2017 (9) TMI 996 - AT - Service Tax

CENVAT credit - input services - civil and structural services - architectural services - maintenance and repair service used for civil work like compound wall roofing, false ceiling, canopy work - Held that - all the services used by the appellant are in the nature of repair and maintenance of various machinery installed at the factory of the appellant used in or in relation to the manufacture of finished goods as per the requirement of Drugs Act - reliance placed in the appellant own case M/s. Cipla Ltd Versus Commissioner of Central Excise, Customs and Service Tax, Bangalore-I 2017 (8) TMI 705 - CESTAT BANGALORE , where this Tribunal has allowed credit on all the input services involved in the present case for the period October 2012 to September 2013 - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Dispute over availed input service tax credit for services not directly related to manufacturing.
- Interpretation of Rule 2(l) of CENVAT Credit Rules, 2004.
- Applicability of judicial precedents on similar issues.
- Nexus between services availed and manufacture of finished goods.

Analysis:

1. Dispute over Availed Input Service Tax Credit:
The appeals were filed against two impugned orders dated 30.1.2015 regarding the availed input service tax credit by the appellants for services not directly connected to the manufacturing process. The appellants had claimed credit for services like civil and structural services, architectural services, and maintenance and repair services used for civil work, which were not directly related to the manufacture of the final product. A show-cause notice was issued demanding the irregularly availed input service tax credit, interest, and penalty under Rule 15(1) of CCR, 2004.

2. Interpretation of Rule 2(l) of CENVAT Credit Rules, 2004:
The dispute revolved around the interpretation of Rule 2(l) of CENVAT Credit Rules, 2004, which defines input services eligible for credit. The appellants argued that the services availed were used in the repair and maintenance of machinery directly related to the manufacturing process, making them eligible for CENVAT credit. The appellants contended that the exclusion clause in Rule 2(l) did not apply to the services they had utilized.

3. Applicability of Judicial Precedents:
The appellants cited various judicial precedents where similar services like repair and maintenance had been allowed as input services eligible for credit. They relied on decisions from different benches of the Tribunal and highlighted cases such as Commissioner vs. Cadila Healthcare Ltd., Alliance Global Services IT India Pvt. Ltd. vs. Commissioner, and others to support their argument that the impugned services fell within the definition of input services.

4. Nexus Between Services and Manufacture of Finished Goods:
The Tribunal, after hearing both parties and examining the records, found that the services availed by the appellants were indeed in the nature of repair and maintenance of machinery used in the manufacturing of finished goods as per regulatory requirements. The Tribunal noted that previous decisions and the Tribunal's own ruling in a similar case supported the appellants' claim that the services were directly related to the manufacturing process. Consequently, the impugned order was set aside, allowing both appeals with consequential relief.

In conclusion, the Tribunal's decision was based on the interpretation of relevant rules, consideration of judicial precedents, and establishing the nexus between the services availed and the manufacture of finished goods, ultimately leading to the appellants being entitled to the CENVAT credit for the disputed services.