2016 (9) TMI 47 - AT - Service Tax

Cenvat credit - service tax on various input services - credit has been availed are input services and are used either directly or indirectly for the manufacturing activities - CENVAT credit irregularly availed by the appellant on various services - Held that - with regard to these three services namely association fee to traffic as well as gift vouchers and annual day function etc., I am of the view that the appellant is not entitled to CENVAT credit of service tax paid on these services as these are not directly related to the manufacture as well as business of the appellant. With regard to rest of the services the case of appellant is covered by various decisions and therefore following the ratios of the said decisions, the impugned order is set aside. - Decided partly in favour of appellant

Summary

Issues Involved:
Denial of CENVAT Credit of service tax on various input services.

Analysis:
The appellant, a manufacturer of digital panel meters and energy meters, faced denial of CENVAT credit on input services leading to three appeals consolidated into a common order. A show-cause notice was issued demanding irregularly availed CENVAT credit, which the appellant contested, claiming the services were used directly or indirectly for manufacturing activities. The Addl Commissioner confirmed a major part of the demand, imposed interest, and a penalty. The Commissioner (Appeals) modified the order-in-original but declined relief on certain services, prompting the present appeals.

The appellant argued that the denied services fell under the definition of input services as per Rule 2(l) of the CENVAT Credit Rules. Citing broader interpretations by various High Courts, the appellant highlighted 24 input services where credit was denied, supported by relevant case laws. The appellant's counsel pointed out that the denied credits had been allowed in previous tribunal and High Court decisions, substantiating the claim.

The respondent contended against allowing credit for specific services where service tax was not collected by the provider or where the services were deemed unrelated to the appellant's business activities. The appellant clarified instances where service tax was subsequently paid and where the bill explicitly included service tax. The respondent argued against credits for association fees, gift vouchers, and annual day expenses, deeming them unrelated to the business. The tribunal partially allowed the appeals, disallowing credit for specific services but permitting it for others based on precedent decisions.

In conclusion, the tribunal pronounced the order on 30/08/2016, partially allowing the appeals by setting aside the impugned order.