2009 (8) TMI 172 - AT - Service Tax

Credit of service tax paid on input service - testing and technical analysis service in respect of medicines which never reached the market - Even the trial manufacture and R & D conducted in respect of such drugs which did not reach to the market has to be considered as part of the manufacturing process and business activity. Therefore, even if goods have not reached commercial production stage, credit is admissible. - As regards C&F Services also, we find that observation of the Commissioner is that a service of C&F cannot be considered as a sale promotion, is not correct. C&F has a definite role to play in promotion of sales by storing the goods and supplying the same to the customers, thus he is actually promoting the sales. Service even though rendered is beyond the place of removal, credit is admissible - As regards courier services, the Tribunal decisions in the case of Deloitte Tax Services (India) Pvt. Limited 2008 - TMI - 3715 - CESTAT, BANGALORE and CCL Products (I) Limited 2009 - TMI - 34642 - CESTAT, BANGALORE squarely cover the specific service and therefore the same is admissible. - Similarly, Foreign Commission Agent services are also admissible, since it is a sale promotion - Without maintenance and repair or management, the factory cannot be nun and therefore, service tax paid on these services is also admissible - in view of. the several decisions cited by the learned advocate the credit of repair and maintenance of photo copier, Air Conditioner, Water Cooler etc. is also available. Appeal allowed

Summary

Issues:
Admissibility of Cenvat credit on service tax paid on various services including Technical and Analysis Services, Commission to foreign agents, Courier services, and C & F Agent services.

Analysis:

1. The appellants, engaged in manufacturing medicaments, availed Cenvat credit of service tax on specific services. The Revenue contended that the credit was inadmissible, leading to an order for recovery with interest and imposition of a penalty.

2. The appellant's advocate argued that the services for which tax was paid and credit taken fell within the definition of input services as per Rule 2(1) of Cenvat Credit Rules 2004. The advocate cited the definition, emphasizing various activities like market research, accounting, and quality control, to support the eligibility of the credit.

3. The advocate relied on the decision of the Larger Bench of the Tribunal in ABB Limited case and several other judgments to establish that direct relation to manufacturing was not necessary for service credit eligibility.

4. The Revenue argued that Technical Testing and Analysis services were for a product not commercially produced, making the credit inadmissible for manufacturing. Other services were to be assessed based on the Tribunal's Larger Bench decision.

5. The Tribunal analyzed the manufacturing process of medicaments, highlighting the stages of testing and analysis products undergo. It disagreed with the Revenue's view that credit was inadmissible if goods did not reach commercial production stage. The Tribunal emphasized the wide definition of input services and the admissibility of credit based on the definition.

6. The Tribunal found that C&F services played a role in sales promotion, making them eligible for credit. It also referenced Tribunal decisions on courier services and foreign commission agent services to support their admissibility. The Tribunal allowed credit for repair and maintenance services based on precedent decisions.

7. Ultimately, the Tribunal concluded that the Cenvat credit on various services availed by the appellant was in order. The impugned order was set aside, and the appeals were allowed with consequential benefits.