2009 (7) TMI 150 - AT - Service Tax

Input services - Credit of service tax paid on the telephone used in the Area Marketing Office credit cannot be denied on the ground that it is not installed in factory held that credit on input-service of Mandap Keeper for Stockists Meet held for promoting sale of final product is allowable as it is used in relation to business activities

Summary

Issues:
Denial of Cenvat credit on various input services including Air Travel Agent Services, Rent-a-Cab-Service, Maintenance and Repair Services, Telephone Services, and Mandap Keeper.

Analysis:
The appellants, engaged in the manufacturing of Cement clinker and cement, availed Cenvat credit on inputs, capital goods, and input services. The Commissioner disallowed Cenvat credit on various input services, including Air Travel Agent Services, Rent-a-Cab-Service, Maintenance and Repair Services, Telephone Services, and Mandap Keeper. The Commissioner observed a lack of evidence regarding the usage of these services for business purposes related to manufacturing or sales promotion. The appellants contended that they had submitted supporting documents in response to show cause notices, which were not examined by the Commissioner.

Regarding Air Travel Agent Services, the Commissioner required examination of documents to allow credit as per the appellant's submission. Similarly, for Rent-a-Cab-Service, the Commissioner noted the absence of evidence supporting the usage of cabs for marketing products and directed examination of relevant documents. For Maintenance and Repair Services, the appellant claimed eligibility for credit related to repair of machinery and equipment used for officials and sales promotion, requiring further examination by the Commissioner.

In the case of Telephone Services, the Commissioner limited credit to telephones installed in the factory, not considering those in Area Marketing Offices. The appellants cited relevant circulars and tribunal judgments supporting the admissibility of credit on telephone services, even if not installed in the factory. The denial of credit on Telephone Services was deemed unjustified based on precedents.

Regarding Mandap Keeper services, the Commissioner disallowed credit for expenses related to Stockists Meet promotion. The Tribunal's decision in ABB Ltd. v. CCE established that activities relating to business fall within the definition of "input service." The Mandap Keeper services utilized for business activities were considered eligible for credit, contrary to the Commissioner's decision.

Ultimately, the Tribunal set aside the denial of credit on Telephone Services and Mandap Keeper, directing the Commissioner to reevaluate the evidence for Air Travel Agent, Rent-a-Cab, and Maintenance and Repair Services. The appellants were instructed to produce evidence during the hearing for further consideration, leading to the disposal of both appeals with these terms.