2012 (12) TMI 267 - AT - Central Excise

Availment of Cenvat credit - Membership of club tourism service and mandap keeper services - Input service - nexus with Manufacture - held that - payment for club membership is allowable as business expenditure inasmuch as club membership is used for convening business meetings and to facilitate vital decisions making exclusively cordial ambience is essential for creating calm composed peaceful and tranquil mind set of the clients and the customers - relatable activities of the business. Hence the same are covered under the definition of input services - Service Tax paid on the same is available as Cenvat Credit to the appellant. Mandap Keeper services - held that - Employees of appellants company were on strike during the relevant period and mandap keeper services were availed for safeguarding the materials lying in the open yard and to provide accommodation under the tent for the employees during the strike period - mandap keeper services were availed by the appellant in connection with their business activity though it was one time expenditure incurred on housing the striking employees and safeguarding the material lying in the open by the workers during strike - fact that it was one time expenditure will not change the fact that said services were availed in connection with the business activities - same are available as credit to the appellant - impugned order is set aside appeal is allowed.

Summary

Issues:
Availment of Cenvat credit on Service Tax paid for club membership and mandap keeper services.

Analysis:
The appellants, engaged in manufacturing polyester film, sought Cenvat credit on Service Tax paid for club membership and mandap keeper services. The dispute arose as the credit was denied, stating these services were not directly or indirectly related to manufacturing final products. The definition of input services under Cenvat Credit Rules, 2004 includes services used for providing output services or in relation to manufacturing final products. The key question was whether club membership services were used in relation to business activities. The Tribunal referred to a case where club membership was considered a business expenditure for convening meetings and facilitating decision-making. The Tribunal concluded that club membership services obtained by the appellant were related to business activities and thus covered under the definition of input services, making the Service Tax paid eligible for Cenvat Credit.

Regarding mandap keeper services, it was noted that these services were availed during a strike period to safeguard materials and provide accommodation for employees. Despite being one-time expenditure, these services were deemed to be connected to business activities. The Tribunal held that the mandap keeper services were eligible for credit as they were utilized in connection with the business activities. Consequently, the impugned order denying the credit was set aside, and the appeal was allowed on merits. The plea on limitation was not considered as the appeal was allowed based on the substantive issues discussed.

In conclusion, the judgment favored the appellants, allowing them to avail Cenvat credit on Service Tax paid for club membership and mandap keeper services by establishing the direct or indirect relation of these services to their business activities, as per the definition of input services under the Cenvat Credit Rules, 2004.