2015 (11) TMI 1552 - AT - Central Excise

Availment of Cenvat credit of service tax paid - Security Agency Service for its off-factory guest house and residential colony - no nexus between disputed service and final product manufactured - Held that - the expenditure towards the disputed service have been included in the cost of production of the excisable goods on which Central Excise duty liability has been discharged I am of the view that same shall merit consideration as input service for the purpose of taking cenvat credit. However since no documentary evidences to that effect were produced by the respondent before the lower authorities I am of the opinion that the matter is required to be remanded back to the original adjudicating authority for verification of the documents/records maintained by the respondent to demonstrate that the cost of disputed service and the service tax paid thereon is forming a part of the cost of production of the finished goods on which Central Excise duty liability has been discharged. - Appeal allowed by way of remand

Summary

Issues involved:
- Availment of cenvat credit on Security Agency Service for off-factory guest house and residential colony
- Nexus between disputed services and final product
- Interpretation of the definition of input service
- Application of legislative intent in Cenvat Credit Rules
- Inclusion of expenses in the cost of production
- Requirement of documentary evidence for cenvat credit eligibility

Analysis:
The judgment pertains to the appeal concerning the availment of cenvat credit on Security Agency Service for a guest house and residential colony located off-factory premises. The adjudicating authority disallowed the credit citing a lack of nexus between the services and the final product. However, the Commissioner (Appeals) ruled in favor of the respondent, allowing the cenvat credit. The Revenue challenged this decision before the Tribunal.

The appellant argued that the disputed services did not relate to the final goods manufactured, referencing a judgment of the Bombay High Court. Conversely, the respondent contended that the principles of the cited judgment were not applicable to this case, citing a different High Court judgment and a Tribunal decision to support their eligibility for cenvat credit on the service.

The Tribunal analyzed the period of the case and the definition of input service under the Cenvat Credit Rules. It noted the legislative intent to broaden the scope of input services. Referring to a High Court case, it highlighted that services for the maintenance of a staff colony could be considered as input services for cenvat credit purposes.

Regarding the inclusion of expenses in the cost of production, the Tribunal observed that while the respondent claimed such inclusion, no documentary evidence was provided to support this assertion. Consequently, the matter was remanded to the adjudicating authority for verification of the documents demonstrating the incorporation of the disputed service costs in the production cost.

Ultimately, the Tribunal allowed the appeal by remanding the case for further adjudication. It emphasized the necessity for the appellant to furnish documentary evidence showing the incorporation of service costs in the production cost to be eligible for cenvat credit.