2017 (3) TMI 851 - AT - Central Excise

CENVAT credit - House Keeping Services - denial on the ground that the same is neither an input service nor is used directly or indirectly in relation to the manufacture of final product - Held that - these services are essential for maintaining cleanliness in order to ensure healthy surroundings and proper working conditions for the employees, which has an effect on production. Besides, without its compliance, being a statutory requirement, manufacturing operations are not possible - the cenvat credit on House Keeping Services is admissible - appeal allowed - decided in favor of appellant.

Summary

Issues:
Admissibility of cenvat credit on House Keeping Services in relation to the manufacture of final product.

Analysis:
The case involved an appeal against the Order-in-Appeal passed by the Commissioner of Central Excise regarding the admissibility of cenvat credit on House Keeping Services availed by the appellants, who are manufacturers of aluminium casting for motor vehicle parts. The Revenue contended that the credit was not admissible as per Rule 2(l) of Cenvat Credit Rules, 2004, stating that the services were neither input services nor used directly or indirectly in relation to the manufacture of the final product. A show cause notice was issued, demanding the amount availed as credit along with interest and penalty. The appellants, aggrieved by the decision, approached the Tribunal.

The appellants argued that maintaining cleanliness in the factory, including House Keeping Services, is a statutory obligation under the Factories Act, 1948, essential for ensuring healthy surroundings and proper working conditions for employees, thereby impacting production. The advocate cited various case laws where similar issues were decided in favor of the appellants, emphasizing the importance of such services for manufacturing operations and compliance with statutory requirements.

After hearing both parties and examining the records, the Tribunal acknowledged the importance of House Keeping Services for maintaining cleanliness in the factory, ensuring a conducive working environment, and meeting statutory obligations. Citing previous judgments, the Tribunal held that such services are essential for production and are admissible for cenvat credit. Consequently, the order of the Commissioner of Central Excise was set aside, and the appeal filed by the appellants was allowed.