2013 (12) TMI 271 - AT - Service Tax

Availability of Input service under Rule 2(1) (ii) of the Cenvat Credit Rules 2004- Service of landline telephone service and Courier service Held that - Following Maruti Suzuki Ltd. Vs. Commissioner 2009 (8) TMI 14 - SUPREME COURT - input service credit is available on landline telephone service as it is used for business purpose - mobile telephone service is also entitled for credit - CBEC circular (supra) is also relevant - input service credit is available on telephone services utilized for business purpose. Following CCE, Vapi Vs. Apar Industries Ltd. 2010 (8) TMI 407 - CESTAT, AHMEDABAD courier services used for placing orders, filing quotation for procurement as well as marketing, dispatch instructions, issuing cheques for procurement, sending stock transfer documents to depots, receiving dispatch instructions from marketing/depots/head office, etc., were held to be input services - Cenvat Credit paid on courier service utilized for dispatching their final product was also eligible for credit Decided in favour of Assessee.

Summary

Issues involved:
1. Interpretation of the definition of 'input service' under Rule 2(1) of the Cenvat Credit Rules 2004.
2. Eligibility of CENVAT credit on telephone service and courier services.
3. Nexus of telephone and courier services with manufacturing activities.
4. Applicability of judgments and circulars in determining input service credit.

Interpretation of the definition of 'input service':
The judgment delves into the definition of 'input service' under Rule 2(1) of the Cenvat Credit Rules 2004. It highlights the criteria for a service to qualify as an 'input service' for both output service providers and manufacturers. The first leg of the definition emphasizes the direct or indirect use of services in or in relation to the manufacture of final products or clearance of final products. The second leg includes specific services irrespective of meeting the first leg's criteria.

Eligibility of CENVAT credit on telephone and courier services:
The case involves the denial of CENVAT credit on telephone and courier services by the Adjudicating Authority. The appeal contests this denial, arguing that these services should qualify as 'input services' under the Cenvat Credit Rules. The Commissioner (Appeals) ruled against the appellants, stating that telephone and courier services do not relate to business activities in a manner that aligns with the definition of 'input services.'

Nexus of telephone and courier services with manufacturing activities:
The judgment scrutinizes the nexus between telephone and courier services with manufacturing activities. It emphasizes that any indirect service used by the manufacturer must be essential for the production of finished products to qualify as an 'input service.' The decision questions whether the courier service exclusively facilitated manufacturing activities and highlights the lack of concrete evidence supporting this claim.

Applicability of judgments and circulars:
The appellants cited various judgments, including those from the Bombay High Court and the Supreme Court, to support their claim for CENVAT credit on telephone and courier services. They also referenced a CBEC Circular that clarified the admissibility of mobile phone services as 'input services.' The judgment considered these references along with precedents set by the Hon'ble Tribunal to determine the availability of input service credit on telephone and courier services.

In conclusion, the judgment ultimately allowed the appeal, granting input service credit on telephone and courier services. It relied on previous decisions and interpretations to establish the eligibility of these services for CENVAT credit. The ruling emphasized the business purpose and nexus with manufacturing activities as key factors in determining the availability of input service credit.