2015 (11) TMI 779 - AT - Service Tax

CENVAT Credit - Various output service - Held that - Assessee is a manufacturer of microscopes and accessories and was sending finished products to its buyers, domestic as well as overseas through courier services and the assesee availed cenvat credit paid on such courier charges and utilized the same for payment of service tax on its output services like GTA, Repair &. Maintenance and Erection, Commissioning or Installation services for which the appellant was also registered under provisions of the Finance Act, 1994. Courier services were utilized for dispatch of excisable goods to its buyers as well as for dispatch of accessories for the purpose of repair which was its output service. - where sale of excisable goods is on FOR destination basis, at the door step of customers and transportation charges were incurred for such transaction, freight charges involved in such transaction is an input service eligible for credit under Rule 2 (l) of the Cenvat Credit Rules, 2004. This decision therefore covers the issue in favour of the assessee in so far as the assessee availed cenvat credit on courier services for its export as well as domestic sales. In so far as availment of service tax credit incurred on courier charges for remittance of service tax on the assessee s output services of Maintenance, or Repair and Erection, Commissioning or Installation services, for the reasons alike, since the courier and Goods Transport Agency services are input services for rendition of output services, cenvat credit is equally admissible. - Decided in favour of assessee.

Summary

Issues:
Cenvat credit on courier service for excisable goods and output services.

Analysis:
The appeal was made against the Order passed by the Commissioner (Appeals) rejecting the appeal against the Primary adjudication order disallowing cenvat credit on courier services. The appellant availed cenvat credit on courier services used for excisable goods and output services like Repair & Maintenance and Erection Commission and Installation. The Primary adjudication order disallowed the cenvat credit and ordered recovery along with interest and penalty. The authorities concluded that the appellant could not legitimately avail cenvat credit on courier services for remittance of service tax on output services as they were not used as input services for providing the output services. They also held that cenvat credit could not be availed for remittance of central excise duty on finished excisable goods as they were post-manufacturing activities.

The assessee, a manufacturer of microscopes and accessories, utilized courier services for sending finished products to buyers and availed cenvat credit paid on such courier charges. The High Court decision in Ambuja Cements Ltd. case declared that freight charges involved in transactions where excisable goods are sold on FOR destination basis are eligible for credit under Cenvat Credit Rules. This decision favored the assessee as they availed cenvat credit on courier services for export and domestic sales. The court held that courier and Goods Transport Agency services are input services for output services like Maintenance, Repair, Erection, Commissioning, or Installation, making cenvat credit admissible.

Based on the above reasons and the High Court decision, the appeal succeeded, and the impugned order disallowing cenvat credit on courier services was quashed. The judgment was delivered in favor of the appellant without imposing any costs.