2014 (5) TMI 425 - AT - Service Tax

CENVAT Credit - Cleaning service - Nexus with manufacturing activity - Held that - From the documentary evidence available on record, it is clear that the cleaning service has been undertaken in the factory premises of the appellant. It is nobody s case that cleaning services are not required in a factory and has nothing to do with the manufacturing activities. The manufacturing activities require not only inputs and capital goods but also on the hygienic atmosphere prevailing in the factory premises. Therefore, it is a pre-requisite for the manufacturing activity and is integrally connected with the manufacturing activity. Hence, it is an eligible input service as defined under Rule 2(l) of Cenvat Credit Rules, 2004 - Following decision of CCE, Raipur v. H.E.G Ltd. 2010 (6) TMI 306 - CESTAT, NEW DELHI - Decided in favour of assessee.

Summary

Issues:
- Eligibility of availing Cenvat Credit on cleaning services as an input service for manufacturing activities.

Analysis:
The appeal and stay application were directed against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Belapur, Navi Mumbai, where the appellant, a company availing Cenvat Credit on various input services, including cleaning services, was denied credit by the department due to the perceived lack of nexus between cleaning services and manufacturing activities. The lower authority also upheld this denial. The appellant contended that the cleaning services were essential for maintaining hygienic conditions in the factory premises where manufacturing activities took place, thus directly contributing to the manufacturing process. The appellant cited precedents, including a Tribunal judgment, to support the argument that cleaning services are integral to business activities involving manufacture and clearance of excisable goods. The appellant urged that the appeal be allowed based on these grounds.

The Advocate representing the appellant reiterated the lower authority's findings but acknowledged that similar issues had been addressed by the Tribunal in previous cases, including the one cited by the appellant. Upon considering the submissions, the Tribunal observed that the cleaning services were indeed carried out within the factory premises, emphasizing that such services are essential for maintaining a hygienic environment necessary for manufacturing activities. The Tribunal concluded that cleaning services qualify as an eligible "input service" under the Cenvat Credit Rules, 2004, as they are directly connected to and integral for manufacturing activities. The Tribunal specifically referenced a previous case involving H.E.G. Ltd., where a similar decision was made, and applied it to the present case. Consequently, the Tribunal allowed the appeal and any consequential relief, if applicable, along with disposing of the stay application.

In summary, the judgment addressed the issue of the eligibility of availing Cenvat Credit on cleaning services as an input service for manufacturing activities. The Tribunal ruled in favor of the appellant, emphasizing the essential nature of cleaning services for maintaining a hygienic atmosphere in the factory premises where manufacturing activities occur, thus establishing a direct nexus between cleaning services and manufacturing operations. The decision was supported by precedent and the interpretation of relevant legal provisions, ultimately allowing the appeal and providing relief to the appellant.