2017 (6) TMI 1222 - AT - Central Excise

CENVAT credit - certain input service - denial on the ground of absence of nexus with the manufacture and clearance of final product viz. bread improvers - various decision cited not considered at all - Held that - Each of the services that were disallowed as eligible to be availed CENVAT credit had been considered by the Tribunal and various High Courts in various decisions - the summary disposal of the issue without ascertaining the applicability of the cited decisions has caused detriment to the appellant. It is necessary that the law laid down in these decisions be complied with. To enable that to be done the impugned order is set aside and the matter remanded back to the original authority for a decision on the eligibility of each of the services in the light of the decisions referred to - appeal allowed by way of remand.

Issues:
Challenge to recovery of CENVAT credit under rule 14 of CENVAT Credit Rules 2004, along with interest and penalty - Denial of credit of tax paid on certain input services due to absence of nexus with the final product - Disallowance of eleven services as eligible for CENVAT credit under rule 2(1) of CENVAT Credit Rules 2004.

Analysis:

1. The appeal was filed against the recovery of CENVAT credit, interest, and penalty amounting to ?2,90,243 under rule 14 of CENVAT Credit Rules 2004, along with the imposition of a penalty under rule 15 of the same rules. The denial of credit on tax paid for specific input services during March 2009 was contested on the grounds of lacking a connection with the manufacturing and clearance of the final product, bread improvers.

2. The lower authorities disallowed eleven services from qualifying for CENVAT credit under rule 2(1) of CENVAT Credit Rules 2004, arguing that these services did not fall under the definition of 'activity relating to business.' However, the appellant contended that these services were indeed used in their business activities.

3. During the proceedings, the arguments of the appellant were presented by the Learned Chartered Accountant, while the case was represented by the Learned Authorized Representative.

4. The Tribunal noted that the services disallowed for availing CENVAT credit had been subject to consideration in various decisions by the Tribunal and High Courts. The appellant cited precedents supporting their claim for services like courier, telephone, air ticket booking, maintenance of xerox machines and air conditioners, housekeeping, and parcels, referencing specific cases where similar services were deemed eligible for CENVAT credit.

5. The Tribunal observed that the issue had been summarily disposed of without considering the applicability of the cited decisions, which disadvantaged the appellant. Consequently, the impugned order was set aside, and the matter was remanded to the original authority for a fresh decision on the eligibility of each service in light of the referenced decisions to ensure compliance with the established legal principles.

6. Ultimately, the appeal was allowed by way of remand, emphasizing the necessity to adhere to the legal precedents and properly assess the eligibility of the disputed services for CENVAT credit.

This comprehensive analysis of the judgment highlights the key issues addressed, the arguments presented by the parties, and the Tribunal's decision to remand the case for a detailed reconsideration based on relevant legal principles.

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