2015 (10) TMI 1540 - AT - Central Excise

Denial of CENVAT Credit - security service - services appears to have not used/consumed exclusively for the manufacture of excisable goods - Held that - The guest house is used for lodging of the employees, outside auditors which performing their service to the appellant s factory. Nothing is available on record to show that guest house is used for any other purpose. In view of this fact, since guest house used for the stay of employee, auditors which has directed nexus with factory which produces excisable goods therefore Cenvat credit is admissible to the appellant. On going through judgments relied upon by the rivals, I find that in the case of L Oreal India Pvt. Ltd. (2010 (11) TMI 143 - CESTAT, MUMBAI) house keeping service of guest house has been held admissible and in the case of Hindustan Zinc Ltd. (2009 (4) TMI 129 - CESTAT, BANGALORE) maintenance service of guest house was allowed as input service. Since the similar service involved in the present case, the ratio of both the judgments are squarely applicable in the appellant s case also. - In the present case no such material was available that guest house was available for the personal needs of the employee therefore judgment of MRF Ltd. is distinguished - in facts and circumstances of the case, security service provided to the guest house in the factory is admissible input service, therefore I set aside the impugned order - Decided in favour of assessee.

Summary

Issues:
- Admissibility of Cenvat Credit for security services provided to a guest house used by company employees and auditors.
- Interpretation of the definition of input service under Cenvat Credit Rules, 2004.
- Application of precedents in similar cases to determine the eligibility of Cenvat Credit.

Issue 1: Admissibility of Cenvat Credit for security services provided to a guest house used by company employees and auditors:

The appellant availed Cenvat Credit for security services provided to a guest house near their factory. The Commissioner (Appeals) rejected the appeal, leading to this appeal. The appellant argued that the guest house is used for company employees and auditors conducting factory audits, thus related to factory activity. The security service is claimed to be used for the guest house's security, making it an admissible input service under the Cenvat Credit Rules, 2004. The appellant cited judgments where Cenvat credit for services related to manufacturing units' guest houses was allowed. The Revenue contended that the security service for the guest house lacks nexus with production, thus not qualifying as an input service. Precedents were cited to support this argument.

Issue 2: Interpretation of the definition of input service under Cenvat Credit Rules, 2004:

The Tribunal analyzed the nature of the service in question, which was security services for the guest house used by employees and auditors related to the factory's activities. It was noted that the guest house was solely used for employee lodging and auditor stays while performing services for the factory. Considering this direct nexus with the factory producing excisable goods, the Tribunal deemed the Cenvat credit admissible. Precedents were cited where similar services like housekeeping and maintenance for guest houses were allowed as input services. The Tribunal distinguished cases where services were provided to residential quarters of employees, emphasizing the unique context of the present case involving a guest house for factory operations.

Issue 3: Application of precedents in similar cases to determine the eligibility of Cenvat Credit:

The Tribunal compared the judgments relied upon by both sides to assess their applicability to the current case. It found that precedents allowing Cenvat credit for services related to guest houses of manufacturing units aligned with the circumstances of the present case. The Tribunal distinguished cases where credit was denied due to services catering to personal needs, emphasizing the absence of such circumstances in the current matter. Ultimately, after careful consideration of the arguments and precedents, the Tribunal concluded that security services provided to the guest house in the factory constituted an admissible input service, leading to the appeal being allowed.

This detailed analysis of the judgment showcases the considerations made by the Tribunal regarding the admissibility of Cenvat Credit for security services provided to a guest house used by company employees and auditors, the interpretation of the definition of input service under the Cenvat Credit Rules, 2004, and the application of relevant precedents to determine the eligibility of Cenvat Credit in this particular case.