2011 (11) TMI 56 - AT - Service Tax

Disallowance of credit of service tax - garden maintenance service - As per the Pollution Control Board they are required to maintain 33% of the area of their factory under green grass plantation and this is required in relation to the manufacture of their final products - Keeping in view the case Ultratech Cement Ltd. 2010 -TMI - 78203 - BOMBAY HIGH COURT Held that here input means activities relating to business - inclusive part of the definition of input service extends to services used prior to/during the course of/after the manufacture of the final products - services having nexus or integral connection with the manufacture of final products as well as the business of manufacture of final product would qualify to be input service - decided in favour of appellant

Summary

Issues:
Appeal against disallowance of credit for garden maintenance service.

Analysis:
The appellant, engaged in manufacturing switches and relays, appealed against the disallowance of Cenvat credit for garden maintenance services. The Commissioner (Appeals) had denied them the credit, leading to this appeal. The appellant argued that maintaining green grass plantation on 33% of their factory area was necessary for manufacturing final products, thus falling under the definition of inputs service. They cited previous tribunal decisions and a High Court ruling to support their claim.

The learned JDR supported the Commissioner's findings, stating that there was no nexus between garden maintenance service and the manufacture of final products. They referenced a decision in the case of CCE v. Manikgarh Cement Works to strengthen their argument. However, the Tribunal found that a previous decision in the appellant's favor, along with support from the Hon'ble Bombay High Court's ruling, favored the appellant's position. The Tribunal highlighted the importance of activities relating to business in interpreting the scope of input service, emphasizing the nexus with the manufacture of final products.

Ultimately, the Tribunal held that the services with a nexus or integral connection to the manufacture of final products qualified as input services under the relevant rules. As a result, the Commissioner's order disallowing the credit was deemed not maintainable and was set aside, allowing the appeal in favor of the appellant.