2014 (10) TMI 676 - AT - Central Excise

Waiver of pre deposit - Denial of Cenvat credit - various input services - scope of the term activities relating to business - Held that - Disputed services indicated should merit consideration as input service , since those services are used in relation to the business of manufacture of final product by the appellant. However, I find from the impugned order that the Cenvat credit has been denied on some of the taxable services for non-submission of documents, substantiating the eligibility for taking credit. Therefore, considering the fact that the appellant had not properly presented its case even in two rounds of litigation before the adjudicating authority, I direct the appellant to make a pre-deposit - Thereafter, the adjudicating authority shall decide the matter of eligibility of Cenvat credit on the disputed services upon verification of the relevant documents after providing opportunity of hearing to the appellant - Decided partly in favour of assessee.

Issues Involved:
1. Denial of Cenvat credit on input services.
2. Determination of whether the disputed services qualify as 'input service' under Rule 2(l) of the Cenvat Credit Rules, 2004.
3. Requirement of documentation to substantiate eligibility for Cenvat credit.

Issue-wise Detailed Analysis:

1. Denial of Cenvat Credit on Input Services:
The primary issue in this case concerns the denial of Cenvat credit amounting to Rs. 12,67,696/-, which the appellant claims is eligible under the definition of 'input service' in Rule 2(l) of the Cenvat Credit Rules, 2004. The adjudicating authority initially disallowed Rs. 3,62,61,032/- as Cenvat credit, which was later reduced to Rs. 45,50,574/- upon de novo adjudication. The appellant accepted Rs. 32,82,878/- as ineligible credit and reversed it, contesting the remaining amount.

2. Determination of Whether the Disputed Services Qualify as 'Input Service':
The appellant argued that the disputed services, including air travel, furniture hire, IPR services, outdoor catering, R&T services, tour operator services, rent-a-cab services, cable operator services, commercial training, renting of immovable property, subscription to periodicals, and vehicle repair, are essential for the business of manufacturing the final product. The definition of 'input service' under Rule 2(l) includes services used directly or indirectly in relation to the manufacture of final products and extends to various business-related activities. The Tribunal noted that the definition is broad and inclusive, covering every conceivable service used in the business of manufacturing the final product, as supported by case law such as Commissioner of Central Excise, Nagpur v. Ultratech Cement Ltd. and Coca Cola India Pvt. Ltd. v. Commissioner of Central Excise, Pune - III. The Tribunal emphasized that the term 'business' in fiscal statutes must be construed broadly.

3. Requirement of Documentation to Substantiate Eligibility for Cenvat Credit:
The adjudicating authority denied Cenvat credit for some services due to the lack of documentation demonstrating their relevance to the business of manufacture. The Tribunal acknowledged that the appellant had not adequately presented its case in previous adjudications. Consequently, the Tribunal directed the appellant to make a pre-deposit of Rs. 5,00,000/- and report compliance. The adjudicating authority was instructed to verify the relevant documents and decide on the eligibility of Cenvat credit for the disputed services, providing the appellant an opportunity for a hearing.

Conclusion:
The Tribunal concluded that the disputed services should be considered 'input services' as they are related to the business of manufacturing the final product. However, due to the lack of proper documentation, the case was remanded to the adjudicating authority for further verification. The appellant was required to make a pre-deposit and comply with the adjudicating authority's directions for a final decision on the matter.

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