2017 (12) TMI 158 - AT - Central Excise

CENVAT credit - input services - cleaning work at the residential colony - outdoor catering services - Held that - in respect of cleaning services, On being asked about the evidence of non utilisation of credit, ld. Counsel did not produce evidence, therefore the interest will be confirmed. - in respect of canteen services, The appellants are maintaining canteen in their factory. In terms of definition of input service, credit in respect of services utilised other than for primarily personal use is admissible. Thus, the service tax paid in respect of canteen maintained in the factory of the appellants would be admissible in terms of decision of the Hon ble High Court of Bombay in the case of Ultra Tech Cements 2010 (10) TMI 13 - BOMBAY HIGH COURT - credit allowed. CENVAT credit - rent a cab or bus service - Board circular no. 943/4/2011-CX dated 29.04.2011 - Held that - the circular states that The credit on such service shall be available if its provision had been completed before 1.4.2011 - the credit of service tax for the period prior to 01.04.2011 would be admissible. CENVAT credit - service used in the residential colony - Held that - These activities are not even remotely connected to the manufacture of final products and thus credit of the same cannot be allowed. CENVAT credit - service tax availed on repair and maintenance of DG Set of water treatment plant in the factory premises - Held that - The impugned order does not discuss any reason for not granting the benefit of said decisions. The order in Para 6 summarily rejects the credit and pleas of the appellants regarding extended period of limitation without granting any cogent reasons. In these circumstances, I find that the impugned order is not a speaking order in respect of these items. Appeal allowed in part.

Summary

Issues:
1. Denial of cenvat credit and demand of interest and penalty.

Analysis:
1. The first appeal involves denial of cenvat credit on service tax paid for cleaning work at the residential colony. The appellants reversed the credit along with interest before the show-cause notice was issued. The counsel argued that interest on the amount not utilized should not be demanded, but failed to provide evidence of non-utilization. The Tribunal found no evidence presented and upheld the demand for interest.

2. The second appeal concerns denial of cenvat credit on various items, with the appellants contesting only two items. Regarding outdoor catering service, credit up to February 2011 was deemed admissible as per the definition of input service. The Tribunal upheld the demand for the period after March 2011 as the appellants did not challenge it. The credit for rent a cab service before April 1, 2011, was allowed based on a circular.

3. The third issue involved services used in the residential colony. The appellants argued that these costs were included in the final product value, but the Tribunal found these services unrelated to manufacturing and disallowed the credit. The next issue was the credit for repair and maintenance of a DG Set, where the Tribunal remanded the matter for fresh adjudication due to lack of reasoning in the impugned order.

4. In the final decision, the Tribunal dismissed one appeal for failure to produce evidence of wrongly availed cenvat credit not being utilized. The Commissioner's observations regarding section 11AC highlighted the appellant's failure to rectify the mistake despite awareness, leading to suppression and misstatements. The Tribunal upheld the Commissioner's decision and dismissed the appeal.

This detailed analysis covers the denial of cenvat credit, interest demands, and penalty issues addressed in the judgment by the Appellate Tribunal CESTAT MUMBAI.