2018 (9) TMI 1120 - AT - Central Excise

CENVAT Credit - Courier service - audit fee - manpower used for TDS entry - insurance service - housekeeping service - consultancy services - book adjustment - penalty. Courier service - whether the appellant is eligible for credit availed on courier service used for sending free samples to the buyers abroad? - Held that - Although the said service has been shown in the show cause notice and the orders as outward transportation, the appellant has produced invoices as discussed in the adjudication order to show that these service are availed by the appellant for sending the free samples to the buyer abroad. The documents show that the services of DHL courier service were availed by the appellant for sending the samples of medicines to buyers abroad - thus, these are not outward transportation service as alleged in the show cause notice or in the adjudication order - However, the said invoices were not produced before the adjudicating authority - matter kept on remand for verification of invoices. Audit Fee - Held that - It is seen that the authorities below have allowed credit in respect of service tax paid on charges paid to the auditor. The appellant is contesting the service tax paid on the conveyance charges for the auditor. However, he has not furnished any document to show that the vehicle used for conveyance of the auditor was registered in the name of the service provider - credit denied. Manpower used for TDS entry - Held that - Since the appellant has to do the work of deducting the tax at source, manpower have been used for such work (data entry), the disallowance of credit is unjustified - credit allowed. Insurance service - Held that - It is seen that the appellant had availed goods transit insurance as well as employees insurance. Needless to say that the goods transit insurance is directly related to the manufacturing activity and therefore eligible for credit. With regard to employees insurance, which is in the nature of covering the risk of gratuity amount, I am of the view that the same would not fall within the exclusion clause. The manufacturer avails such insurance to cover the financial risk that he would have to face in case of payment of gratuity to employees and therefore is directly related to manufacture - credit on the services allowed. Housekeeping service - Held that - It is seen that the appellant has not produced the entire invoices regarding this issue - matter requires reconsideration. Consultancy services - Held that - Since the said services are availed for legal advice / consultancy, I am of the view that the same would be eligible for credit, if the appellant produces the invoices - matter remanded. Also, appellant submitted that under the heading book adjustment, the appellant has actually availed credit of manpower supply agency service availed for calibration service of the machines - Held that - Since these are directly related to manufacturing activity, the said services would be eligible for credit, if the appellant produces the invoices - matter on remand. Penalties - Held that - There were doubts as to whether rent-a-cab services are eligible for credit after 1.4.2011. So also there were divergent views as to whether WCS used for repair and renovation is eligible for credit. Being interpretational in nature, penalties on these services set aside. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Eligibility of CENVAT credit on various input services.
2. Disallowance of credit on specific input services.

Analysis:
1. The appellant, engaged in manufacturing radiators, availed CENVAT credit of service tax on input services. Upon audit in 2012, it was found that certain credits were ineligible. The show cause notice proposed disallowing the credit, which was partially allowed after adjudication. The appellant appealed against the disallowed credits before the Commissioner (Appeals), who further disallowed some credits, leading to the appeal before the Tribunal.

2. Outward Transportation/Courier Service: The appellant argued that availing courier services to send samples abroad was a sales promotion/marketing activity, not outward transportation. The Tribunal remanded the issue for verification of invoices.

3. Audit Fee/Rent-a-Cab Service: The conveyance charges for the auditor were disallowed post-1.4.2011. The Tribunal upheld this disallowance due to lack of proof regarding the vehicle's ownership by the service provider.

4. Manpower Supply Service for TDS Entries: The disallowance of credit for manpower used in TDS entries was set aside as it was found to be necessary for the appellant's tax deduction work.

5. Insurance Service: Goods transit insurance was allowed as directly related to manufacturing, while employee insurance covering gratuity risk was also deemed eligible for credit.

6. Housekeeping Service: The Tribunal remanded the issue for further consideration, as the cleaning services were wrongly categorized as manpower supply service.

7. Consultancy Service: Credits were rejected due to lack of documentation. The Tribunal remanded the issue, stating that legal consultancy services could be eligible if proper invoices were produced.

8. Book Adjustment/Calibration Service: The Tribunal remanded this issue as calibration services were integral to manufacturing, requiring proper documentation for credit eligibility.

9. Other Services: Credits for manpower used in data entry were remanded for lack of documentation, with the Tribunal indicating eligibility if proper invoices were provided.

10. Penalties and Interpretational Issues: Penalties were set aside for services like rent-a-cab and works contract, considering interpretational doubts during the relevant period.

11. Conclusion: The Tribunal partly allowed the appeal, modifying the impugned order and remanding certain issues for further consideration based on the presented evidence and legal interpretations.