Landmark Service Tax Judgments: Cenvat Credit

What is Cenvat Credit

Cenvat Credit Scheme provides for availing of credit of duties/taxes paid on inputs and input services and utilisation of the same for payment of duty/taxes on the final product/output services. This scheme was introduced with an intention to avoid cascading effect of duties/taxes and double taxation.

History of Cenvat Credit

This scheme which was initially known as Modvat Credit Schem was introduced in the year 1986 in the field of Central Excise. The provisions of Central Excise Rules, 1944 governed the working of this scheme. With the advent of Service Tax, Service Tax Credit Rules, 2002 were notified for extending the benefit of this scheme to field of Service Tax. Simultaneously the provisions relating to Cenvat Credit as applicable to Central Excise field was carved out of the Central Excise Rules, 1944 and notified as Cenvat Credit Rules, 2002. Subsequently Cenvat Credit Rules, 2002 and Service Tax Credit Rules, 2002 were superseded by the present Cenvat Credit Rules, 2004. The present provisions of Cenvat Credit Rules, 2004 governs the availment of Cenvat Credit of duties paid on inputs and capital goods as well as taxes paid on inputs services and its manner of utilisation for payment of duties/taxes on final product/output services.

Who is eligible to avail Cenvat Credit

In general terms, Cenvat Credit in relation to service tax paid on input services is allowed if they are in relation to the manufacturing activity and necessary for conduct of business of the assessee. Under the scheme of CENVAT Credit, the person who is liable to pay service tax on the services provided by him (output service) can set off this liability by claiming credit for the amount of duties and cess he has paid on the goods (input goods as well as capital goods) he used and also the amount of service tax and cess he has paid on the services he used (input services) to provide such taxable services.

As per Rule 2 (k) of Cenvat Credit Rules, 2004 “input” in relation to Service Tax means all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service and as per Rule 2 (l) of Cenvat Credit Rules, 2004 “input service” means any service, - (i) used by a provider of taxable service for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, - and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; and excludes certain services.

Service Tax: Demand Remand: While arriving at correct tax liability, the Commissioner to consider the issue of Cenvat credit availed by the appellant after due verification of the duty paying documents. The Adjudicating Authority also should keep in mind that assessee is disputing only the inclusion value of the cost of land to be included in the aggregate value of the services rendered by them and not the amount of Services Tax admitted and paid by them under ‘Health Club and Fitness Services’.(Para 7).The appeal filed by the Revenue is disposed off as indicated herein above.(Para 8).

Cenvat credit: Cenvat credit on Tower/Shelter etc. and tower material i.e. angles, channels, beams etc. and pre-fabricated building, shelter, PUF channels used in the manufacture such Towers, denied on the ground that the same cannot be held to be inputs: In view of judgments of other benches in similar issues waiving pre deposit : Unconditional stay granted.

Cenvat Credit: Stay: Credit availed on the basis of judgments of High Court for demerger of units: Prima facie case made out for waiver.

Service Tax: GTA services: Demand: A perusal of para 2.4.2 of CBEC's Excise Manual of Supplementary Instructions shows that there is no legal bar to the utilisation of Cenvat credit for the purpose of payment of service tax on the GTA services. Apart from the above, even as per Rule 3(4)(e) of the Cenvat Credit Rules, 2004, the Cenvat credit may be utilised for payment of service tax on any output service. In the present case also, the service tax was paid out of the Cenvat credit on GTA services and, hence, the respondents were well within their right to utilise the Cenvat credit for the purpose of payment of service tax. (Para 6).Therefore, the impugned order is set aside and the appeal is allowed.(Para 7). 

GTA Service: Input tax credit can be used for discharging service tax liability, as it is a deemed taxable output service.

Service Tax: Intellectual Property Service: Rule 6(3)(c) of CCR: Inputs and input services had no nexus with the output services of the assessee viz. intellectual property service: Alcoholic beverages not being excisable goods do not fall under exempted goods as defined under Rule 2(d) of CCR. Therefore, the provisions of Rule 6(3)(c) of CCR are not attracted in the instant case. The assessee can utilize the credit to discharge the tax liability for service provided without being limited by the ceiling of 20% of the tax due.(Para 9). Complete waiver of pre-deposit of the dues adjudged against the assessee ordered and stay recovery thereof pending decision in the appeals.(Para 10).

Service Tax: Advertisement services: Demand: Denial of cenvat credit on inputs: The issue involved in this case is regarding eligibility of cenvat credit availed by the appellant on MS angles, tubes, plates, sections, sheets, channels, bars, etc for construction of unipoles, on which advertisements are displayed. The erection of unipoles is done by the appellant after the said unipoles are fabricated by using the angles, tubes, sections and plates. Whether the said goods would fall under the category of 'tubes and fittings' under ‘Capital Goods' is an arguable issue and not free from doubt and eligibility for cenvat credit can be gone into detail only at the time of final disposal of the appeal. Partial pre-deposit is ordered and on compliance the recovery of balance amounts is stayed till the disposal of the appeal.(Para 6). 

Service Tax: Software development and support services: CENVAT: Refund: The claim of CENVAT Credit on the input service received prior to the registration by the appellant, there is no provision in the CENVAT Credit Rules specifically prohibiting availment of CENVAT Credit in respect of inputs/input service which have been received prior to their registration as an output service provider. So long as they can establish that they have born the incidence of duty on the inputs/input services and they have utilized the same in providing taxable output services, they are eligible for the tax credit on the inputs/input services.(Para 5)

Credit cannot be denied on the basis of invoices wherein registration numbers were not mentioned so long as the payment of tax was established and the said input service was utilized in the provisions of output service. Therefore, the appellant is eligible for the amount of service tax credit and consequent refund in respect thereof.(Para 6)

The coffee machine has been maintained by the appellant for vending of coffee to its employees. It is the nature of a catering service provided to the employees which is very essential, especially for the employees working round the clock as in the case of IT companies. Therefore, repair of the coffee vending machine is an input service in or in relation to the output service provided by the, appellant and therefore they are rightly entitled to the service tax paid on the repair of the coffee vending machine as it is an eligible input service.(Para 7)

The appeals filed by the appellant in this case are allowed with consequential relief,(Para 8)

Service Tax: CENVAT Credit of Service Tax Paid on commission: Input service: It is established that the foreign commission agent services received by an assessee for sale promotion in foreign land are eligible input services for the purpose of MODVAT Credit. As such, the appellant has been able to make out a good prima facie case in their favour so as to dispense with the condition of pre-deposit of duty and penalty. (Para 2). Stay Petition as also appeal gets disposed off in above terms.(Para 3).

Cenvat Credit: Inadmissible credit taken and availed: Interest payable as per Apex Court judgment.

Cenvat credit: Input tax credit: In view of Bombay High Court judgment in Coca Cola activities relating to business are entitled as credit.

Stay: Demand for 1997 raised in 2005: Taxability of DTA services: Waiver from pre deposit granted.

Service Tax: Cenvat Credit: Input Services: Mandap Keeper Services: During the course of advertising and .publicizing the product the assessee enlisted the services of a mandap keeper which is an input service. This confirms to the definition of input service as defined under Cenvat Credit Rules, 2004. In the show cause itself the demand was raised on the basis of invoice issued by Bhagwati Banquets & Hotel Ltd., Ahmedabad which is an adequate proof of providing mandap keeper service. The appeal is allowed. (para 2,3)

GTA Service: Manufacturer being deemed provider of taxable service not entitled to use cenvat credit for discharging service tax liability for GTA service.

Service Tax: Service tax on GTA services: Demand: Since the appellant are not manufacturing any final product or providing any taxable services (during the period prior to 19.04.2006 or after 19.04.2006), the services of telephone, security services, repair and maintenance services, scientific or technical consultancy services etc., can not be treated as the input services for their “deemed output service” i.e. the GTA services received by them. Therefore, in respect of GTA service received by the Appellant, there is no question of payment of service tax through Cenvat Credit account and the same has to be paid in cash.(Para 8.1, 11). The appeal stands disposed of (Para 16).

Service Tax: Cenvat Credit: Remand: Rule 6(5) of the Cenvat Credit Rules, 2004: Learned Consultant states that they are ready to assist the jurisdictional Commissioner and to demonstrate before him that they qualify for credit under Rule 6(5) of the Cenvat Credit Rules, 2004. Set aside the impugned order and remand the matter to the original authority for fresh decision. The appellants shall be free to demonstrate before him with documentary evidence that they qualify for Cenvat credit under Rule 6(5) of the Cenvat Credit Rules, 2004. (para 2)

Service Tax: Demand: Cenvat: Waiver of pre-deposit: The service tax paid on advertisements, sales promotion etc. in relation to aerated water (final product) was admissible as credit for payment of excise duty on concentrate (intermediate). Appellants have a good case against the impugned demand of service tax. Hence, there is waiver of pre-deposit and stay of recovery in respect of the dues.(Para 2)

Service Tax: ‘Architect Services’: Demand: Waiver of pre-deposit: Rain water harvesting system is set up with the objects of raising the ground water level. Water is essential for the assessee to manufacture its final product. Therefore, ‘Architect Service’ availed by the assessee is an admissible input service. There is waiver of pre-deposit of the dues and stay on recovery thereof pending decision in the appeal.

Service Tax: Waiver of pre-deposit: The short question raised in this appeal is, whether the tower on which the antenna is mounted by the appellant constitutes capital goods for the purpose of Rule 3 of the Cenvat Credit Rules 2004 and whether the Tribunal is justified in directing the appellant to make pre-deposit. Admittedly, in several similar appeals filed by the appellant the CESTAT has granted waiver of pre-deposit in all those appeals which are pending since July 2007.(Para 2). As such, unconditional stay has to be granted. Accordingly the stay petition is allowed.(Para 5). 

Service Tax: Taxable and exempted Services: Rule 6(3)(c) of the Cenvat Credit Rules, 2004: Remand: The provisions of the Rule restricting utilization of credit to the extent of 20% of the payable is a very clear cut provision and the concerned branch of the SBI was required to follow the same more so when they are claiming to be service tax collectors. As such, several ingredients required for the purpose of invoking longer period of limitation is available in this case. As the lower appellate authority has not gone into the merits of the case, in view of his finding on time bar, the appeal is remanded to him for fresh decision as regards the merits of the case. The department’s appeal is allowed in the above terms. (para 5,6)

Service Tax: Refund on export services: The view taken by the Revenue that invoice is not sufficient to link the export goods with the export cannot be sustained. What is required to be seen is whether basic document namely shipping bill and other enclosures are available with the claim and it is not necessary that in respect of each and every service tax claim, separate copies of documents are produced. What is required to be seen is whether the export invoice contains all the relevant details and the invoice number is available in the receipts issued by service providers and the invoice produced by the exporter in respect of goods has a corresponding shipping bill/ARE-1. No purpose will be served in requiring the claimants of refunds to produce multiple copies of same documents in respect of each and every individual claim of service tax credit. Since invoices have been produced and shipping bill and ARE-1, prima-facie appellants seem to be eligible for refund. The impugned order is set aside and the matter is remanded to the original adjudicating authority for verification and consideration of the claim afresh.(Para 3). 

Service Tax: Cenvat Credit: Refund: Chartered Accountant’s Service: The ‘Chartered Accountant’s service’ involved accounting and auditing of the transactions assessee. Auditing and accounting are specifically included in the definition of input service. (para 4)

Service Tax: Cenvat Credit: Refund: Manpower recruitment and supply service: This service is an essential input and the assessee in entitled to credit of the service tax paid. (para 4.1.)

Service Tax: Cenvat Credit: Refund: Outdoor catering service: The appellants have submitted an affidavit by the Director of the appellant company to the effect that 50% of the cost towards catering is recovered from the employees. It is accordingly held that the asseessee is entitled to credit of actual service tax incurred by it under this head. (para 4.2.)

Service Tax: Cenvat Credit: Refund: General Insurance Service: Insuring the property and premises of the service provider is an activity related to its business. It is an eligible input service. (para 4.3.)

Service Tax: Cenvat Credit: Refund: Security Agency Services: Assessee employs security staff to guard the premises from where it operates. This is an activity which cannot be dispensed with by the assessee to carry on its activities. Therefore, the tax paid under the head ‘security service’ qualifies as input service. (para 4.4)

Service Tax: Cenvat Credit : Refund: Technical inspection service: The service is akin to ‘credit rating’ covered by the definition of input service in Rule 2 (I) of Cenvat Credit Rules, 2004. This technical inspection certification therefore is an admissible input service for the assessee. (para 4.5.)

Service Tax: Cenvat Credit: Refund : Asset Management Service: Remand: The assessee relies on the decision in Convergys India Pvt. Ltd. Case (supra) wherein the Tribunal held that services of asset management used in connection with procurement of other input service were input services and allowed credit. In the circumstance, the dispute regarding admissibility of tax paid under this head is remanded to the original authority to examine the case afresh after hearing the appellant. (para 4.6)

Service Tax: Cenvat Credit: Pre-deposit: The applicants are having a common account and they have utilized the entire credit against the output services and have not utilised the credit for clearing manufactured products. As per provisions of Cenvat Credit Rules, no where it is specified that if an assessee is engaged in both activities i.e. manufacturing and providing services, the assessee has to maintain separate cenvat credit account of input/output service. Therefore, grant wavier of entire demand of cenvat credit along with interest and penalty and stay demand during pendency of the appeal. (para 6)

Service Tax: Rate of Tax as on date of rendering of Service: The submissions of the learned counsel that the rate of tax applicable was the rate on the date of rendering of service is to be accepted in the light of the Tribunal's decision in the case of Reliance Industries (supra). (para 6)

Service Tax: Adjustment of Excess paid tax: Rule 6(4) of the Service Tax Rules, 1994: Remand: The adjusting of excess payment against short-payment has to be done in the manner provided under Rule 6(4)(a) of the Service Tax Rules, 1994, as submitted by the learned SDR. However, this exercise has not been done and no specific details of the short-levy relating to month-wise or quarter-wise are available. On this ground alone the mater requires to go back to the original authority for fresh consideration. (para 6)

Service Tax: Service of renting immovable property coming under Section 65(105) (zzzz) of Finance Act, 1994: Utilisation of cenvat credit: CENVAT Credit Rules have been framed in terms of powers conferred by Section 37 of the Central Excise Act, 1944 and Section 94 of the Finance Act, 1994. Rule 3(1) enables a 'manufacturer' or a 'provider of taxable service' to take credit of specified duties and utilize them to discharge duty liability under Rule 3(4) of the CENVAT Credit Rules. A credit can be utilized for payment of any duty of excise on any final product or for payment of service tax on any output service. The respondent is registered as a service provider for providing the services of renting of immovable property. The credit taken by them as manufacturer/service provider has been used both for paying excise duty and for paying service tax. The rules permit taking of credit under a common pool and permit use of the credit from the common pool for different purposes and there is no restriction placed to the effect that credit accounts should be maintained for use for manufacture of excisable goods and for use for providing services. Therefore, the view taken by the Commissioner (Appeals) cannot be faulted. The respondents have registered themselves as service provider of service of renting of immovable property and paying service tax as provider of output service and therefore the utilization of credit taken by them is valid.(Para 6). The appeal is therefore dismissed(Para 7). 

Service Tax: Security Agency Services: Cenvat Credit: Input Services: The security services used in the saltpan though belonging to the respondents are clearly outside the factory premises as recognized under the central excise law. In view of the specific exclusion of salt pan from the definition of the term factory which definition is applicable to the Cenvat Rules, the security services which are area specific cannot be treated as input services. (para 6.3)

Service Tax: Input Services: Salt is subject to 'nil' rate of duty. Therefore, other independent suppliers of salt cannot avail credit of security services utilized in their saltpan. (para 7)

Service Tax: Security Agency Services: Cenvat Credit: Limitation: Penalty: The belief of the respondents that they were eligible to take credit of service tax paid on security services utilized in a captive saltpan cannot be treated as other than bonafide belief. Therefore, no demand can be sustained invoking the extended period and further penalties are not justified. (para 8)

Service Tax: Business Auxiliary Services: Commission: Services received from abroad: Cenvat Credit utilised for discharge of Tax under Section 66A: The appellant is deprived of making use of the Cenvat credit. Since the matter in controversy involves question of law, there may be waiver of pre-deposit during pendency of the appeal. (para 3)

Service Tax: Cenvat Credit: Refund: Appeal: Speaking Order: The Commissioner (Appeals) had not passed a speaking order on the merits of dispute. He found that the services involved were essential for the output service rendered by the respondents and directed the original authority to reconsider the refund claim in the light of the CBEC Circular No. 120/01/2010 dated 19.01.2010. Now that the original authority has passed an order in terms of remand directions, though not legal, the appeal has become infructuous. The appeal is therefore rejected. (para 4)

Service Tax: Storage and Warehousing: Demand: Remand: It is not able to conceive a situation where the oil companies keep three different petroleum products always in order to push, a consignment of any particular petroleum product. (Para 8)

The impugned order is set aside and remand the dispute to Commissioner for taking a fresh decision, for issuing a speaking order explaining the factual matrix clearly and then to arrive at a decision on the legal dispute. The appeal is thus allowed by way of remand.(Para 9)

Service Tax: GTA Services: Demand: In para 5.7 of letter F. No. 341/18/2004-TRU(Pt) dt. 17/12/2004 of the Ministry of Finace, it was clarified that:- “5.7 If service tax due on transportation of a consignment has been paid or is payable by a person liable to pay service tax, service tax should not be charged for the same amount from any other person, to avoid double taxation”. Matter remanded to the Commissioner for taking a fresh decision.(Para 3). The appeal is thus allowed by way of remand. Stay petition also stands disposed of.(Para 6).

Service Tax: Renting of immovable property: Stay: The stay order is modified to the effect that the appellants shall freeze the credit to the extent of 75% of the amount confirmed and also keep balance 25% of the credit which would accrue in future in accordance with the stay order dated 21.10.2010.(Para 3). 

Service Tax: Demand: Penalty U/S 78: Appellant may be eligible for the credit of service tax paid on input services and they have made good the same by taking the Cenvat Credit. Since the eligibility to the Cenvat Credit needs to be verified from the factual matrix, the Adjudicating Authority should go into the matter and re-consider the issue afresh. Appeal is allowed by way of Stay petition also disposed off.(Para 5). 

Service Tax: Refund: The perusal and analysis of the entire materials required for the purpose of appropriate decision on the dispute has to precede the actual decision. It appears that the Commissioner (Appeals) did not consider this settled principles of law while deciding the matter in hand. Otherwise, he would not have disposed of the appeal by observing that the refund is granted subject to production of certificate from the Chartered Accountant. It was necessary for the Commissioner (Appeals) to peruse such certificate prior to the decision in the matter. On this count also, the impugned order cannot be sustained and is liable to be set aside.(Para 9). Matter is remanded to the Commissioner (Appeals) to decided the same afresh(Para 19). 

Service Tax: Cenvat credit: Demand: Suppression of facts: It is established that input service credit is available to fixed telephone and mobile telephones given to the employees of a unit.(Para 6). Revenue was not able to show evidence that the respondents have suppressed the factual details, in the absence of any contrary evidence, therefore, the impugned order is correct. The appeal filed by the Revenue is rejected.(Para 7).

Service Tax: GTA Services: Demand: The appellants are permitted to maintain a common Cenvat account into which credit of duty paid on inputs and service tax paid on input services are allowed to be taken as credit. The purpose for which use of the Cenvat account has been permitted has been listed. There is no restriction placed for utilisation of Cenvat credit by the manufacturing unit towards payment of service tax as a service provider or deemed service provider. In view of the above, there is no irregularity on the part of the appellants using Cenvat credit account. (Para 5). The order of the Commissioner (Appeals) is set aside and appeal is allowed with consequential relief as per law.(Para 6). 

Service Tax: Refund of unutilized CENVAT credit : Notification No. 05/2006-CE(NT) dated 14.03.2006 read with provisions of Rule 5 of CENVAT Credit Rules, 2004: Eligibility: i) It is a common sense that bank charges, courier and clearing charges and other professional service charges, computer maintenance, clearing charges, insurance charges are incurred by an assessee in or in relation to the manufacturing of the final products i.e. the business of assessee .. The findings of the learned Commissioner (Appeals) are very clear to that aspect and hence we uphold them. It is seen that revenue has not produced any evidence to the effect that these services are not in relation to the business of the assessee.(Para 6.2). ii) Any premises, which are used for the manufacturing of export goods, needs to be considered as used 'in or in relation to' the manufacturing of the final products. It is also seen from the records that there is no dispute, that for operational convenience, the appellants have procured/purchased commercial vehicles for shifting the semi-finished goods from one premises to another for the next level of production. If these commercial vehicles, which are owned by the assessee and used by them for shifting of the semi-finished goods or under process goods for the further level of production, then the credit of Service Tax paid on the maintenance of such vehicles cannot be denied.(Para 6.4).

In reletion to: Settled law: Hon'ble Supreme Court in various cases Doypack Systems (Pvt.) Ltd. Vs. UOl -- STO 1988 SC 13 CCE Vs. Solaris Chemtach Ltd.-STO 2007 SC 759 settled the expression 'in relation to' and the Hon'ble Supreme Court has settled law, that the expression 'in relation to' is a particular expression which pre-supposes another subject matter and has to be considered in a proper perspective. Therefore, services received by the appellant in respect of the above services would be 'in relation to' the manufacturing of the final product i.e. ready made garments.(Para 6.7).

Retrospective amendment in notification: Effect: If the Notification with retrospective amendment stands as reproduced hereinabove, then, any input service, which is used in relation to the manufacture of final products, the appellant is eligible to avail the Cenvat credit and if such cenvat credit cannot be utilized by him for discharge of Central Excise duty or output service, he becomes eligible to claim the refund from the authorities.(Para 6.7). Revenue appeal dismissed.
 

Service Tax: GTA Services: It stand observed by the Hon’ble High Court that in terms of para 2.4.2 of CBEC Excise Manual of Supplementary Instructions, there is no legal bar to the utilisation of Cenvat credit for the purpose of payment of service tax on the GTA Services. It stands further observed that apart from the above, even as per Rule 3(4)(e) of the Cenvat Credit Rules, 2004 the Cenvat credit may be utilised for payment of Service Tax on any output services. Accordingly, the appeals filled by the Revenue stand dismissed by observing that a Commissioner (Appeals) have rightly held that the respondents were entitled to pay service tax from Cenvat credit.(Para 7,8). 

Service Tax: Repair and maintenance services: Taxable event: Demand: It is established that unless the nexus is established between the services rendered and the business carried on by the assessee, the benefit of CENVAT credit is not allowable. In the present case, in our opinion, rendering taxable services at the residential colony established by the assessee for the benefit of the employees, is not an activity integrally connected with the business of the assessee and therefore, the Tribunal was not justified in holding that the services such as repairs, maintenance and civil construction rendered at the residential colony constitutes 'input service' so as to claim credit of service tax paid on such services under Rule 2 (1) of the CENVAT Credit Rules, 2004.(Para 5). It is clear that there is no nexus of input services with the manufacturing of the finished goods viz., cement and hence, the respondents are not entitled to credit of service tax paid on such services. Accordingly, the impugned Order in Appeal is set aside and the impugned Order in Original is restored.(Para 6). 

Service Tax: Liability of sub contractor: Demand: There is no any provision in the Finance Act, 1994 to grant immunity to the sub-contractor from levy of service tax when taxable services were provided by them.(Para 5). There was non-compliance to the law by the sub-contractor appellant. When the appellant is made liable under Finance Act, 1994 and has paid taxes, cum-tax benefit cannot be denied. So also if there is benefit available towards Cenvat credit that shall not be deniable subject to scrutiny under the provisions of Cenvat law.(Para 6). There is no substance in the arguments that the proceedings is time barred when there is escapement of scrutiny and the appellant did not seek registration to claim its bonafide. So also returns were not filed to claim bonafide. Therefore, there shall not be any concession in penalty. (Para 7). 

Service Tax: Good Transport services: The appellants did not provide any taxable service, though they did manufacture an excisable product. They were Iiable to pay service tax on GTA Service received by them in connection with clearance of their product from factory. The GTA Service so received by the appellants would have been covered under the definition of "input service" under Rule 2(1). By virtue of the Explanation, it shall be deemed to be "output service". In other words the appellants, while paying service tax on GTA Service availed in connection with removal of their final product from factory were doing so on an "output service" and therefore, they were entitled to utilize, for payment of service tax on such service credit of the tax paid on the input GTA service availed by them in connection with receipt of inputs into their factory.(Para 4). Impugned order is unsustainable and is liable to be set aside(Para 5). 

Service Tax: Banking and Other Finance Services: Refund claim of unutilized service tax credit under Rule 5 of Cenvat Credit Rules, 2004 read with Notification. No. 5/2006CE (N.T.) dt. 14/3/2006: Notification No.5/2006-CE(N.T.) dt. 14/3/2006 which was relied upon by both sides talks about the amount of refund to be granted to an assessee based upon the formula in that notification may also apply. We find that this aspect has not been examined by the lower authorities while rejecting the refund claims filed by the assessee. It is seen from the records that the appellant is able to produce a certificate issued by the Chartered Accountant, wherein there is bifurcation of the value of the taxable and non-taxable service, the benefit of the refund to the assessee for the services exported by them should not be denied, for the reason that the details are not explained properly.(Para 10). The appeal is allowed by way of remand to the Adjudicating Authority(Para 12). 

Service Tax : Refund of accumulated Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004: As per Rule 2 (I) of the Cenvat Credit Rules, 2004, input services are defined as under:-
“any service

(i) used by a provider of taxable service for providing and output service; or

(ii) used by the manufacturer, whether directly or indirectly, in relation to the manufacture of final products and clearance of final products from the place of removal,

And includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory of premises, advertisement or sales promotion, market research storage upto te place or removal, procurement of inputs, activates relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training computer networking credit rating, share registry and security, inward transportation of input or capital goods and outward transportation upto the place of removal”. Therefore, credit available on (i) Courier service (inland)(ii) Advertising services(iii) Security services (iv) Transport services, ie rent a cab services(v) Professional services(vi) AMC for Other equipments or maintenance or repair service other than computers(vii) placement services(viii) clearance charges(ix) Outdoor catering services(x) Insurances services(xi) Air travel agent’services (xii) Telephones(xiii)Rent a cab services. Matter remanded (Para 3).
 

Service Tax: Maintenance service whether input service: Limitation of period: Penalty u/s 78: Show cause notice for denial of credit of duty availed on 01.6.06 was issued on11.9.07 i.e. after normal period of limitation of one year. Having accepted that the appellants had filed monthly returns showing availment of impugned credit, no suppression or mis-statement with an intent to evade duty, can be attributed to them. In any case, the same Commissioner (Appeals) has set aside the penalty imposed upon the appellants by following the Tribunal's decision in the case of M/s. Rajhans Metals Pvt. Ltd, which has observed that the disputed issue is issue of interpretation and there is no justification for imposition of penalty. If that be so i.e. the issue is as regards interpretation of law, the appellant cannot be held to have any malafide intention for availing the credit. As such, the demand of credit having been raised after the normal period of limitation is hit by limitation and is time barred. For the said reasons, demand of duty beyond the period of limitation is set aside. (Para 5).

Service Tax: Banking and other Financial Services: Denial of Credit on input services: Demand: Different opinion: The services utilized should be in or in relation to the providing of output services. The ownership of the premises per se is not relevant for making credit eligible. If the appellant is rendering the services from a rented premise, still if the services utilized are input services, the credit shall be available. Merely because the service provider owns several premises some of which were not connected to the providing of services, the services utilized in the premises, in my considered view, cannot be treated as 'input services' and made eligible for CENVAT credit. The appellants are not eligible for the credit claimed by them.(Para 8.3). However it was held by the Tribunal that the definition of 'input service' includes "services used in the premises of a provider of output service". There is no dispute that the staff quarters are the premises of the bank. Therefore, they are covered by the definition of 'input service' in Rule 2(1) and, therefore, they are entitled to take CENVAT credit of the entire service tax paid.(Para 10). Matter kept before Hon'ble President for his consideration for referring the matter to a Division Bench.(Para 13).
 

Service Tax: Validity of the circular clarifying amendment to Rule 2(k): Since the impugned Circular F. No. 267/11/2010-CX.8, dated 8-7-2010 issued by C.B.E. & C. clarifying amendment to Rule 2(k) of Cenvat Credit Rules, 2004 will not be relied upon for any purpose by the Revenue in course of the pending proceeding, there exists no requirement or necessity for quashing the impugned Circular.(Para 7).

Quashing the show cause notice: It shall remain open for the petitioner to canvas all the legal contentions as well as the necessary case law before the Commissioner, Central Excise, Customs & Service Tax, Bhubaneswar-I and the same shall be considered and disposed of by the Commissioner on its own merit.(Para 9).
 

Service Tax: Input removed as such, whether service tax credit availed while receiving such inputs is also need to be reversed : The view as expressed by the Tribunal is strictly in conformity with the Rules. Rule 2(k) of the Rules defines ‘input’, whereas Rule 2(l) defines ‘input service’, meaning thereby both the terms have been defined independently. Rule 3 defines the term ‘Cenvat credit’, which includes duty paid under various enactments and also the service tax leviable under Section 66 of the Finance Act, 1994. Rule 3(5) of the Rules only talks about the Cenvat credit taken on inputs or capital goods. It does not refer to the Cenvat on input service, whereas Rule 5, on which reliance is sought to be placed by the Revenue, specifically talks about the Cenvat credit on any input or input service used in the manufacture of final product. This rule pertains to refund in case of exports, which stands altogether on different footings. Once the rule-making authority has defined the terms specifically and used the same in different provisions consciously, the argument of learned counsel for the Revenue that merely by analogy even if in one provision both the terms have been used, the same should be read in the other provision as well, where it has not been specifically mentioned, has no legs to stand, as the tax cannot be levied merely by inference or presumption. It is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. Words cannot be added or substituted so as to give a particular meaning.(Para 10). Appeal dismissed (Para 11). 

Business Auxiliary Service: Export of services abroad is exempted.

Market Research Services: Activity of analyzing market research reports coming from abroad. Prima facie, amounts to rendition of Market Research Services.

Service Tax: Admissibility of Cenvat credit: In the case of the respondent itself, Commissioner (Appeals) has held that it is entitled to credit of the service tax paid by it on mobile phones, rent a cab, CHA and Surveyor charges and professionals. Hence, in absence of any material change justifying the revenue to take a different view of the matter, the question could not have been reopened and a different and contradictory stand could not have been taken. In the circumstances, no infirmity can be found in the impugned order of the Tribunal in relation to admissibility of CENVAT credit. (Para 5). The conclusion arrived at by the Tribunal being based upon a finding of fact, in absence of any challenge to the said finding of fact on the ground of perversity, the same does not give any rise to any question of law.(Para 6). 

Central Excise: Cenvat: Utilisation: If any amount is credited in a Cenvat account either by way of Cenvat credit or otherwise which is not admissible and if such amount is utilized for the purposes of the payment of the Central Excise Duty only in that situation it can be said that the duty has not been properly paid and the consequences of the non-payment of duty will follow but if any amount wrongly credited in the Cenvat account is not utilized in making the payment of the excise duty on the final products, it leads to no consequence.(Para 8).

Interest and penalty: Instead of claiming refund separately, the Assessee has taken Cenvat Credit of the said amount in the Cenvat account. Such amount credited in the Cenvat account was available for the payment of duty but the same was not utilized for payment of duty and subsequently, the Assessee has reversed the Cenvat Credit entry in the Cenvat account. The Apex Court in the case of Commissioner of Central Excise, Mumbai-I v. Bombay Dyeing & Manufacturing Company Limited, reported in 2007 (215) E.L.T. 3 (S.C.) has held that where before the utilization of the credit amount if the entry is reversed it amounts to not taking credit. Once the credit is reversed before its utilization in the Cenvat account it does not amount to taking of credit. Thus, the provisions of Rule 14 of Cenvat Credit Rules and Section 11AB of the Act are not attracted and neither the penalty nor the interest is chargeable(Para 9). Appeal dismissed(Para 10).
 

Service Tax: Outdoor Catering service provided in factory canteen: Whether an input service: Under the provisions of Section 46 of the Factories Act, it is mandatory for the employer to provide canteen services to the staff. Thus, provision of canteen services is a statutory requirement. Provision of canteen services being indispensable, it is incumbent on a manufacturer of goods, to provide the same if he desires to run his factory. In view of the definition of “input service” which means any service used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products, the input service does not have to used directly in the manufacture of final products, it may be a service which is only indirectly used in relation to the manufacture of final products. In the circumstances, canteen services which are indispensable in relation to manufacture of the final products would certainly fall within the ambit of “input service” as defined under the Rules.(Para 6). Moreover, Rule 3 of the Rules provides that the manufacturer shall be allowed to take credit of the service tax leviable under Section 66 of the Finance Act; paid on any input service received by the manufacturer of final product on or after the 10th day of September, 2004. A plain reading of the said rule makes it clear that the said provision does not qualify the nature of input service availed of by the manufacturer.(Para 7).

Therefore, the Tribunal was justified in holding that the service tax paid on outdoor catering services by the canteen located in the respondent’s manufacturing premises has to be considered as an input service relating to business and that CENVAT credit is admissible in respect of the same.(Para 8).

Appeal dismissed.(Para 8).
 

Service Tax: Availed and utilized the modvat credit on the alleged incorrect/invalid invoices: Credit held as admissible by Tribunal: Strictures: In the instant case, the findings of the Tribunal are perverse, speculative and without any basis or evidence.(Para 13). Tribunal, having just ignored the admissions of the parties and the evidence on record, reversed the order of Commissioner without any basis, particularly when in para 6 of the impugned order’ Tribunal has noticed the fault of the assessees, that the invoices are incorrect for the purpose of taking modvat credit, but it fell in legal error and observed that even if it is assumed that the goods had not been dispatched from Abohar, yet their receipts in the factories of the assessees and the other particulars relating to the quantum of duty, are not in dispute.(Para 16).

The tribunal has observed that if according to the department, Shobhit had committed certain irregularities at the time of issue of invoices, there cannot be a case to penalize the assessees for some one else doing. Here, the Tribunal has fell in grave error and did not deal with the reasons recorded by the Commissioner, in this relevant connection and the impugned order cannot legally be sustained.(Para 17).

The party can only claim the modvat credit on the basis of the invoices of the input duty paid goods, which had actually reached the premises of the assessees and not otherwise. Thus, the findings of the Tribunal are not only devoid of merit and misdirected but perverse and speculative as well. The tribunal has just ignored the admissions and other cogent evidence on record with impunity as noticed by the Commissioner.(Para 18).Appeal allowed and matter remanded to Tribunal for reconsideration.
 

Stay: Extension of stay: Stay extended for further period of six months.

Stay applications of department: Rejected: Issue whether cenvat credit of service tax paid on inward transportation can be subsequently used for payment of service tax of inward consignments, as the issue referred to Larger Bench.

Tour Operator Services: Taking into consideration the deposit made already and also the fact that appellants have suffered huge financial losses, the appellants are directed to pre-deposit Rs 75 lakhs within three months from the date of this order. (para 5)

Limitation: ST-3 returns and also the Cenvat credit returns have been filed regularly by the appellant: Extended period not available.