2016 (12) TMI 1380 - AT - Central Excise

CENVAT credit - Security agency service received at the residence of the senior personnel of the appellant - training services - incineration services - denial on the ground that the same have been availed after the manufacture of the goods and all the services have no nexus with the manufacturing activity or with the provisions of any output service - Held that - training and coaching services very much fall in the definition of input service as contained in Rule 2(l) of CENVAT Credit Rules and the said activity is directly and substantially related with the business of the appellant. In the absence of which, it will be difficult for the appellant to promote his business. Further, the incineration service is also an input service as the appellant is under a statutory obligation to dispose of the waste, failing which, he would attract penal consequences - on both the services, the appellant is entitled to CENVAT credit - credit on training services and incineration services allowed. As regard to the security agency service, the learned counsel for the appellant did not press for CENVAT credit as the said security was provided at the residence of senior officer and the same has nothing to do with the manufacturing process - denial of CENVAT credit on security agency service upheld. Appeal allowed - decided partly in favor of assessee.

Summary

Issues:
Appeal against denial of CENVAT credit on security agency service, training services, and incineration services.

Analysis:

Training Services:
The appellant, engaged in manufacturing CNC lathe machines, availed CENVAT credit on training services. The Department alleged that the services were availed after manufacturing, lacking nexus with manufacturing activity or output service provisions. The appellant contended that training services were integral to their business activity, citing precedents and rule definitions. The counsel argued that training services were directly correlated to the business activity, essential for completing the sale process. Relying on case laws, the counsel asserted that training services were eligible input services. The Tribunal agreed, stating that training services fell within the definition of input services, crucial for promoting the business. The appeal was partly allowed, setting aside the denial of CENVAT credit on training services.

Incineration Services:
The appellant also availed CENVAT credit on incineration services, claiming it as waste management, a statutory obligation under environmental protection laws. The appellant argued that waste disposal was integral to manufacturing processes, citing a precedent where waste management was deemed eligible for CENVAT credit. The Tribunal agreed, stating that incineration services were directly related to manufacturing processes and eligible as input services. The appeal was partly allowed, setting aside the denial of CENVAT credit on incineration services.

Security Agency Service:
Regarding security agency service provided at a senior officer's residence, the appellant did not press for CENVAT credit, acknowledging its irrelevance to the manufacturing process. The appellant had already reversed the amount related to this service. The Tribunal upheld the denial of CENVAT credit on security agency service.

In conclusion, the Tribunal allowed the appeal partly, setting aside the denial of CENVAT credit on training services and incineration services but upholding the denial on security agency service. The decision was based on the direct correlation of training and incineration services with the manufacturing processes, making them eligible as input services for CENVAT credit.