2018 (5) TMI 1850 - AT - Central Excise

CENVAT Credit - input services - house keeping service - insurance service - legal and professional consultancy services - lodging expenses - repair and maintenance of show room & office - telecommunication service - Held that - With regard to telecommunication services, the appellant should be entitled for the Cenvat benefit since such services were used for smooth operation of the manufacturing activity of the appellant. Therefore, the impugned order denying CENVAT credit in respect of telecommunication service is not proper and justified - Credit on these services are not allowed. The impugned order to that extent it denies CENVAT benefit on the services other than the services of telecommunication is upheld - Appeal allowed in part.

Summary

Issues: Denial of CENVAT credit on various services, including housekeeping, insurance, legal consultancy, lodging expenses, repair, maintenance, and telecommunication services.

In this case, the main issue revolves around the denial of CENVAT credit on different services like housekeeping, insurance, legal consultancy, lodging expenses, repair, maintenance, and telecommunication services. The Appellate Tribunal, after considering the arguments, upheld the decision of the Commissioner (Appeals) regarding most services, stating that they do not have a nexus with the manufacture of the final product and hence cannot be considered as input services for availing CENVAT credit. However, the Tribunal disagreed on the aspect of telecommunication services, finding that they were essential for the smooth operation of the manufacturing activity. Consequently, the Tribunal ruled in favor of the appellant, allowing CENVAT credit specifically for telecommunication services.

The Tribunal concurred with the Commissioner (Appeals) on the denial of CENVAT credit for services other than telecommunication, affirming the decision to disallow the credit on those services. However, the Tribunal found the denial of CENVAT credit for telecommunication services unjustified and not in accordance with the operational necessities of the manufacturing activity. Therefore, the impugned order was partially set aside, granting the appellant the benefit of CENVAT credit for telecommunication services.

In conclusion, the Tribunal disposed of the appeal by upholding the denial of CENVAT credit on services other than telecommunication while allowing the appellant to avail CENVAT credit specifically for telecommunication services. The judgment emphasizes the importance of establishing a direct nexus between the services availed and the manufacturing process to qualify for CENVAT credit, highlighting the significance of operational relevance in determining the eligibility for such credits.