2017 (2) TMI 487 - AT - Service Tax

CENVAT credit - input services - insurance, coal analysis, fabrication and erection, sealing turbine commissioning, vibration analysis, certification, legal consultancy and stevedoring services relating to coal import - denial on the ground of nexus - Held that - The activities like Insurance Service, Repairs, modification and erection service, Servicing of Turbines, Vibration analysis, Legal Services etc., have been considered as eligible input services in decisions passed by various High Courts as well as the Tribunal. On perusal, I have to say that these services qualify as input services and are eligible for credit - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
Department's appeal against Commissioner (Appeals) order allowing credit on input services.

Analysis:
The respondent, engaged in manufacturing activities, availed credit on various input services related to their operations. A Show Cause Notice was issued challenging the eligibility of these services as input services. The original authority partially allowed credit but disallowed a significant amount. The Commissioner (Appeals) reversed this decision and allowed the entire credit, leading to the Department's appeal before the Tribunal.

The Department argued that the respondent, operating a power plant using coal for electricity generation, is not eligible for credit on input services used for coal import. Additionally, they contended that common inputs for both dutiable and exempted products render the respondent ineligible for the entire credit. In response, the respondent's counsel highlighted that the Show Cause Notice did not raise the common input services issue but focused on the services' qualification as input services. The Commissioner (Appeals) thoroughly analyzed the matter based on the allegations in the Show Cause Notice and allowed the credit.

Upon hearing both sides, the Tribunal examined the disputed services, including insurance, coal analysis, repairs, turbine servicing, legal services, and certification charges. The Commissioner (Appeals) had already detailed the nexus of these services with the manufacturing activity. Despite the Department's argument about common inputs, the Tribunal noted that the Show Cause Notice did not mention this aspect. Previous decisions by High Courts and the Tribunal supported the eligibility of services like insurance, repairs, turbine servicing, and legal services as input services. After review, the Tribunal found no issue with the Commissioner (Appeals) order and dismissed the Department's appeal.