2018 (3) TMI 1711 - AT - Central Excise

CENVAT Credit - input services - telephone service - period from April, 2004 to September, 2015 - Held that - In view of the fact that the disputed input service has been used in or in relation to the manufacture of the final product by the appellant and in view of the fact that the appellant had reversed proportionate cenvat credit in respect of use of input service for trading activity, the disputed service is confirming to the definition of input service under the amended provisions of Rule 2 (l) of the Cenvat Credit Rules, 2004, with effect from 01.04.2011 - appeal allowed - decided in favor of appellant.

Summary

Issues: Denial of cenvat credit for Service Tax paid on telephone service from April 2004 to September 2015.

In the present case, the issue revolved around the denial of cenvat credit for Service Tax paid on telephone service utilized by the appellant from April 2004 to September 2015. The Commissioner (Appeals) acknowledged the eligibility of cenvat benefit for the period up to 31.03.2011 but denied it for the subsequent period. The denial was based on the argument that the telephone service was not directly or indirectly used in the manufacturing process or specified in the inclusive clause of the definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004.

The appellant contended that the telephone service had a direct impact on planning and organizing manufacturing activities, establishing a clear nexus with manufacturing and clearance of finished excisable goods. The appellant had also reversed proportionate cenvat credit for the trading activities, as evidenced by letters to the Superintendent (Audit). However, these submissions were not adequately addressed in the original or impugned orders.

Upon review, the Tribunal found that the disputed input service was indeed used in or in relation to the manufacture of the final product by the appellant. Considering that the appellant had reversed the credit for trading activities, the Tribunal concluded that the disputed service fell within the definition of input service under the amended provisions of Rule 2(l) of the Cenvat Credit Rules, 2004, effective from 01.04.2011.

Consequently, the Tribunal did not find merit in the impugned order and allowed the appeal in favor of the appellant, setting aside the previous decision. The judgment was pronounced in the Open Court on 28/03/2018.