2011 (6) TMI 238 - AT - Service Tax

Input Services - Rule 2(l) of the CENVAT Credit Rules, 2004 - manufacture of Electrical goods - 100% EOU - in view of the decision in Commissioner of Central Excise, Nagpur vs. Ultra Tech Cement Ltd. 2010 (10) TMI 13 - BOMBAY HIGH COURT held that - (1) Banking & Other financial services - credit allowed, (2) Catering Service - credit denied, (3) Courier Services - credit allowed, (4) Insurance Services - family members of the employees - credit denied, (5) Maintenance and Repair of Garden - Credit allowed, (6) Management Consultancy - credit allowed, (7) Telephone Services (Land Line) - credit allowed, (8) Business Auxiliary Services - taking a hall on hire in hotel - credit allowed and (9) Maintenance and Repairs - credit allowed.

Summary

Issues:
Denial of input services credit under the CENVAT Credit Rules, 2004 for various services availed by the appellant.

Analysis:
1. Banking & Other Financial Services: The credit was denied for collection of export bills, considered a post manufacturing/export activity. However, as per the decision in Commissioner of Central Excise vs. Ultra Tech Cement Ltd., input service credit is allowed for services related to business activities. Hence, credit allowed.

2. Catering Services: Credit denied as the amount was recovered from employees, not borne by the appellants. Following precedent, credit not allowed for services not directly borne by the appellant.

3. Courier Services: Credit denied for failure to demonstrate usage in manufacturing, sales, or marketing activities. However, as the services were availed in the business of manufacturing, credit is allowed per established legal precedent.

4. Insurance Services: Credit denied for insuring employees' family members, deemed unrelated to business. Distinction made from a previous case where insurance was for employees or personal accidents. Credit denied based on lack of relevance to business activities.

5. Maintenance and Repair of Garden: Credit allowed as the service was related to the appellant's manufacturing business.

6. Management Consultancy: Credit allowed as the psychology assessment of employees was deemed related to the manufacturing business.

7. Telephone Services (Land Line): Credit allowed despite installation outside factory premises as the service was used in the manufacturing business.

8. Business Auxiliary Services: Credit allowed for hiring a hall for employee training, considered relevant to the manufacturing business.

9. Maintenance and Repairs: Credit allowed for a photocopying machine used in the manufacturing business.

In conclusion, the appeals were disposed of based on the above findings, with input service credit allowed for services directly related to the appellant's manufacturing business.