2016 (12) TMI 1227 - AT - Central Excise

Cenvat credit - Garden Maintenance Service, Car Rental Service and Canteen Service - Held that - If the appellants are covered by the mandatory provisions of Factories Act to provide canteen services to the employee and do not recover the costs from employees and if they are covered by the provisions of Pollution Control Law, as claimed, to maintain garden, then the credit would be admissible to them - Appeal allowed by way of remand.

Summary

Issues:
Appeal against denial of CENVAT Credit on Garden Maintenance Service, Car Rental Service, and Canteen Service.

Analysis:
The appellant, M/s Larsen & Toubro Ltd., appealed against the denial of CENVAT Credit on various services. The appellant argued that their case is covered by a previous decision of the Tribunal where credit for the same services was allowed. They contended that they are entitled to avail credit for Garden Maintenance Service due to mandatory provisions under the Maharashtra Factories Rules, 1963 for planting trees. Additionally, they argued that they provide canteen services as required by the Factories Act without recovering costs from employees and that the car hired by them is used for employees directly related to manufacturing finished goods.

The learned Assistant Commissioner, on the other hand, relied on the impugned order and pointed out that while providing canteen services is mandatory under the Factories Act, the appellant did not specifically state that they are covered by these provisions. He also challenged the appellant's claim regarding the necessity of garden maintenance under Pollution Control Law, stating it lacked proof. The Assistant Commissioner argued that credit for these services is only available if they are used in or in relation to the manufacture of finished goods, which the appellant failed to establish. He cited a decision of the Hon'ble Bombay High Court emphasizing that services must be integrally connected with the business to qualify as input services.

Upon reviewing the submissions, the Member (Technical) found that while the previous Tribunal decision covered these services, the factual aspects were not examined. It was noted that the appellant did not provide specific details regarding the applicability of mandatory provisions of the Factories Act or the provision of canteen services to employees. Similarly, there was a lack of evidence regarding the mandatory nature of garden services under Pollution Control Law as claimed by the appellant. An inconsistency was also identified in the appellant's statements regarding canteen services. As a result, the matter was remanded to the original adjudicating authority for further verification of the facts presented by the appellant.

In conclusion, the impugned orders were set aside, and the appellants were directed to produce necessary evidence to support their case. The appeals were allowed by way of remand, emphasizing the need for verification of the facts regarding the eligibility of CENVAT Credit for the disputed services.