2016 (9) TMI 326 - AT - Service Tax

Cenvat credit - Auction Service - Service tax paid during the period from March 2012 to December 2012 - service used for clearing the waste and scrap and used material available in the factory - received to ensure free flow of production material service - Held that - in the case of Mangalam Cement Ltd. Vs CCE & ST Jaipur 2015 (9) TMI 942 - CESTAT NEW DELHI , the Tribunal has held that sale of waste and scrap which is arising out of manufacturing of final product is part of the business of manufacture and held the said service as eligible service and allowed the credit. Therefore by following the same ratio, I hold that Auction Service is eligible input service and credit is permissible. Cenvat credit - Cab Service - Service tax paid during the period from March 2012 to December 2012 - Held that - it is found that this very Bench in the case of S.K.D. Lakshmanan Fireworks Industries Vs C.C.E. & S.T., Tirunelveli 2015 (12) TMI 1102 - CESTAT CHENNAI has held that Rent-a-cab service availed by a manufacturer is not an eligible input service for the purpose of availing service tax credit. Therefore, by following the ratio, I hold that cenvat credit availed by the appellant-manufacturer on the service tax paid on Rent-a-cab service for picking up and dropping down of its employees to the factory and back is not proper and denied as the said service is not an eligible input service and credit is not admissible to the appellant. Cenvat credit - Courier Service - Service tax paid during the period from March 2012 to December 2012 - service used to correspond with government agencies, customers and suppliers - Held that - the interaction with government agencies is regarding statutory compliance. The interaction with customer is related to marketing of excisable goods and that of supplier is for procurement of materials. Credit cannot be disallowed as the service utilized by appellant is in relation to manufacture. Cenvat credit - Foreign Exchange Service - Service tax paid during the period from March 2012 to December 2012 - Held that - the Tribunal in the case of Sterlite Industries India Ltd. 2015 (9) TMI 1399 - CESTAT CHENNAI , has held that foreign exchange money service is inextricably connected with business and relevant for export and import and hence eligible to input service credit. Therefore, by following the same ruling, I hold that credit on this service is not deniable. Cenvat credit - Mobile Telephone Service - Service tax paid during the period from March 2012 to December 2012 - Held that - I am of the view that the telecommunication service is a most important and vital service for day-to-day affairs of a company. This view is also affirmed by the Hon ble Bombay High Court in the case of CCE Nagpur Vs Ultratech Cement 2010 (9) TMI 19 - High Court of Bombay . Accordingly, I hold that appellants are entitled to avail credit on this service. Cenvat credit - Printing Work Service - Service tax paid during the period from March 2012 to December 2012 - service relates to sharing of registry documents, export invoice etc. by the appellant - Held that - the activity of the appellant of sharing of registry documents, export invoices etc. has a direct nexus with the manufacture and clearance of the final product inasmuch as there can be no clearance without these documents. Hence appellants are entitled to this credit. Cenvat credit - Travel Agency Service - Service tax paid during the period from March 2012 to December 2012 - Held that - as long as the Travel Agency Service is not received for personal benefit of any employee but meant for travel of office personnel, credit is not deniable. This service is in connection with production, planning, import, marketing etc. The Hon ble Gujarat High Court in the case of Principal Commissioner Vs Essar Oil Ltd. 2015 (12) TMI 1062 - GUJARAT HIGH COURT has allowed credit on this service. Therefore, by following the very same ratio, I hold that credit is allowable. Cenvat credit - Certification Audit Service - Service tax paid during the period from March 2012 to December 2012 - service was received for obtaining ISO certificates - Held that - this Tribunal in the case of Rotork Control (India) Pvt. Ltd. Vs CCE Chennai 2010 (6) TMI 336 - CESTAT, CHENNAI , has held that consultancy services are essential inputs in relation to the manufacturing activity as such services have been availed in obtaining ISO certification of the assessees products and hence held the same as eligible input service. Since the ISO certification (service) is a must for marketing, therefore by following the ratio of above decision of Tribunal, I hold that appellants are entitled to credit on this service. - Decided partly in favour of appellant

Summary

Issues involved:
1. Disallowance of service tax credit on various services not related to the manufacture of final products.
2. Appeal against the order confirming the demand, interest, and penalty.
3. Eligibility of service tax credit on specific services like Auction Service, Cab Service, Courier Service, Foreign Exchange Service, Mobile Telephone Service, Printing Work Service, Travel Agency Service, and Certification Audit Service.

Analysis:
1. The appellant, engaged in manufacturing Radiator Caps, faced disallowance of service tax credit on services unrelated to final product manufacture. The show cause notice proposed disallowing credit of &8377; 1,53,068/- under Section 11A of the Act, with interest and penalty. The Commissioner (Appeals) partially allowed the appeal, setting aside the penalty but confirming the demand and interest. The appellant argued that services were availed based on prima facie eligibility to credit under Rule 2(l) of CCR 2004. Various case laws were cited to support credit eligibility.

2. The Tribunal analyzed each disputed service individually. For Auction Service, the appellant's use for production material flow was deemed eligible based on precedent. However, Rent-a-cab service was denied credit as it was not considered an eligible input service for manufacturers. Courier Service was allowed as it related to statutory compliance and marketing. Foreign Exchange Service and Mobile Telephone Service were deemed essential for business operations. Printing Work Service was considered integral to sales promotion. Travel Agency Service was allowed if not for personal benefit, and Certification Audit Service was essential for ISO certification and marketing.

3. The Tribunal's decision upheld most services as eligible for credit, except for Cab Service. The judgment relied on specific case laws and the direct nexus of services to manufacturing or business operations. The appellant's arguments, supported by relevant precedents, were crucial in establishing the eligibility of certain services for service tax credit. Overall, the appeal was partly allowed based on the analysis of each service's relevance to the manufacturing process or business activities.