2015 (4) TMI 650 - AT - Central Excise

Denial of CENVAT Credit - courier service and transportation services - Held that - Reason stated by the Chartered Accountant and supported by substantial evidence on record demonstrate relevancy of services to manufacture and business of the appellant. When the authority below did not find any contrary evidence of use of services elsewhere but were utilized for business as well as manufacture, denial of CENVAT credit is unjustified. But the expenditure on training, printing and stationery could not satisfy as to relevancy thereof to the manufacture activity. Therefore, no CENVAT credit on these two items shall be allowed. But credit on the rest of the items clamed shall be allowed. - Decided partly in favor of assessee

Summary

Issues:
1. Disallowance of CENVAT credit on various expenses including testing and certification charges, training, courier services, renting, security services, telephone charges, transportation charges, AMC, and printing and stationery.
2. Justification of the expenses as directly attributable to manufacturing and business activities.
3. Admissibility of CENVAT credit on different types of expenses based on their relevance to manufacturing and business purposes.
4. Evaluation of the evidence presented to support the claim for CENVAT credit.
5. Decision on the allowance of CENVAT credit on specific items.

Analysis:
The judgment by the Appellate Tribunal CESTAT CHENNAI involved a dispute regarding the disallowance of CENVAT credit on various expenses incurred by the appellant. The Chartered Accountant representing the appellant argued that expenses such as testing and certification charges, training, courier services, renting, security services, telephone charges, transportation charges, AMC, and printing and stationery were directly related to the manufacturing process and business operations. The Chartered Accountant contended that these expenses were essential for carrying out sales, protecting the premises, and conducting business activities, making them eligible for CENVAT credit.

During the hearing, the Revenue supported the adjudication and referenced the reasons for disallowance provided by the Commissioner (Appeals). The Tribunal carefully examined the arguments from both sides and reviewed the evidence on record. It was observed that the expenses on testing, certification, courier services, transportation, renting, security services, telephone charges, AMC, and printing and stationery were indeed relevant to the manufacturing and business activities of the appellant. Consequently, the Tribunal deemed the denial of CENVAT credit on these items unjustified.

However, the Tribunal found that the expenses on training, printing, and stationery did not sufficiently demonstrate their direct relevance to the manufacturing process. As a result, CENVAT credit on these specific items was disallowed. The judgment emphasized the importance of establishing the direct connection between expenses and manufacturing activities to claim CENVAT credit successfully.

In conclusion, the Appellate Tribunal allowed the stay applications and partially allowed the appeals. The judgment highlighted the need for expenses to be directly attributable to manufacturing and business activities to qualify for CENVAT credit, underscoring the importance of providing substantial evidence to support such claims.