2017 (6) TMI 97 - AT - Central Excise

CENVAT credit - input services - Insurance - Air Travel Bills - Taxi Bills - Motor Vehicle Service charges - Club Bill which is paid to Madras Gymkhana Club and Presidency Club - Held that - the appellant has not brought any material on record to show that these Club bills are related to the business operation of the appellant - these are private clubs and are not business clubs and therefore the expenditure of the club cannot be termed as an input service - credit not allowed. As far as service tax paid on Insurance, Air Travel Bills, Taxi Bills and Motor Vehicle Service charges are concerned, I allow the appeal of the appellant, by allowing credit. Appeal allowed - decided partly in favor of appellants.

Summary

Issues:
Appeal against Commissioner (Appeals) order disallowing cenvat credit on various services including insurance charges, travel bills, club bills, and motor vehicle service charges.

Analysis:
The appellant, engaged in cement manufacturing and taxable services under GTA, appealed against the rejection of their appeal by the Commissioner (Appeals) regarding the disallowance of cenvat credit on certain services. The Department observed erroneous cenvat credit availed by the appellant during an audit, leading to a show-cause notice and subsequent disallowance of credit, along with interest and penalties. The appellant contended that the impugned order ignored the definition of 'input service' under the Cenvat Credit Rules, emphasizing the wide interpretation given by various courts to the term. The appellant argued that the services in question, such as insurance charges for windmills and various bills, are directly related to their business activities and fall within the definition of 'input service'. The appellant cited relevant case laws to support their argument, highlighting the nexus between the services and their manufacturing process.

The appellant further argued that services like air travel, taxi, club bills, and motor vehicle charges are integral to their business operations, especially in marketing their products amidst competition. They presented decisions from the Tribunal and High Court to support their claim that these services qualify as 'input services'. On the contrary, the Department objected to the cenvat credit on club bills paid to private clubs, asserting that such expenses are not related to the business operations of the appellant. The Department contended that club bills cannot be considered 'input services' as they pertain to private clubs. The Tribunal upheld the Department's objection regarding club bills but allowed the appeal concerning insurance charges, travel bills, taxi bills, and motor vehicle service charges based on the precedents cited by the appellant.

In the final judgment, the Tribunal pronounced the operative portion, allowing the appeals except for the cenvat credit on club membership. The decision was based on the direct relation of certain services to the appellant's business activities, as evidenced by legal precedents and arguments presented during the hearing. The Tribunal's ruling highlighted the importance of establishing a clear nexus between the services claimed for cenvat credit and the appellant's manufacturing and business processes.