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TMI Blog2019 (6) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... Cenvat Credit Rules, 2004 and also whether the Appellant is liable for penalty under Section 78 of the Finance Act, 1994 in respect of the credit availed on admissible input services? 2. The facts giving rise to the filing of the Appeal are stated in brief as follows. The Appellant i.e. Federal Express Corporation is into the business of Transport of Goods by Air/Road, Courier Agency Services, Management Consultancy Services and Online Information Data Base Access & Retrieval Services. During the course of audit it was observed that during the period from April, 2007 to March, 2008 they had wrongly availed and utilised cenvat credit total amounting to Rs. 12,68,968/- on ineligible services by contravening the provisions of Rule 9(2) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble output service and therefore they have been rightly included in the value of service. According to him, once value of service provided by the service provider includes reimbursement charges/expenses, the service recipient cannot be denied benefit of Cenvat Credit on the said reimbursement. He also submits that there is no suppression of facts and therefore no penalty can be imposed under section 78 ibid. As per learned counsel, the commissioner has erred in disallowing Cenvat Credit of Rs. 12,32,083/- on reimbursement of customs clearance expenses by the Appellant to Federal Express (India) Pvt. Ltd. [FedEx Express], which were incurred by FedEx Express during the course of providing customs clearance services to the Appellant. The has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1962 Xxx xxx xxx 4. In addition to above, in case of High Value Clearance, the Service Provider shall charge to the Service Recipient all the cost incurred by it plus a mark up of 9% of such cost (excluding third part cost). Further Service Provider shall recover at Actuals all the Third party cost incurred by it on Customs Clearance of High Value Packages." 5. The said reimbursement has been denied to the Appellant since as per revenue FedEx Express has outsourced the work to an independent identity- Jeena & Co. and they have failed to establish the nexus between the services provided by Jeena & Co. and the services provided by FedEx Express. The authorities below have failed to take into consideration the customs clearance c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. for customs clearance service relating to the Appellant. I have also been informed that the Appellant has also submitted an undertaking to confirm that they are aware of the fact that FedEx Express has appointed Jeena & Co. as a third party subcontractor for customs clearance service of the high value shipments of the Appellant. The customs clearance services provided by FedEx Express is directly connected with the courier services of import and export shipments provided by the Appellant, without which the Appellant cannot provide services to its customers, therefore undoubtedly the same is 'input service'. Merely because the invoice of FedEx Express recorded that the charges are recovered as reimbursement charges of Jeena & Co., it do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing has been produced which shows that actually the mobile and telephone expenses have been incurred by the said M/s. Prakash Airfreight Pvt. Ltd. exclusively in connection with the output service provided by the Appellant, therefore the same has been rejected by authorities below. It has been submitted that it is part of the agreement between the Appellant and M/s. Parkash Airfreight Pvt. Ltd. that the octroi, mobile and telephone expenses bill are to be paid by the appellant and the same has been booked as expenditure by the appellant, therefore, it can be said that the aforesaid services has been used for business activity of the appellant. In my considered view these services are input service used for output service, in particular, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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