The respondents herein who are engaged in the manufacture of P and P medicaments were availing CENVAT credit on inputs and input-service credit under the CENVAT Credit Rules, 2004. During the period November 2005 to March 2006, they had availed input-service credit on dry cleaning service, Customs House Agent s service and had also availed service tax credit for payment of telephone bills for telephones installed in their Head Office. It appeared to the authorities that credit was not admissible and therefore a show-cause notice proposing recovery of wrongly availed CENVAT credit together with appropriate interest and proposing penal action was issued; notice was adjudicated by the Assistant Commissioner who confirmed a demand of Rs.97,462/- + education cess of Rs.1,666/- along with interest and imposed penalty of Rs.2,000/-. The Commissioner (Appeals) accepted the contention of the assessees that the input services were essential in relation to the business and that they were eligible to credit. Hence this appeal by the Revenue.
2. I have heard both sides. Input service as defined under Section 2(l) of the CENVAT Credit Rules, 2004 is under:-
“any service,
i. Used by the provider of taxable service for providing an output service, or
ii. Used by the manufacturer, whether directly or indirectly, in or 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 or premises, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, activities 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 inputs and capital goods and outward transportation up to the place of removal”
The issue of eligibility to credit of service tax paid on Customs House Agent’s service stands settled in favour of the assessees by the Tribunal’s decisions in Commissioner Vs. Rolex Rings Pvt. Ltd. - 2008 (230) ELT 569 and Commissioner Vs. Adani Pharmachemp Pvt. Ltd. - 2008 (12) STR 593. The decision of the Tribunal in Excel Crop Care Ltd. Vs. Commissioner - 2007 (7) STR 451 which has been relied upon by the Revenue and followed in Nirma Ltd. Vs. Commissioner - 2009 (13) STR 64 holding that credit is not admissible, has been distinguished in Rolex Rings case on the ground that the Excel Crop order did not consider the definition of input service or the CBEC Circular dated 23.8.2007 holding that all services availed by an exporter under the port area is required to be considered as input service as they are clearly related to business activities and activities relating to business are covered by the definition input service and admittedly CHA service relates to export of business. Following the ratio of the decisions in Rolex Rings (supra) and Adani Pharmachem (supra), I uphold the extension of CENVAT credit of service tax on Customs House Agents service.
3. As regards dry cleaning services, there is no dispute that wearing of clean uniforms/clothing is mandatory under Drugs and Cosmetics Act for personnel engaged in the manufacturing of medicaments or drugs. Therefore, dry cleaning services are clearly related to the business of manufacture of their final products. Hence they are entitled to CENVAT credit of service tax availed on dry cleaning service. As regards telephone service, since they are required to meet out day to day business activities, such services are also in relation to business falling within the scope of the definition of input service and therefore service tax credit on telephone service is admissible.
4. In the light of the above discussion, I see no reason to interfere with the impugned order of the Commissioner (Appeals) and accordingly uphold the same and reject the appeal filed by the Revenue.