2017 (1) TMI 1730 - AT - Central Excise

CENVAT Credit - input services - Air Travel Agent services - Maintenance and Repair service - Mandap Keeper service - Rent a cab service - Telephone services - allegation that credit has been availed on the basis of documents deposited by the ISD which were not input services for the respondent - HELD THAT - Cenvat Credit is allowable in respect of the subject services - It is also a settled position of law that the Regional Import Officers / Head Office registered as ISD can distribute the credit availed on various services to all manufacturing units as per standard method devised by them. The Commissioner (A) in the impugned order has also agreed and come to the conclusion that expenses on the subject services have been incurred and formed part of the goods included by the respondent unit in manufacturing and marketing of cement and cement clinkers. Accordingly, he has held that same are relatable to business activity and the Cenvat Credit on subject services has been rightly taken. Credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
- Disallowance of Cenvat Credit on various input services
- Eligibility of input services under Rule 2(l) of Cenvat Credit Rules
- Nexus between services and business of manufacturing final product

Analysis:
1. Disallowance of Cenvat Credit on Various Input Services:
The appeal was filed by the Revenue against the impugned order passed by the Commissioner (A) Bhopal, seeking recovery of Cenvat Credit availed by the respondent on input services including Air Travel Agent, Maintenance and Repair, Mandap Keeper, Rent a cab, and Telephone services. The Department contended that these services did not qualify as input services under Rule 2(l) of the Cenvat Credit Rules as they were used outside the factory premises for purposes other than manufacturing and marketing to the place of removal. The original authority confirmed the recovery of Cenvat Credit, leading to the appeal.

2. Eligibility of Input Services under Rule 2(l) of Cenvat Credit Rules:
The key contention revolved around whether the subject services availed by the respondent qualified as input services as per Rule 2(l) of the Cenvat Credit Rules. The Revenue argued that there was a lack of examination of documentary evidence to establish the nexus between the credit distributed by the Input Service Distributor (ISD) and the business activities related to the sale of excisable goods manufactured by the respondent. However, the respondent relied on precedents where Cenvat Credit on similar services had been allowed by the Tribunal in favor of other sister units, citing specific case laws to support their claim.

3. Nexus between Services and Business of Manufacturing Final Product:
The Tribunal examined the dispute regarding the disallowance of Cenvat Credit on various services such as Air Travel Agent, Maintenance and Repair, Mandap Keeper, Rent a cab, and Telephone services. Citing previous decisions, the Tribunal held that these services were eligible input services under Rule 2(l) of the Cenvat Credit Rules. By referring to specific case laws related to each service, the Tribunal concluded that the disputed services were covered by various Tribunal decisions, and there was no reason to interfere with the impugned order of the Commissioner (Appeals). The Tribunal upheld that the expenses on the subject services were incurred for the manufacturing and marketing of cement and cement clinkers, making them relatable to the business activity, and thus, the Cenvat Credit on these services was rightly taken by the respondent.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the impugned order and affirming the eligibility of Cenvat Credit on the subject services based on established legal principles and precedents.