2012 (11) TMI 1012 - AT - Central Excise

Service tax credit - Clearing and forwarding agency services - Denial of refund claim - Held that - it becomes absolutely clear that the definition of inputs service can covers all services, which have a nexus with the manufacturing activity undertaken by the appellant. The Hon ble High Court in the case of Ultra Tech Cement Ltd., 2010 (10) TMI 13 - BOMBAY HIGH COURT has held that any service which has a nexus with the business of the manufacturing activity undertaken by the appellant would be an eligible input service and in respect of outdoor catering service, the Hon ble High Court held that the same is an eligible input service subject to the condition that the manufacturer does not recover any cost from their employees. In the instant case, as submitted by the appellant, they are not recovering any cost towards catering from their employees and therefore, they are rightly entitled for the same as input credit. Similarly, in the case of travels and tours the Hon ble High Court of Karnataka in the case of Stanzen Toyotetsu India (P) Ltd., 2011 (4) TMI 201 - KARNATAKA HIGH COURT have held that travel car services are eligible input service and therefore, in this case also the appellant is rightly entitled for the credit. As regards the construction service, in the instant case, it is towards repairs and maintenance of the factory premises and the invoices submitted by the appellant available in the records, also indicate that the same is towards repair and maintenance of the factory premises and therefore, these are also eligible input services - Decided in favour of assessee.

Summary

Issues:
Refund claims under Rule 5 of Cenvat Credit Rules, 2004 - Eligibility of service tax credit on construction, travel, car, catering, and clearing and forwarding agency services.

Analysis:
The appellant, a 100% EOU, filed refund claims for unutilized Cenvat credit of service tax. The lower adjudicating authority rejected a portion of the claim related to certain services not considered "input services." The lower appellate authority allowed credit on clearing and forwarding agency services but rejected claims for construction, travel, car, and catering services. The appellant contended that these services had a nexus with manufacturing activities and were eligible for credit based on various Tribunal decisions.

The definition of "input service" under Rule 2(1) of Cenvat Credit Rules, 2004 includes services used directly or indirectly in relation to manufacturing activities. The Tribunal noted that services with a nexus to manufacturing activities are eligible input services. Citing a High Court judgment, it clarified that services like outdoor catering and travel car services could be considered eligible input services if certain conditions were met. In this case, the appellant did not recover catering costs from employees, making it eligible for input credit. Similarly, the construction services for factory repairs and maintenance were deemed eligible based on invoices provided. The Tribunal found the lower authority's decision on these services lacking merit.

Therefore, the Tribunal allowed the appeal, granting consequential relief to the appellant.