2018 (2) TMI 529 - AT - Central Excise

CENVAT credit - input service - courier service - repair and maintenance of garden service - Held that - the definition of input service does not exclude courier and, to the extent that, the cost of such service is included in the assessable value of goods, that are dutiable, credit of tax paid on such input service cannot be denied. Compliance with environmental laws would bring the input service within the ambit of production activity - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to recovery of wrongly availed CENVAT credit under rule 14 of CENVAT Credit Rules, 2004 read with section 11A of Central Excise Act, 1944 with interest, dispute regarding eligibility of credit of tax paid on "courier service" and "repair and maintenance of garden service" as input services.

Analysis:
The dispute in this case revolves around the challenge to the recovery of wrongly availed CENVAT credit under rule 14 of CENVAT Credit Rules, 2004 read with section 11A of Central Excise Act, 1944, while dropping the penalty imposed by the original authority. The appellant contested the decision of the lower authorities regarding the eligibility of credit of tax paid on "courier service" and "repair and maintenance of garden service" utilized by the company. The lower authorities deemed these services ineligible as per rule 2(l) of CENVAT Credit Rules, 2004 defining "input service."

The appellant argued that there was a direct nexus between the input services and the final product, emphasizing that these services were essential functional requirements in a pharmaceutical manufacturing enterprise. They contended that it was erroneous for the lower authorities to equate "courier service" with transport and highlighted the necessity of garden maintenance services for compliance with environmental protection laws.

The Authorized Representative reiterated the contents of the impugned order, drawing attention to a relevant judgment in Commissioner of Central Excise, Bangalore - II v. Millipore India Pvt Ltd. The judgment discussed the interpretation of the term "Input Services" under Rule 2(1) of CENVAT Credit Rules, 2004, and the eligibility of various input services for tax credit. It was noted that the definition of input services is inclusive and activities related to business, including services rendered in connection therewith, are considered part of input services.

The judgment concluded that the definition of "input service" does not exclude courier services, and if the cost of such services is included in the assessable value of goods, credit of tax paid on such input service cannot be denied. Additionally, compliance with environmental laws was deemed to bring the input service within the ambit of production activity. Consequently, the impugned order was set aside, and the appeal was allowed, affirming the entitlement of the appellant to the CENVAT credit for the disputed services.