2010 (10) TMI 336 - AT - Service Tax

Refund - input services - courier charges, commission agents service, professional charges, labour charges, etc - Rule 5 of the Cenvat Credit Rules, 2004 - 100% EOU - appellant, an EOU, is entitled to credit of service tax paid under Business Auxiliary Service on commission paid to the agents who procured export orders of the assessee s final products and tax paid under man power recruitment and supply agency service for obtaining labour to process and pack the final products of the assessee - No material evidence are available - Accordingly the appeal is allowed by way of remand

Summary

Issues:
Admissibility of accumulated credit of service tax on commission paid to commission agents service and labor charges.

Analysis:
The appeal was filed by M/s. Vishal Natural Food Products Ltd., a 100% E.O.U., against the order of the Commissioner (Appeals) regarding the refund of accumulated credit of service tax paid on various input services. The original authority partially allowed the refund, disallowing a portion of the claimed amount. On appeal, the Commissioner upheld the refund related to courier and professional charges but denied the credit for service tax on commission agents service and labor charges, stating they were not related to manufacturing activities. The appellant argued that these services were essential for manufacturing and exporting their products, emphasizing that commission paid to agents for procuring export orders constituted sales promotion, an eligible input service under the Cenvat Credit Rules.

The Tribunal considered the nature of the services, with the appellant asserting that the services involved canvassing export orders and providing labor for processing and packing export products. The Tribunal agreed that the service tax paid on Business Auxiliary Service for commission agents and labor supply agency service for providing labor were indeed input services eligible for credit. However, due to the lack of concrete evidence supporting these claims during the hearing, the Tribunal decided to remand the case back to the original authority for a fresh decision on the refund claim. The appeal was allowed by way of remand, granting the appellant an opportunity to provide substantiating evidence for the credit claims.

In conclusion, the Tribunal acknowledged the entitlement of the appellant to the credit of service tax paid on commission agents service and labor charges as valid input services for their manufacturing and export activities. However, due to the absence of sufficient evidence during the proceedings, the case was remanded to the original authority for a reevaluation of the refund claim. The decision highlighted the importance of providing clear documentation and evidence to support refund claims related to input services under the Cenvat Credit Rules.