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2009 (6) TMI 73 - AT - Service TaxCenvat Credit input service - subscription to SIMA (Sponge Iron Manufacturers Association), security services at railway siding at Roha, rent-a-cab service and mobile telephony service held that - subscription given by the assessee to SIMA was in no way connected with the manufacture of final products or with clearance thereof from the factory, there is not even a remote connection - The purpose of posting of security personnel must be discerned from the agreement between the appellant and security agency. But none is forthcoming - in respect of rent-a-cab service , no documents on records that these service was used by functionaries/officials/employees of the company to commute between their administrative office and the factory for purposes connected with the manufacture and/or clearance of the finished goods - a mobile phone can be used by a person for multifarious purposes credit denied on all the four input services.
Issues:
Admissibility of CENVAT credits on various services under CENVAT Credit Rules, 2004; Applicability of Section 11A of the Central Excise Act for recovery of CENVAT credit; Interpretation of the definition of "input service" under Rule 2(1) of the CENVAT Credit Rules, 2004; Nexus between services claimed and manufacture/clearance of final products; Plea of limitation. Admissibility of CENVAT credits on various services under CENVAT Credit Rules, 2004: The appeals considered whether CENVAT credits amounting to Rs. 19,584/-, Rs.11,093/-, Rs.37,273/-, and Rs.1,34,929/- taken by the assessee on services such as "subscription to SIMA," "security services at railway siding at Roha," "rent-a-cab service," and "mobile telephony service" were admissible under the CENVAT Credit Rules, 2004. The department contended that these services did not fall under the definition of "input service" as per Rule 2(1) of the Rules. The original authority denied the credits, imposed penalties, and ordered recovery under Section 11A read with Rule 14. The first appellate authority upheld this decision, leading to the appeals. Applicability of Section 11A of the Central Excise Act for recovery of CENVAT credit: The appellant raised a preliminary objection against invoking Section 11A for recovery of CENVAT credit on input services. The contention was that Section 11A was not applicable in such cases. However, the Tribunal ruled that Section 11A could be invoked when inadmissible CENVAT credit was used for excise duty payment on final products, as per Rule 14 of the CENVAT Credit Rules, 2004. Interpretation of the definition of "input service" under Rule 2(1) of the CENVAT Credit Rules, 2004: Regarding the services claimed for CENVAT credits, the Tribunal analyzed each service individually. It was found that the subscription to SIMA, security services at the railway siding, and rent-a-cab services did not have a direct or indirect connection with the manufacture or clearance of final products, as required by the definition of "input service." The appellant failed to establish a nexus between these services and the manufacturing process. Despite citing a precedent for a liberal interpretation of "input service," the Tribunal held that the services in question did not meet the essential requirements of the definition. Nexus between services claimed and manufacture/clearance of final products: The Tribunal scrutinized the usage of services like security services, rent-a-cab services, and mobile telephony services in relation to the manufacturing process. It was emphasized that for a service to qualify as an "input service," it must directly or indirectly contribute to the manufacture or clearance of final products. The appellant's failure to provide documentary evidence establishing this connection led to the denial of CENVAT credits on these services. Plea of limitation: The appellant raised a plea of limitation, which was contested. However, since the Tribunal had already decided against the appellant on the substantive issue, the plea of limitation was not considered further. In conclusion, all the appeals were dismissed by the Tribunal after a detailed analysis of the issues involved and the relevant legal provisions.
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