2017 (11) TMI 827 - AT - Central Excise

CENVAT credit - input services - input service distributor - Held that - there is nothing wrong in distributing the credit through ISD invoices; simply on the ground that the services have been received at the R & D Centre instead of factory - the courier service and housekeeping service have also been held to be input service - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against Commissioner's order upholding Order-in-Original and rejecting appellant's appeals. Appellant availed CENVAT Credit for services rendered at specific premises. Disallowance of credit, demand for recovery, interest, and penalty imposed. Appellant's contention on sustainability of impugned order based on judicial precedents. Dispute over whether services utilized in or in relation to manufacturing of final products.

Analysis:
The appellant filed two appeals against the Commissioner's order dated 26.12.2012, which upheld the Order-in-Original and rejected the appellant's appeals. The appeals related to availing CENVAT Credit for services rendered at M/s. Cargill Flavour Systems, Eco Space Campus, Bangalore. The services included courier, housekeeping, rent, and maintenance services during specific periods. The appellant's Head Office had centralized service tax registration and acted as an Input Service Distributor (ISD). Three show cause notices were issued proposing disallowance and recovery of irregularly availed credits, along with interest and penalties. The adjudicating authority confirmed the demanded irregular CENVAT credit, imposed interest, and penalties. The appellant contended that the impugned order did not consider binding judicial precedents on the issue. The appellant argued that credit distributed through ISD invoices should not be denied based on the location of service receipt. The appellant relied on specific decisions to support their case.

The appellant argued that courier and housekeeping services were utilized in or in relation to the manufacturing of final products, citing relevant judicial decisions. On the contrary, the learned AR supported the findings of the impugned order, emphasizing that the services were not used in manufacturing processes or final product clearance. The AR contended that courier and housekeeping services were not directly related to the manufacturing activities. After considering the submissions and previous decisions, the Judicial Member found that distributing credit through ISD invoices based on service receipt location was permissible. The Member noted that the courier and housekeeping services were considered input services in previous decisions. Therefore, the impugned order was deemed unsustainable, and both appeals of the appellant were allowed. The operative portion of the order was pronounced in open court on 13/11/2017.