2017 (11) TMI 1680 - AT - Central Excise

CENVAT Credit - membership fees paid to the Gujarat State Federation of Co-operative Sugar Factories Ltd. - denial of credit on the premise that the said service do not have any nexus to the manufacturing activities of the appellants in terms of Rule 2 (l) of CCR 2004 - Held that - The federation of Co-operative sugar factories is the association looking after the difficulties faced by their members of the sugar factories. The said membership is having a direct nexus with the manufacturing activities of the appellants as they shall raise the issues with this federation and solutions are made out by meetings with various Government departments and without the membership of the federation of sugar factories cannot be run. The appellants are entitled to avail CENVAT credit on membership fees of service tax paid to the Gujarat State Federation - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Denial of cenvat credit on membership fees paid to the Gujarat State Federation of Co-operative Sugar Factories Ltd. based on the lack of nexus to manufacturing activities.

Analysis:
The appellants challenged the impugned orders that denied cenvat credit on membership fees paid to the Gujarat State Federation of Co-operative Sugar Factories Ltd., contending that the membership had a direct nexus with their manufacturing activities. The issue revolved around whether the said service had a connection to the manufacturing activities of the appellants as per Rule 2 (l) of CCR, 2004. The Tribunal considered the arguments presented by both parties.

Upon review, it was noted that the Federation of Co-operative Sugar Factories acted as an association addressing the challenges encountered by its member sugar factories. The membership facilitated raising issues with the federation, leading to solutions through engagements with various government departments. The appellants emphasized that without membership, the sugar factories could not operate effectively. Consequently, the Tribunal concluded that the membership fees were integral to the manufacturing activities of the appellants, enabling them to avail cenvat credit on the service tax paid to the Federation.

In light of the above analysis, the Tribunal found no merit in the impugned orders and set them aside. The appeals were allowed, granting consequential relief as applicable. The judgment highlighted the essential connection between the membership fees paid to the Federation and the manufacturing activities of the appellants, ultimately leading to the decision in favor of allowing the cenvat credit.