2017 (9) TMI 1111 - AT - Central Excise

CENVAT credit - input services - Banking & Financial services - Consulting Engineer s Service (Drawing charges) - EXIM /DGFT Consultant s service - Company Secretary services and C.A. services - Installation services - Maintenance services - Held that - in the various judgments of this Tribunal the service tax paid on the services viz. Banking & Financial services Consulting Engineer s service (Drawing Charges) EXIM/DGFT Consultant s service Company Secretary service and Chartered Accountant s Service Installation Services Maintenance Services which are held to be input services as defined under Rule2(l) of Cenvat Credit Rules 2004 CENVAT credit of the same is admissible. However the credit availed on Club Membership for the Director is not admissible as it cannot be said to be remotely connected with the activity of manufacture - the service tax paid on membership charges to Heat Transfer Researches Inc. is admissible as the said service is being used in or in relation to manufacture of finished goods. Decided partly in favor of appellant.

Summary

Issues:
- Denial of CENVAT credit on various input services
- Eligibility of input services for CENVAT credit
- Nexus of Club Membership service with manufacturing activity

Analysis:
The judgment by the Appellate Tribunal CESTAT AHMEDABAD dealt with the denial of CENVAT credit amounting to Rs. 3,72,382/- on several input services related to service tax paid between October 2008 to September 2013. The input services in question included Banking & Financial services, Consulting Engineer's service, professional services like Company Secretary services and Chartered Accountant's services, EXIM/DGFT consultant service, Installation services, Maintenance and Repair services, and Club Membership services. The appellant argued that these services were considered input services in various decisions of the Tribunal and thus eligible for credit.

The advocate for the appellants cited previous Tribunal decisions to support the claim that the mentioned services qualified as input services. The Respondent-Revenue, however, contended that the Club Membership service for the Director did not have a direct or indirect nexus with the manufacturing activity, and hence, the credit should be denied. In response, the appellant highlighted that a portion of the Club Membership charges, specifically related to the membership of Heat Transfer Researches Inc., provided technical know-how assistance and literature beneficial for the manufacturing activity, justifying the admissibility of credit on this specific aspect.

Ultimately, the Tribunal referred to its previous judgments and ruled that services like Banking & Financial services, Consulting Engineer's service, EXIM/DGFT Consultant's service, Company Secretary service, Chartered Accountant's Service, Installation Services, and Maintenance Services qualified as 'input services' under the Cenvat Credit Rules, 2004, making them eligible for CENVAT credit. However, the credit for Club Membership of the Director was deemed inadmissible due to the lack of connection with manufacturing activity. Notably, the credit for membership charges related to Heat Transfer Researches Inc. was allowed as it contributed to the manufacturing process. Consequently, the Tribunal modified the impugned order, setting aside the denial of CENVAT credit on most services except for Club Membership of the Director, which remained upheld. The appeals were disposed of accordingly.