2017 (1) TMI 835 - AT - Central Excise

CENVAT credit - security services - manufacturer of HDPE/LLDPE, LPG and various other petro-chemical products - whether M/S Gail India Ltd. are entitled to Cenvat credit on security services received for taking care of their residential colony/ township? Held that - the residential colony/ township is located at a remote place, where no municipal services are available. Further it is admitted fact that, it is an industrial township set up by the respondent-assessee so that trained manpower is available to run their plant for production of dutiable output - as the said security services qualify that input service under Rule 2(1) of Cenvat Credit Rules, 2004 being the service utilized by the manufacturer in relation to manufacture of dutiable output, credit is allowed - The respondent-assessee will be entitled to refund or re-credit of the duty reversed under protest with interest as per rules - appeal dismissed - decided against Appellant-Revenue.

Summary

Issues: Entitlement to Cenvat credit on security services for residential colony/township.

Analysis:
The appeal was filed by Revenue challenging an Order-in-Appeal passed by the Commissioner of Customs Central Excise & (Appeals), Kanpur, regarding the entitlement of M/S Gail India Ltd. to Cenvat credit on security services for their residential colony/township. A Show Cause Notice was issued to disallow Cenvat credit on security services received for the residential colony/township near the factory. The Notice proposed disallowing a specific amount along with penalties. The adjudication resulted in disallowing the amount and imposing penalties, which were later appealed by the respondent-assessee. The Commissioner (Appeals) allowed the appeal, emphasizing the broad definition of input services under Rule 2(1) of Cenvat Credit Rules, 2004, which includes services related to factory premises activities essential for smooth manufacturing and clearance of excisable goods.

Upon hearing the parties and reviewing the grounds of appeal, it was noted that the residential colony/township was located in a remote area without municipal services, established by the respondent-assessee to ensure the availability of trained manpower for plant operations. The security services provided were deemed to qualify as an input service under Rule 2(1) of Cenvat Credit Rules, 2004, being essential for the manufacture of dutiable output. Consequently, the impugned Order-in-Appeal was found to be appropriate, leading to the dismissal of Revenue's appeal and the disposal of the Cross Objection for statistical purposes. The respondent-assessee was deemed entitled to a refund or re-credit of the duty reversed under protest, along with interest as per rules.