2014 (3) TMI 550 - AT - Central Excise

Availment of CENVAT Credit where service tax paid on reverse charge basis - Revenue was of the view that these activities happen after the export of the goods and, therefore, these services cannot be considered as input services for manufacture of the goods. - Commissioner (Appeals) allowed the credit - Held that - In the case of Commission Agent, it is already well settled that CENVAT credit of tax of duty paid on reverse charge basis under Section 66A of Finance Act, 1994, on services rendered by a Commission Agent located abroad can be taken. I agree with argument of the learned counsel for the respondent that there is no reason to distinguish the services of Commission Agent falling within the ambit at entry to Section 165(105) (19) of the Finance Act, 1994 on a different footing as compared to other services falling within the scope of the same taxing entry for the purpose of allowing CENVAT credit - Decided against Revenue.

Summary

Issues:
Dispute over CENVAT credit on service tax paid by the respondent to agents in Germany for various services; Interpretation of "input services" for manufacture of goods; Applicability of previous tribunal and high court decisions on similar cases; Whether CENVAT credit can be allowed for services beyond those of a Commission Agent.

Analysis:
The appeal before the Appellate Tribunal CESTAT CHENNAI involved a dispute regarding the CENVAT credit of Rs.8,74,616/- taken by the respondent on service tax paid to their agents in Germany for a range of services provided. The Revenue contended that these services, such as sales promotion, handling, storage, assembly, logistics, quality services, repacking, warehousing, and delivery, occurred after the export of goods and thus could not be considered "input services" for manufacturing. A show-cause notice was issued, leading to an adjudication where the demand was confirmed along with interest and penalties. However, the Commissioner (Appeals) set aside the adjudication order and allowed the credit, citing previous tribunal decisions and high court rulings in similar cases.

The Revenue argued that the decision in a specific case involving commission agents located abroad should not be applied to the services provided by the appellant's agents in Germany, as these agents performed a wider range of activities beyond those of a typical Commission Agent. They highlighted that the decisions relied upon by the Commissioner (Appeals) did not consider the differences in the nature of activities between cases. Additionally, it was noted that the decisions cited had been challenged and were pending before the High Court for a final decision.

In response, the respondent's counsel contended that the services of Commission Agents fell within the definition of "Business Auxiliary Services" and that there was no justification for treating services other than those of Commission Agents differently under the same entry. They referenced a decision by the Punjab and Haryana High Court related to Commission Agents to support their argument.

After considering the submissions from both sides, the Tribunal found that CENVAT credit on services provided by Commission Agents located abroad under reverse charge basis could be availed. The Tribunal agreed with the respondent's argument that there was no basis to distinguish between services falling within the scope of the same taxing entry for the purpose of allowing CENVAT credit. Consequently, the appeal filed by the Revenue was rejected by the Tribunal.

This judgment clarifies the interpretation of "input services" for CENVAT credit in cases involving services provided by agents located abroad, emphasizing consistency in treating services falling within the same taxing entry. The decision underscores the relevance of previous tribunal rulings and high court decisions in similar contexts while addressing the specific circumstances of each case to determine the eligibility of CENVAT credit.