2014 (8) TMI 506 - AT - Service Tax

Denial of benefit of Cenvat credit of service tax - making of concentrate by purification of ores raised by the appellant from its underground captive mines - services used in relation to renovation and repair of factory and activities relating to business are input services - Held that - Definition of input service is very wide and covers not only services used directly or indirectly in or in relation to manufacture of final products but also various service used in or in relation to business of manufacture whether prior to manufacture or after manufacture. Inasmuch the appellants are unable to use their premises without dismantling, sorting and transporting the scrap from the underground area or service area of the mine, it has to be held, at this prima facie stage, that the activities are relating to the business activity of the appellants - stay granted.

Summary

Issues:
- Denial of Cenvat credit for service tax paid on dismantling/handling of unusable material and its transportation.

Analysis:
The judgment by the Appellate Tribunal CESTAT NEW DELHI addresses the denial of Cenvat credit for service tax paid on services related to dismantling, handling of unusable material, and transportation. The contention raised was that these services are essential for the renovation and repair of the factory, constituting input services under Rule 2(l) of the Cenvat Credit Rules, 2004. The appellant's manufacturing process involves handling abrasive and corrosive materials, leading to the generation of scrap that needs to be dismantled, sorted, and transported for sale. The argument was that these services directly relate to the repair and renovation of the factory, falling within the definition of input services. The appellant cited various judgments to support their claim.

Furthermore, the appellants argued that the services in question are essential for their business activities and have a wider scope. Citing judgments such as CCE v. Ultra-Tech Cement, it was emphasized that input services encompass not only those directly used in manufacturing but also those related to the business of manufacture. The Tribunal, considering the Bombay High Court judgment in the Ultra-Tech Cement case, held that the activities of dismantling, sorting, and transporting scrap are integral to the business operations of the appellants. Therefore, at the prima facie stage, it was concluded that the appellants have a strong case in their favor. Consequently, the Tribunal dispensed with the pre-deposit conditions of duty and penalties, allowing the stay petitions unconditionally. The judgment was pronounced on 30-9-2011 by Ms. Archana Wadhwa, Member (J) of the Appellate Tribunal CESTAT NEW DELHI.