2017 (4) TMI 487 - AT - Central Excise

CENVAT credit - whether the Cenvat Credit in respect of input service viz. (i) house keeping and gardening (ii) Nurses & Ayaa Services engaged in creche used by the appellant company is admissible or otherwise? Held that - all the services such as gardening, house keeping, maintaining creche for which nurses and ayaas are required are mandatory. It is statutory requirement to run factory therefore it is used for running factory, hence it is used in or in relation to the manufacture of final product therefore credit is admissible - credit allowed - appeal allowed - decided in favor of assessee.

Summary

Issues:
Admissibility of Cenvat Credit for input services related to housekeeping, gardening, and creche services.

Analysis:
The issue in this case revolves around the admissibility of Cenvat Credit for input services such as housekeeping, gardening, and creche services used by the appellant company. The lower authorities had denied the credit, arguing that these services were not directly related to the manufacturing activity and thus did not qualify as input services.

The appellant's counsel, in defense of the credit claim, highlighted the essential nature of these services. The garden maintenance and housekeeping services were deemed necessary for complying with statutory requirements under the Factory Act. Similarly, the nurses and ayahs were deployed to maintain the creche within the factory premises, which is also a statutory obligation when more than 13 workers are employed. The counsel argued that these services were indispensable for the smooth functioning of the factory and, therefore, should be considered as used in or in relation to the manufacture of the final product.

Moreover, the appellant's counsel presented several precedents from both the Tribunal and High Courts where similar services were held to be admissible input services, and the credit was allowed. The judgments cited by the counsel established a consistent pattern of considering such services as essential and directly linked to the manufacturing process, thereby justifying the claim for Cenvat Credit.

On the contrary, the Assistant Commissioner representing the Revenue reiterated the findings of the impugned order, maintaining the denial of credit for the mentioned services.

After careful consideration of the arguments from both sides and a thorough examination of the records, the Member (Judicial) concluded that the services in question, including gardening, housekeeping, and creche maintenance, were mandatory for the operation of the factory as per statutory requirements. As these services were deemed essential for running the factory and were directly linked to the manufacturing process, the Member held that they qualified as input services. Citing the various judgments provided by the appellant's counsel, which supported the admissibility of similar services as input services, the impugned order was set aside, and the appeal was allowed with any consequential relief as per the law.

In conclusion, the judgment dated 15/03/2017 by the Appellate Tribunal CESTAT MUMBAI ruled in favor of the appellant, allowing the admissibility of Cenvat Credit for the input services related to housekeeping, gardening, and creche services based on their essential nature and statutory requirements for factory operations.