2016 (9) TMI 1468 - AT - Central Excise

CENVAT Credit - input services - testing handling and commission services - mobile phone services - machine and maintenance services - management consultant services - courier service - banking and finance distributed by their head office services - services received directly by insurance of plant and machinery consultancy for fly ash project - R&D services - mobile phone services - municipal solid waste management services etc. Services used at the depot/C&F agent premises - Held that - Credit has been taken as distributed by the ISD and pertains to various activities intimately connected with the manufacture and sale of cement through depots C&F agents etc. Such services have been allowed as input services and are squarely covered by several decisions - reliance placed in the case of M/S. HCL TECHNOLOGIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND VICE-VERSA 2014 (1) TMI 1730 - CESTAT NEW DELHI - credit allowed. Insurance Services - credit sought to be disallowed on service tax paid for insuring the plant and machinery mining equipments store material and company vehicles - Held that - The credit cannot be denied on the ground that these services are not used in or in relation to the manufacture of cement since insuring the plant and machinery building etc. would form part of the normal business activity to make sure that they get compensation in the unfortunate event of fire theft etc. - These services have also been held to be permissible as input services in the case of Hindustan Zinc vs. CCE Jaipur 2014 (7) TMI 485 - CESTAT NEW DELHI - credit allowed. R&D Services - credit denied on the ground that it has been incurred towards development of re-active belaite cement which is not the product of the appellant - Held that - This has been shown to be an R&D activity undertaken by the respondent in pursuance of introduction of new varieties of their final product and hence cannot be denied - similar issue has been examined by the Tribunal in the case of Cadila Healthcare Ltd. vs. CCE Ahmedabad 2009 (8) TMI 172 - CESTAT AHMEDABAD where it was held that the service will be allowable on the ground that all products taken up by the company for R&D may not reach the customer as a commercial product - credit allowed. Service tax paid on consultancy for fly ash or coal handling - Held that - The same are relatable to the appellant s main activity in their claim - credit allowed. Mobile phone services - appellants clarified that the services are availed and the bills are borne by the appellants - Held that - Reference can be made to the decision of Hon ble Gujarat High Court in CCE vs. Excel Crop Care Ltd. 2008 (7) TMI 160 - HIGH COURT GUJARAT where it was held that credit not deniable on ground that phones were not installed in the factory premises - credit allowed. Services provided on Municipal Solid Waste Jaipur - Held that - The services used for procurement of input is specifically included in the input service and hence credit is admissible on the same - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues: Appellant's eligibility for credit on various input services.

Analysis:
1. The appeals dealt with the eligibility of the appellant for credit on various input services related to the manufacture of cement and clinker liable for Central Excise duty during the period April 2006 to December 2007. The credits were availed based on distribution by the head office or direct receipt of tax paid documents in the manufacturing unit, covering services like testing, handling and commission, mobile phone, machine and maintenance, management consultant, courier service, banking and finance, insurance of plant and machinery, consultancy for fly ash project, R&D services, mobile phone services, municipal solid waste, and more.

2. The denial of credit on these input services was primarily based on the argument that they did not fall under the category of input service as per Rule 2(l) of the Cenvat Credit Rules, 2004. The Original Authority rejected the credit, stating that these services were not connected to the manufacture and clearance of goods up to the place of removal. However, the appellant argued that the eligibility of these services had been previously settled in their favor by the Tribunal in their own case and cited relevant case laws to support their plea.

3. The Tribunal examined the final order in the appellant's own case and found that the services in dispute, such as testing, handling & commission, telephone, machine maintenance, insurance, courier, mobile van, banking, and more, were intimately connected with the manufacturing and sale of cement through depots and agents. The Tribunal referred to various decisions supporting the allowance of such services as input services, emphasizing their connection to the manufacturing activity.

4. Credit on insurance services for insuring plant and machinery, mining equipment, and vehicles was sought to be disallowed, but the Tribunal held that such services were permissible as input services based on previous cases. Similarly, credit on R&D services was disallowed initially, but the Tribunal ruled in favor of the appellant, stating that R&D activities related to the development of new product varieties were eligible for credit.

5. The Tribunal also considered consultancy services for fly ash or coal handling, mobile phone services, and services related to municipal solid waste processing plant. In each case, the Tribunal found that the services were directly related to the appellant's main activity and were eligible for credit based on previous decisions and the nature of input services. Consequently, the Tribunal set aside the orders denying credit on the mentioned services and allowed the appeals.