2017 (9) TMI 18 - AT - Central Excise

CENVAT credit - input services - depository/demat charges - membership/subscription charges - Input Service Distributor (ISD) invoices issued based on the invoices addressed to other units - Held that - reliance palced in the case of M/s. Bharat Fritz Werner Ltd. Vs. CCE 2011 (2) TMI 1276 - CESTAT, BANGALORE wherein it has been held that CENVAT credit on service tax on operating Demat Account for the business purpose is permissible - Further, membership/subscription charges have already been allowed by this Tribunal in the appellant s own case BAL PHARMA LTD. Versus COMMR. OF C. EX., CUS. & ST., BANGALORE-I 2014 (10) TMI 564 - CESTAT BANGALORE - all the services are covered under the input service definition - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against order disallowing CENVAT credit for certain input services, depository/demat charges, and membership/subscription charges.

Analysis:
The appellant filed two appeals against the Commissioner (A)'s order disallowing CENVAT credit for specific input services, depository/demat charges, and membership/subscription charges. The audit revealed that the appellant availed ineligible input service credit based on invoices from their corporate office, some of which were not addressed to the corporate office. Show-cause notices were issued proposing demand/recovery of wrongly availed credit, interest, and penalty. The original authority partially allowed the credit and ordered recovery along with penalties. The appellant appealed to the Commissioner (A), who partially allowed the appeal, leading to the present appeals.

During the hearing, the appellant's counsel argued that the impugned order misinterpreted the definition of 'input service' under Rule 2(l) of CCR and disregarded binding judicial precedents. The counsel contended that the denied services fell within the 'input service' definition, citing a Bombay High Court case. Additionally, the appellant, being a public limited company and export house, incurred service tax on depository/demat charges, which were considered expenses under the Income Tax Act. Reference was made to a tribunal judgment allowing CENVAT credit on operating Demat Accounts for business purposes. Membership/subscription charges were also previously allowed in the appellant's own case by the Tribunal. The Joint Commissioner of Service Tax later allowed CENVAT credit for the subsequent period for all disputed services.

The Judicial Member, after reviewing the submissions, concluded that all services in question fell within the definition of 'input service.' Relying on the cited decisions, the appeals were allowed, setting aside the impugned order with any consequential relief. The operative portion of the order was pronounced in open court on 07/07/2017.