2016 (2) TMI 720 - AT - Central Excise

Denial of cenvat credit - original authority denied these credit mainly on the ground that these services are not used in or in relation to the manufacturing activities or clearance of final products - Held that - In Hindustan Zinc Ltd. (2014 (7) TMI 485 - CESTAT NEW DELHI ) the Tribunal held that cenvat credit is eligible on insurance services for insuring plant, machinery and goods/cash in transit, vehicles and computers. In Endurance Technologies P. Ltd. (2011 (7) TMI 373 - CESTAT, MUMBAI) the Tribunal held that services of repair and maintenance of windmills for generation of electricity are eligible for credit. In Dolphin Automative System P. Ltd 2014 (2015 (3) TMI 297 - CESTAT NEW DELHI ) the Tribunal held that various services like cleaning services, legal services, management services, celeberation of annual day etc are eligible services for credit. In Ultratech Cement Ltd. (2010 (9) TMI 126 - CESTAT, MUMBAI ) the Tribunal held that credit on services used outside factory premises cannot be denied. Having examined the scope of input services now in dispute we find denial of credit on them is not legally sustainable. - Decided in favour of assessee

Summary

Issues:
Denial of cenvat credit on input and input services by the Commissioner of Central Excise, Indore, leading to an appeal before the Appellate Tribunal CESTAT NEW DELHI.

Analysis:
The appeal before the tribunal challenged the order of the Commissioner of Central Excise, Indore, disallowing a significant amount of cenvat credit and imposing a penalty on the appellant. The appellant, engaged in the manufacture of Cement and Clinker, was availing cenvat credit on input and input services. The disallowed credits included insurance service, R & D services, consultancy services for fly ash storage projects, and various input services distributed by an input service distributor.

The appellant argued that the denied credits were integral to their manufacturing processes and clearance of final products. They contended that the definition of 'input service' encompasses services directly or indirectly related to manufacturing activities or business operations. The appellant presented a detailed chart outlining the services, credit amounts, purposes, and reasons for denial by the original authority. Additionally, the appellant cited numerous case laws to support their position against the impugned order.

The respondent, represented by the ld. AR, reiterated the findings of the impugned order, emphasizing the lack of details in the invoices issued by the input service distributor. The respondent argued that without specific service details, the denial of credit was justified.

Upon examining the admissibility of credit on the disputed services, the tribunal found that the original authority's denial was unfounded. The tribunal noted that services related to insurance, R & D, consultancy, and various input services were indeed connected to the manufacturing, clearance, or business activities of the appellant. The tribunal highlighted that the emphasis on the place of service by the lower authority was irrelevant in determining credit eligibility.

Furthermore, the tribunal analyzed several case laws cited by the appellant, which supported the eligibility of credits on similar services in various contexts. The tribunal concluded that the denial of credit on the disputed input services was not legally sustainable. Consequently, the appeal was allowed in favor of the appellant.

This comprehensive analysis by the Appellate Tribunal CESTAT NEW DELHI underscores the importance of a nuanced understanding of 'input services' in the context of availing cenvat credit, ensuring that credits are rightfully claimed for services integral to manufacturing processes and business operations.