2016 (8) TMI 308 - AT - Service Tax

Denial of Cenvat credit - Commercial and industrial construction service, works contract service and architect service - Services used to bring immovable property - Held that - The land and the factory were required directly and in any event indirectly in or in relation to the manufacture of the final product and for the clearance thereof up to the place of removal - by following the decision of Hon ble High Court of Punjab & Haryana in the case of Bellosonica Auto Components India Pvt. Ltd. 2015 (7) TMI 930 - PUNJAB & HARYANA HIGH COURT , the credit is allowed. Denial of Cenvat credit - Event Management services - Services used for sale promotion event - Held that - the arguments of the Commissioner that since the participants of the race already owners of bike, it cannot be considered as sale promotion event is absurd to say the least. The event is witnessed by number of people and therefore is clearly sale promotion exercise which is squarely covered within the definition of input service. Therefore, the credit is allowed. Denial of Cenvat credit - Medical insurance and life insurance service - Held that - in terms of the decision of Hon ble Karnataka High Court in the case of CCE, Bangalore-III, Commissionerate vs Sanzen Toyotetsu India (P) Ltd. 2011 (4) TMI 201 - KARNATAKA HIGH COURT , so long as the insurance is in terms of section 38 of ESI Act the credit of the service tax paid is allowed. Denial of Cenvat credit - Supply of tangible goods - Cars used by the employees who were not involved in the manufacturing of goods - Held that - the exact nature of use of the cars and purpose for which they have been used has not been examined and certain bald statements have been made by both sides in respect of such use. Therefore, to determine the exact use, the matter is remanded to the original authority for determination of the facts and re-adjudication. Denial of Cenvat credit - Business support service - data entry service used for host of activities which may not be related to the manufacture - Held that - the accounting is specifically covered within the definition of input service and therefore the credit on business support service of data entry availed is allowed. Denial of Cenvat credit - Manpower recruitment or supply agency service - Service availed for hiring the drivers used by the directors for personal consumption - Held that - the issue is squarely covered by the decision of Tribunal in the case of Utopia India Pvt. Ltd. vs CST, Bangalore 2011 (2) TMI 586 - CESTAT, BANGALORE and Brakes India Ltd. vs CCE, Mysore 2010 (1) TMI 301 - CESTAT, BANGALORE . It is found that the impugned order does not record any evidence or finding to the effect that the directors and also the employees who used the said services were not involved directly or indirectly in the manufacturing activity, therefore, the demand on this count is not sustainable and the same is set aside. Denial of Cenvat credit - Renting of immovable property - storage of goods required for providing output service of commercial use of exploitation of event service - Held that - it is not in dispute that the said service has not been availed in respect of manufacture of goods at Manesar and this is only an alternate argument which is not examined at the lower level. Therefore, the demand is set aside and the matter is remanded back. Denial of Cenvat credit - Photography services - taking pictures of manufactured products for use of advertisement and R&D - Held that - the services are clearly used for development and improvement of manufactured products and therefore the credit of the same is admissible. Denial of Cenvat credit - Hotels, inns, club or guest house services - Held that - the assertion of the appellants that the said service are used for stay of employees when they are travelling for the purposes of sales promotion has not been challenged and therefore the credit of the same cannot be denied as the activity of sale promotion falls within the definition of input service. Denial of Cenvat credit - Manpower recruitment or supply service - Appellant contended that the entire amount of credit was reversed, therefore, no demand should be confirmed - Held that - this fact needs verification, therefore, the impugned order is set aside and the matter remanded back. - Appeal disposed of

Issues Involved:
1. Credit on Commercial and Industrial Construction Service, Works Contract Service, and Architect Service.
2. Credit on Event Management Services.
3. Credit on Medical Insurance and Life Insurance Service.
4. Credit on Outdoor Catering Service.
5. Demand for Supply of Tangible Goods.
6. Credit on Business Support Service.
7. Credit on Manpower Recruitment or Supply Agency Service.
8. Credit on Renting of Immovable Property.
9. Credit on Convention Services.
10. Credit on Photography Services.
11. Credit on Hotels, Inns, Club or Guest House Services.
12. Credit on Manpower Recruitment or Supply Service for Caretaker of Guest House.

Detailed Analysis:

1. Credit on Commercial and Industrial Construction Service, Works Contract Service, and Architect Service:
The appellants were denied credit on these services used for the marshal conveyor project based on a circular dated 4.1.2008 and the Tribunal decision in Vandana Global Ltd.-2010 (253) ELT 440. The Commissioner argued that these services were used for immovable property, which is not eligible for credit. However, the appellants cited the High Court decision in Bellosonica Auto Components India Pvt. Ltd.-2015-VIL-300-P&H-ST, which allowed such credits. The Tribunal found the issue covered by the jurisdictional High Court decision and allowed the credit.

2. Credit on Event Management Services:
The appellants were denied credit on event management services used for a sales promotion event on the grounds that participants were already bike owners. The Tribunal found this argument absurd, noting that the event was witnessed by many potential customers, thus qualifying as a sales promotion activity. The appeal was allowed, and the credit on event management services was granted.

3. Credit on Medical Insurance and Life Insurance Service:
The credit was denied based on Circular No.843/4/2011-Cx dated 29.4.2011, which stated that such services were for employee welfare. The appellants argued that the insurance was mandated by Section 38 of the Employees State Insurance Act. The Tribunal, referencing the Karnataka High Court decision in Sanzen Toyotetsu India (P) Ltd.-2011 (23) STR 444 (Kar), allowed the credit, noting that the insurance was a statutory obligation.

4. Credit on Outdoor Catering Service:
The appellants admitted liability but disputed the final demand, claiming the Commissioner did not credit certain payments already made. The Tribunal remanded the matter to the Commissioner for verification of figures.

5. Demand for Supply of Tangible Goods:
The appellants challenged a demand for cars leased for officials, admitting partial liability. The Tribunal noted that the exact use of the cars was not examined and remanded the matter for determination of facts and re-adjudication.

6. Credit on Business Support Service:
The credit on business support services for data entry was denied, claiming it was not related to manufacturing. The Tribunal found accounting to be within the definition of input service and allowed the credit.

7. Credit on Manpower Recruitment or Supply Agency Service:
The credit was denied for hiring drivers used by directors for personal purposes. The appellants had reversed part of the credit voluntarily. The Tribunal found no evidence that the directors were not involved in manufacturing activities and set aside the demand.

8. Credit on Renting of Immovable Property:
The demand was raised for storage of goods for providing output service. The appellants argued that the service was used in Chennai, where they were registered as service providers. The Tribunal noted this argument was not raised earlier and remanded the matter for examination.

9. Credit on Convention Services:
The credit was denied for services used in meetings with technicians and mechanics for after-sales service. The Tribunal found that the facts were not correctly presented and remanded the matter for reconsideration.

10. Credit on Photography Services:
The credit was denied for photography services used in product development and advertisement. The Tribunal found these services integral to the manufacturing process and allowed the credit.

11. Credit on Hotels, Inns, Club or Guest House Services:
The credit was denied based on Circular No.843/2011, which stated these services were for personal consumption. The Tribunal found the services were used for sales promotion and allowed the credit.

12. Credit on Manpower Recruitment or Supply Service for Caretaker of Guest House:
The appellants reversed the entire credit amount and challenged the demand. The Tribunal set aside the order and remanded the matter for verification.

Conclusion:
The Tribunal modified the impugned order, allowing credits on several services, remanding some issues for further verification, and setting aside certain demands. The appeals were disposed of accordingly.

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