By TIOL News Service

NEW DELHI, FEB 07, 2017: THE appellant is engaged in manufacture of Zinc and Lead Concentrates.

They are availing the services of M/s. Keybell Solutions Ltd. for keeping a track of the movement of trucks, known as "Truck Khoj services" carrying cargo from Mines to the smelters, from smelters upto depot and for movement of the finished goods upto the door step of the customers to ensure timely delivery of the goods to the customers and to track delay caused in delivery of the goods, if any.

The tax on services so provided by M/s. Keybell Solutions Ltd. for vehicle tracking modules was paid under the category of Business Support Services and credit of the same was availed by the appellant under the CCR, 2004.

The lower authorities denied the CENVATCredit on the ground that the activity is post the clearance of the goods from the factory and hence cannot be said to be used directly or indirectly in relation to clearance of final products.

Before the CESTAT, the appellant submitted that the timely delivery of goods and the security of the same is an essential activity for running the business of the appellant; that the same software package is also used to track the movement of inputs coming to the factory for manufacture and, therefore, the service qualifies as an eligible input service under rule 2(l) of CCR. Reliance is placed on the decision of the Bombay High Court in the case of Ultratech Cement - 2010-TIOL-745-HC-MUM-ST.

The DR reiterated the stand taken by the department.

The CESTAT extracted the definition of ‘Input Services' and the decision cited and observed -

++ It is to be noted that the definition of 'input services' when used by a manufacturer has two parts - it is used directly or indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal. The definition also has an inclusive part within which comes the disputed service.

++ It is the outlook of any manufacturer not only to manufacture the goods but also to ensure timely delivery of goods upto the ultimate destination. With technological advances it is now possible, through software packages, to track safe delivery of the goods loaded in the trucks until the premises of the customer. The appellant has made use of such services not only to track the delivery of the finished product but also to track the receipt of the inputs.

++ Hence, the said service qualifies as input service because the service has been used in or in relation to manufacture and clearance of the finished products upto the premises of the customer. It may even be covered within the definition of "procurement of inputs" and "activities relating to business."

Setting aside the impugned order, the appeal was allowed.

(See 2017-TIOL-336-CESTAT-DEL)