory premises, but continued to remain in the said definition of input service. Needless to mention that these services are even though not directly linked to the manufacturing activity in the factory premises of the assessee but connected or related to the business of manufacturing activity which also involve marketing/sale of the manufactured goods - It cannot be denied that Courier Service involves a host of uses relating to the activity of manufacture and sale of goods. Service Tax paid on the Courier Services for various purposes viz., Sending Samples, Documents, finished goods etc., would be eligible to Cenvat Credit before and even after amendment to the definition to the Input Services with effect from 01.4.2011 - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Admissibility of CENVAT Credit of Service Tax paid on 'Courier Services' prior to and after 01.4.2011.

Analysis:
The appeals were filed against Orders-in-Appeal passed by the Commissioner(Appeals) involving a common question of law related to the admissibility of CENVAT Credit of Service Tax paid on 'Courier Services'. The main contention by the appellants was that the 'Courier Services' were used for sending samples, documents, and finished goods, which are integral to the manufacturing activity. They argued that even after the amendment to the definition of Input Services in 2011, the credit on Service Tax paid on such services should be admissible as they are necessary for the business of manufacturing activity. The appellants relied on previous judgments and interpretations to support their claim.

The Revenue, on the other hand, argued that after the deletion of the expression 'activities relating to business' from the definition of Input Service in 2011, 'Courier Services' should not be considered within the scope of Input Services as they are strictly connected to business activity and not directly related to manufacturing. The core issue for determination was whether the appellants were eligible for CENVAT Credit of Service Tax paid on 'Courier Services'. The Revenue contended that post the 2011 amendment, 'Courier Services' would fall outside the definition of Input Services and hence not eligible for credit.

The Tribunal analyzed the amended definition of Input Service and observed that while the expression 'activities relating to business' was deleted, other services like Accounting, Auditing, Financing, Recruitment, and others, which are not directly linked to manufacturing but are connected to the business of manufacturing activity, remained within the definition. The Tribunal noted that 'Courier Services' are essential for various purposes related to manufacturing and sale of goods, such as sending samples, documents, and technical reports. The Tribunal referred to previous cases where it was held that credit on Service Tax paid on 'Courier Services' is eligible for CENVAT Credit.

In conclusion, the Tribunal held that Service Tax paid on 'Courier Services' for sending samples, documents, and finished goods would be eligible for CENVAT Credit both before and after the 2011 amendment to the definition of Input Services. The impugned Orders were set aside, and the appeals were allowed with consequential relief, if any, as per law.