2014 (1) TMI 456 - AT - Service Tax

Denial of Cenvat credit Input services not relatable to final product Waiver of Pre-deposit Held that - Following Suzuki Motorcycle (I) Pvt. Ltd. vs. CCE, Delhi-III, Gurgaon 2011 (2) TMI 56 - CESTAT NEW DELHI maintenance of R.O. plant is for providing pure water to the employees of the company - canteen is one of the essential requirements for running a factory - prima-facie supply of pure water is one of the essential requirements for running of the factory Pre-deposits waived till the disposal unconditional stay granted.

Summary

Issues:
- Denial of cenvat credit on input services related to final product
- Whether construction services and maintenance of R.O. plant qualify as input services for cenvat credit

The judgment by the Appellate Tribunal CESTAT NEW DELHI, delivered by Ms. Archana Wadhwa, addresses the denial of cenvat credit amounting to Rs.62,81,089/- and Rs. 1,10,489/- in two separate cases, based on the contention that the input services are not linked to the final product of auto parts. The Tribunal examined the major portion of the demand, Rs. 52,39,108/-, attributed to construction services availed by the appellant. Referring to precedent decisions, including Suzuki Motorcycle (I) Pvt. Ltd. vs. CCE, Delhi-III, the Tribunal found that construction services fall within the definition of input services. Additionally, around Rs. 9 lakhs of the remaining balance was related to the maintenance of the R.O. plant, providing pure water to employees. Drawing from a previous ruling concerning the essential nature of a canteen for factory operations, the Tribunal concluded that supplying pure water is also essential for factory functioning. Minor denials, such as red painting and office equipment, were considered insignificant. Consequently, the Tribunal granted the appellant unconditional stay, waiving the pre-deposit requirement, as they were deemed entitled to it.

In conclusion, the judgment clarifies that construction services and maintenance of the R.O. plant are considered valid input services for cenvat credit, as they are essential for the functioning of the factory. The Tribunal's decision was based on precedent cases and the interpretation of what constitutes an input service in the context of manufacturing activities. The appellant's entitlement to unconditional stay was affirmed, emphasizing the importance of services contributing directly or indirectly to the manufacturing process.