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TMI Blog2014 (11) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... Testing and Analysis Service, Technical Testing and Certification Service, and Intellectual Property Rights Services for the period 1-1-2007 to 31-7-2007. 3. During the course of audit, it was observed that the assessee had availed of input service credit in respect of the above services which according to the department were not in or in relation to manufacture of products manufactured by the assessee. Accordingly, three show cause notices came to be issued to the assessee in respect of the above mentioned input services (i) show cause notice dated 8-4-2008, (ii) show cause notice dated 1-4-2008 and (iii) show cause notice dated 5-8-2008. 4. The aforesaid three show cause notices came to be adjudicated by the Additional Commissioner, Central Excise, Ahmedabad-II vide Order-in-Original, dated 25-11-2008 and 31-7-2008 respectively, whereby the demand came to be confirmed in respect of all the three show cause notices along with interest and penalty. The assessee carried the matter in appeal before the Commissioner (Appeals) who by an order dated 31-3-2009 confirmed the duty demand but reduced the penalty amount in respect of two of the show cause notices. The assessee ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises 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 or capital goods and outward transportation up to the place of removal;" (xvii) Before adverting to the merits of the issue, reference may be made to various decisions rendered in the context of the expression 'input service' as defined under Rule 2(l), of the Rules. This court in the case of Parth Poly Wooven Pvt. Ltd. (supra) has, after referring to various decisions on the question of interpretation of the said rule as well as interpretation of statutory provisions, held that to qualify for input service, such service should have been used for the manufacture of the final products or in relation to the manufacture of final product or even in the clearance of the final product from the place of removal. Thus, what is required to be examined is as to whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id thereon. Since production of medicaments are subject to approval by the regulatory authorities of various countries to which such drugs are exported, the assessee is required to obtain approval before starting commercial production. Thus the final product can be manufactured only upon approval of the regulatory authority after the product undergoes technical testing and analysis. Under the circumstances, it cannot be gainsaid that the activity of testing and analysis of the trial batches is in relation to the manufacture of final product. Unless such testing and analysis is carried out, it would not be possible to produce the final product inasmuch as unless the trial batches are sent for testing and analysis and approval is obtained, the final product cannot be manufactured. Under the circumstances, the services availed in respect of technical testing and analysis services are directly related to the manufacture of the final product. The contention of the department that unless the goods have reached the commercial production stage, Cenvat credit is not admissible in respect of the technical testing and analysis services availed in respect of the product at trial production sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal products". Under the circumstances, the service of technical inspection and certification agencies availed by the assessee would clearly fall within the ambit of input service. The contention that such certification has no nexus with the manufacture of final product is evidently fallacious as it would not be permissible for the assessee to use the necessary instruments without certification. Another aspect of the matter is that services rendered by a technical inspection and certification agency fall under sub-clause (zzi) of clause (105) of Section 65 of the Finance Act which is one of the clauses specified under sub-rule (5) of Rule 6 of the Rules. The Tribunal was, therefore, justified in holding that such service fell within the purview of input service as contemplated under Rule 2(l) of the Rules. This issue, accordingly, stands answered in favour of the assessee and against the revenue." 7. Insofar as the third issue, viz. services in respect of Intellectual property rights is concerned, the assessee availed Service Tax credit as an input service for intellectual property right transferred by M/s. Astron Research Ltd. Ahmedabad to the tune of Rs. 13,95,870/-. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nature of services involved are more or less similar, the facts of the present case are different from that of M/s. Cadila Healthcare Pvt. Limited inasmuch as the services availed by the assessee are in respect of products which are not put to manufacture even after availment of the services in question. The assessee has not commenced manufacture of the final product in view of the fact that if the product is manufactured during the patent period there would be violation of Intellectual Property Rights which would have huge financial implications. Hence, the assessee is waiting till the time the product becomes generic before commencing manufacture of the final product. The Commissioner (Appeals) has, therefore, held that as and when the assessee is able to co-relate the use of the above services as input service used in its final product it would be eligible for credit of such taxes. The Tribunal, in the impugned order has without delving into the facts of the present case and noticing the distinguishing features, has blindly followed its earlier decision in the case of M/s. Cadila Health Care Pvt. Limited. However, the Tribunal being the final fact finding authority having not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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