2014 (5) TMI 409 - AT - Central Excise

CHA Services - input services - nexus with manufacturing activity - Whether the service tax paid by the applicant on the CHA services availed by them is admissible or not - Held that - Definition of input service given in Rule 2 (1) of the Cenvat Credit Rules, 1994 is quite comprehensive. However, every assessee taking cenvat credit of input service has to establish that such services are utilized in relation to manufacturing active ity. In the event of CHA services availed by appellants, it was required to be shown that these services are utilized for clearance of inputs under specific bills of entry in order to establish that such services are utilized in bringing raw materials etc. by the respondents. In absence to such correlation, simply a C.A. Certificate cannot be made as a basis for allowing cenvat credit - Decided against assessee.

Summary

Issues involved:
1. Admissibility of service tax paid on CHA services availed by the appellant.

Analysis:

Issue 1: Admissibility of service tax on CHA services
The appeal was filed by M/s Castrol India Ltd. against the Order in Appeal upholding the Order in Original regarding the admissibility of service tax paid on CHA services. The appellant argued, based on a Chartered Accountant's Certificate, that the CHA services were rendered for importing inputs used by them, citing relevant judgments. However, the Commissioner highlighted the lack of correlation between the input service credit taken and the bills of entry submitted by the CHA. The Tribunal observed that to claim cenvat credit of input service, it is essential to establish that the services are utilized in relation to manufacturing activity. Specifically, in the case of CHA services, it was necessary to demonstrate their utilization for the clearance of inputs under specific bills of entry. Without this correlation, solely relying on a C.A. Certificate is insufficient for allowing cenvat credit. Consequently, the Tribunal dismissed the appeal and upheld the Order in Appeal passed by the Commissioner.

This judgment emphasizes the importance of establishing a direct link between the services availed and the utilization of those services in the relevant activities for claiming input service credit. The Tribunal's decision underscores the need for concrete evidence, such as specific bills of entry, to support the claim of utilizing CHA services for bringing in raw materials. The reliance on a Chartered Accountant's Certificate alone was deemed insufficient in the absence of such substantiating documentation.