2014 (5) TMI 725 - AT - Service Tax

CENVAT Credit - whether they were eligible for Cenvat credit of Service Tax paid on housekeeping service, rent-a-cab service, outdoor catering service, manpower recruitment, design service, advertising service and gardening services - Held that - under the provisions of Section 11 of the Factories Act a manufacturer is required to maintain the factory neat and clean. We are of the view that services availed by the appellant for keeping the factory neat and clean is a service essential for manufacturing operations and, hence, the same would be covered by the definition of input service. service availed is taxable service of manpower supply for the purpose of cleaning which is a taxable service. As regards rent-a-cab service, we find that the cenvat credit in respect of the it same is admissible in view of the judgment of Hon ble Karnataka High Court in the case of Stanzen Toyotetsu India (P) Ltd. (2011 (4) TMI 201 - KARNATAKA HIGH COURT ). As regards outdoor catering service, the same has been availed for providing canteen facility to the workers in the factory and in respect of the same. Hon ble Bombay High Court in the case of CCE, Nagpur v. Ultratech Cement (2010 (10) TMI 13 - BOMBAY HIGH COURT ) has held that the cenvat credit would be admissible. The design and advertising service are also covered by the definition of Input Service . The appellant thus, have a strong prima facie case - stay granted.

Summary

Issues:
1. Eligibility for Cenvat credit of Service Tax paid on various services including housekeeping, rent-a-cab, outdoor catering, and others.
2. Denial of Cenvat credit by original adjudicating authorities and Commissioner (Appeals).
3. Stay applications filed against orders of denial.

Analysis:

Issue 1: Eligibility for Cenvat credit
The Appellant, engaged in manufacturing structural steel items, sought Cenvat credit for Service Tax paid on services like housekeeping, rent-a-cab, outdoor catering, and more. The dispute arose when the department denied them the credit, leading to orders-in-original by the Assistant Commissioner and Superintendent of Central Excise. The Commissioner (Appeals) upheld these orders. The Appellant argued that the services were essential for compliance with the Factories Act, making them eligible for Cenvat credit. They cited judgments supporting their claim, emphasizing the necessity of these services for manufacturing operations.

Issue 2: Denial of Cenvat credit
The Department, represented by the Departmental Representative, opposed the stay applications, reiterating the findings of the Commissioner (Appeals). They contended that certain services, like housekeeping, were not specified under the Finance Act, hence not eligible for Cenvat credit. The Department emphasized that since no Service Tax was payable on these services, the Appellant could not claim Cenvat credit. They maintained that the Cenvat credit was not admissible to the Appellant for the services in question.

Issue 3: Stay applications
After hearing both sides and examining the submissions, the Tribunal found that the services in question, such as housekeeping and outdoor catering, were essential for manufacturing operations as per the Factories Act. The Tribunal held that these services fell within the definition of 'input service,' making the Appellant eligible for Cenvat credit. Citing relevant judgments, the Tribunal ruled in favor of the Appellant, allowing the stay applications and waiving the requirement of pre-deposit of Cenvat credit demand, interest, and penalty until the disposal of the appeals. The Tribunal granted the stay applications and listed the appeals for further hearing.