2014 (8) TMI 984 - AT - Service Tax

Denial of CENVAT Credit - Manpower supply agents service - Input service - Nexus with manufacturing activity - Held that - As regards the service of receiving trained personnel for manning the occupational health centre at Sirohi factory, it is seen that the appellant in terms of Rule 65T of the Rajasthan Factories Rules are required to maintain an occupational health centre as their employees are more than 500 and they carry out hazardous operations. Unless the appellant comply with this provision of the Rajasthan Factories Rules, they would not be allowed to carry on their manufacturing activity. Therefore, I hold that the service of receiving trained medical personnel through manpower supply agency for maintaining the occupational health centre has to be treated as in or in relation to manufacture of final product and would be eligible for Cenvat credit as input service. As regards the services of supply of trained manpower received through manpower supply agents at project office at Udaipur and corporate office at Mumbai, the Jurisdictional Assistant Commissioner in his order dated 3-11-2008 for the previous period has given a finding that these personnel recruited through manpower supply agents are used in connection with activities relating to business and, therefore, this service also has to be treated as covered by the definition of input service. - Decided in favour of assessee.

Summary

Issues:
1. Eligibility of Cenvat credit for services received from manpower supply agents in relation to maintaining an occupational health centre.
2. Eligibility of Cenvat credit for services received from manpower supply agents at project and corporate offices.

Analysis:
1. The appellant, a cement manufacturer, appealed against the disallowance of Cenvat credit for services received from manpower supply agents for maintaining an occupational health centre at their factory. The appellant argued that as per Rule 65T of the Rajasthan Factories Rules, they are required to maintain the health centre for hazardous operations, making it an essential part of the manufacturing process. The Tribunal held that the service of receiving trained personnel for the health centre is in relation to the manufacture of the final product, as without it, the manufacturing activity cannot continue. Therefore, the Tribunal allowed Cenvat credit for these services, overturning the previous orders.

2. The appellant also contested the disallowance of Cenvat credit for services received from manpower supply agents at their project office in Udaipur and corporate office in Mumbai. The Assistant Commissioner had previously found that these personnel were used in activities relating to the business of the appellant, making them eligible for Cenvat credit. The Tribunal upheld this finding and stated that these services are covered under the definition of input service. Consequently, the Tribunal set aside the orders disallowing Cenvat credit for these services, allowing the appeal in favor of the appellant.

Conclusion:
The Tribunal allowed the appeal, ruling in favor of the appellant on both issues. They held that services received from manpower supply agents for maintaining the occupational health centre and for activities at project and corporate offices are eligible for Cenvat credit as they are deemed to be in relation to the manufacturing process and business activities, respectively. The impugned orders disallowing the Cenvat credit were set aside, and the appellant's appeal was allowed.