2018 (1) TMI 250 - AT - Central Excise

CENVAT credit - various input services - Mediclaim/ Medical Insurance for employees - Grass cutting - Maintenance of Garden - PCC work - Road Work - Republic day celebration - Removal of Honey Comb - Held that - as regards Mediclaim/ Medical Insurance for employees, if there is a requirement under factories act to provide insurance as claimed by the appellants, then in respect of the factory employees, the credit of the medical premium cannot be denied. In these circumstances, the impugned order so far as it relates to rejection of premium on medical premium is set aside and matter is remanded to the Commissioner to decide afresh - matter on remand. CENVAT credit - Grass cutting - Maintenance of Garden - Held that - maintenance of factory premises is an activity which is directly related to the manufacturing activity. Clean atmosphere and safety are part and parcel of the manufacturing process - credit allowed. CENVAT credit - laying of PCC in pipeline - Held that - Credit has been denied as the appellants have not produced any documentary evidence that the credit is in respect of supplying and laying PCC in the pipelines. In the appeal memo no evidence has been produced regarding nature of job done and therefore the appeal in respect of PCC work is dismissed - credit denied. CENVAT credit - repair and maintenance of internal roads within the factory premises - Held that - No reasons have been given in the impugned order for denying the credit in respect of road work. In the absence of any reason this order is set aside and remanded to Commissioner (Appeals) for reconsideration - matter on remand. CENVAT credit - Republic Day celebration - Held that - No argument has been submitted by the appellants in their appeal memo. In the absence of any argument in support of their claim, credit cannot be allowed - credit disallowed. CENVAT credit - Removal of Honeycomb from the factory premises - Held that - removal of Honeycomb is part of maintenance of the factory premises. Credit of the services availed for maintenance of factory premises cannot be denied - credit allowed. Appeal allowed in part and part matter on remand.

Summary

Issues involved:
- Denial of credit of service tax on certain services
- Interest and penalty demanded

Analysis:
The appeal filed against the denial of credit of service tax on various services was heard by the Appellate Tribunal CESTAT Mumbai. The issues contested included the denial of credit on services such as Mediclaim/Medical Insurance for employees, grass cutting, maintenance of garden, PCC work, road work, Republic day celebration, and removal of Honey Comb. The Tribunal considered each issue separately and provided detailed reasoning for its decision on each service.

Mediclaim/Medical Insurance for employees:
The denial of credit on Mediclaim/Medical Insurance for employees was based on the lack of documentary evidence to support the claim that the services were not primarily for personal use or consumption. The appellant argued that insurance coverage for employees not covered under the ESIC Act was mandatory under the ESIC Act and the Factory Act. The Tribunal referred to relevant case laws and noted that while the policies covered both employees and their families, the element of personal use could not be ruled out. However, if there was a statutory requirement to provide insurance under the Factory Act, the credit could not be denied. The Tribunal set aside the denial of credit on medical premium and remanded the matter for further consideration with the opportunity for the appellant to produce necessary evidence.

Grass cutting and maintenance of garden:
Credit was denied on these services on the grounds that they were not directly or indirectly used in the manufacture of final products. The appellant argued that these services were necessary for safety and statutory compliance. The Tribunal found that maintaining factory premises was directly related to the manufacturing activity and essential for safety. Additionally, the Commissioner (Appeals) had previously allowed the credit for these activities. Therefore, the appeal regarding grass cutting and garden maintenance was allowed.

PCC work:
Credit was denied on the laying of PCC in pipelines due to the lack of documentary evidence regarding the nature of the job done. As no evidence was produced, the appeal in respect of PCC work was dismissed.

Repair and maintenance of internal roads:
Credit denial on road work was set aside and remanded to the Commissioner (Appeals) for reconsideration as no reasons were provided for the denial in the impugned order.

Republic Day celebration:
Credit denial for Republic Day celebration was upheld as it was considered a welfare service not covered under the definition of input service. The absence of arguments in support of the claim led to the dismissal of the appeal on this count.

Removal of Honeycomb:
Credit denial on the removal of Honeycomb was overturned as it was deemed part of the maintenance of factory premises. The appeal on this count was allowed.

In conclusion, the appeal was partly allowed and partly remanded for further consideration based on the detailed analysis of each issue presented before the Tribunal.