2012 (11) TMI 195 - AT - Central Excise

Cenvat credit input service Held that - Sending samples to the customers and correspondence with head office from the factory are definitely activities relatable to manufacture and therefore clearly the courier service falls under the definition of category of input services - What is required is nexus with the manufacture and when the service is clearly identifiable to show that the same has not been received after the place of removal, credit cannot be denied

Summary

Issues:
Admissibility of cenvat credit on service tax paid on courier charges from March 2005 to March 2009.

Analysis:
The judgment pertains to the admissibility of cenvat credit on service tax paid on courier charges between March 2005 and March 2009. The original adjudicating authority disallowed the credit, stating that courier services did not have a nexus with the manufacture and clearance of final products. However, the Commissioner (Appeals) overturned this decision, leading to an appeal by the Revenue. The key argument was whether courier services were considered input services, especially after the definition of services was amended in April 2008.

The learned A.R. contended that post-April 2008, credit for service tax on courier services would not be admissible as the services were received beyond the place of removal. On the other hand, the respondents argued that courier services were essential for sending samples to customers and communicating with the head office, activities directly related to manufacturing. They relied on precedents to support their stance, emphasizing the nexus between courier services and manufacturing activities.

Upon analyzing the submissions, the judge found that courier services were indeed used for sending samples and correspondence related to manufacturing activities. The judge disagreed with the original authority's conclusion that courier services lacked nexus with manufacturing and clearance of goods. Additionally, the judge highlighted that there was no evidence indicating that courier services were received after the place of removal. Emphasizing the importance of nexus with manufacturing, the judge concluded that denying credit based on the place of removal was unwarranted.

In conclusion, the judge rejected the Revenue's appeal, upholding the admissibility of cenvat credit on service tax paid on courier charges during the period in question. The judgment underscored the significance of establishing a clear nexus between the services availed and manufacturing activities, regardless of the timing concerning the place of removal.