2015 (10) TMI 1233 - AT - Central Excise

Denial of CENVAT Credit - Whether CENVAT credit with respect to services of membership of club is admissible under Rule 2(l) of the Central Excise Rules, 2004 or not - Held that - Appellant has relied upon the case of BCH Electric Ltd. vs Commissioner of Central Excise, Delhi-IV 2013 (9) TMI 551 - CESTAT NEW DELHI , wherein it has been held that services of club membership of India International Centre and IEEMA New Delhi, are admissible as CENVAT credit - CENVAT credit has been a rightly claimed by the appellant as the activities provided are in relation to manufacturing the products of the appellant. So far as taking of CENVAT credit after registration for the earlier period is concerned, it is relevant to mention that once there is a nexus between the services received and the manufacturing activity undertaken by the appellant minor Procedural Lapses / Irregularities cannot be held to be any adverse effect on taking CENVAT credit. It is observed from the activities of Gujarat State Federation of Co-up. Sugar Factories Ltd., that service provider is providing technical support and guidance to the members for expansion renovation and modernization of the units and also assist to undertaken research work for better quality of Sugar etc. - Decided in favour of assessee.

Summary

Issues:
1. Eligibility of CENVAT credit on services related to club membership under Rule 2(l) of Central Excise Rules, 2004.
2. Admissibility of service tax paid documents for availing CENVAT credit for earlier periods.

Analysis:
1. The appellant contended that CENVAT credit for services related to club membership is admissible based on the case law of BCH Electric Ltd. vs Commissioner of Central Excise, Delhi-IV. The appellant argued that technical/procedural irregularities should not be a ground for denying CENVAT credit, citing precedents like Collector of Central Excise & Customs vs Amal Rasayan Ltd. The appellant demonstrated the nexus between the services received and their manufacturing activity, emphasizing the relevance of the services provided by Gujarat State Federation of Co-up. Sugar Factories Ltd. The Revenue, represented by Shri S. Shukla, argued against the admissibility of credit for club membership services, stating it is not related to manufacturing activity. The Tribunal examined the case records and referred to the precedent of BCH Electric Ltd., concluding that CENVAT credit for club membership services is admissible if it is related to manufacturing activity. The Tribunal highlighted the importance of the nexus between services received and manufacturing activity in determining CENVAT credit eligibility.

2. Regarding the admissibility of service tax paid documents for earlier periods, the appellant argued that such credits should be allowed despite minor procedural irregularities, relying on legal principles and circulars. The Revenue contended that service tax paid before the date of registration is not admissible as CENVAT credit. The Tribunal considered both arguments and emphasized that as long as there is a clear nexus between the services received and the manufacturing activity, minor procedural lapses should not affect the availability of CENVAT credit. The Tribunal referenced the activities of Gujarat State Federation of Co-up. Sugar Factories Ltd. to support the appellant's claim for credit even for services received after registration. Ultimately, the Tribunal allowed the appeal filed by the appellant, granting consequential relief.

In conclusion, the judgment by the Appellate Tribunal CESTAT Ahmedabad addressed the issues of CENVAT credit eligibility for club membership services and the admissibility of service tax paid documents for earlier periods. The Tribunal emphasized the importance of the nexus between services received and manufacturing activity in determining CENVAT credit eligibility, allowing the appellant's appeal and granting consequential relief.