2012 (4) TMI 499 - AT - Central Excise

Eligibility of Cenvat credit - Tour operator service, garden maintenance service, waste management service and repair of fan service - Rejection on the ground that services are not integrally connected to the manufacture of final product - Held that - input services on which Cenvat Credit has been availed by the appellant in the instant case qualifies as input service. In respect of many of these services, there are a large number of decisions passed by this Tribunal allowing such credit. In respect of photographic services, the learned, Advocate submits that the services were used for taking photograph of the machines to be submitted to the insurance company for obtaining insurance and, therefore it is related to the business of the manufacture. Similarly, in respect of dry cleaning services, the same was used for dry cleaning the uniform of their staff and therefore, forms part of business of manufacturing. With regard to construction, the same is undertaken for construction of premises for the manufacturing activity and it is directly connected with the business of manufacturing and similarly in respect of brokerage, the same is connected with commission paid to the brokers for selling products of the company which amounts to sales promotion - Decided against Revenue.

Summary

Issues Involved:
Eligibility of Cenvat credit for various input services.

Analysis:
1. Condonation of Delay:
The judgment addresses the condonation of delay applications filed by both the Assessee and the Department. The Assessee filed a composite appeal initially, leading to a delay of 59 days, which was condoned due to satisfactory reasons provided. Similarly, the Department filed composite appeals resulting in a delay of 357 days, which was also condoned as the explanation given was deemed satisfactory.

2. Eligibility of Cenvat Credit:
The primary issue in this case revolves around the eligibility of Cenvat credit for service tax paid on various input services. The lower appellate authority allowed Cenvat credit for most services except for tour operator service, garden maintenance service, waste management service, and repair of fan service. The lower authority reasoned that these services were not integrally connected to the manufacturing process, thus not qualifying as "input services" under Rule 2(l) of the Cenvat Credit Rules, 2004.

3. Arguments by Assessee:
The Assessee argued that the tour operator service was essential for transporting staff to the factory, waste management was a statutory requirement integral to the manufacturing process, garden maintenance was necessary for a chemical company like theirs, and repair of fan service was crucial for maintaining manufacturing equipment. The Assessee also cited previous Tribunal and High Court judgments supporting their claims for Cenvat credit on similar services.

4. Revenue's Position:
The Revenue contended that certain services like Architects, courier service, construction service, catering service, etc., were not directly connected to the manufacturing activity as defined in the Cenvat Credit Rules. The Revenue argued that the lower appellate authority's explanation was legally incorrect.

5. Decision and Analysis:
After considering the arguments from both sides, the judgment refers to a Bombay High Court case emphasizing the broad definition of input services under the Cenvat Credit Rules, covering services used not only in manufacturing but also in the business of manufacturing. The judgment aligns with this interpretation and allows Cenvat credit for the services in question, highlighting that they qualify as input services. The Tribunal found merit in the Assessee's arguments regarding the essential nature of the services for their manufacturing business and dismissed the Revenue's appeals while allowing those of the Assessee.

In conclusion, the judgment delves into the nuances of Cenvat credit eligibility for various input services, considering the integral connection of these services to the manufacturing process. It highlights the importance of satisfying legal definitions and precedents in determining the eligibility for such credits, ultimately leading to a decision in favor of the Assessee.