2018 (2) TMI 992 - AT - Central Excise

CENVAT credit - gardening service - rent-a-cab service - maintenance service - Held that - in various decisions it was held that all these services are eligible for credit - Tribunal in Reliance Industries Ltd v. Commissioner of Central Excise & Service Tax, LTU, Mumbai 2016 (8) TMI 123 - CESTAT MUMBAI has held that in the absence of evidence of personal consumption, availment of credit of tax paid on rent-a-cab service is proper - credit on gardening service and maintenance service allowed in the case of Commissioner of Central Excise, Bangalore v. Millipore India Pvt Ltd 2011 (4) TMI 1122 - KARNATAKA HIGH COURT - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Disallowance of credit availed on tax liability for 'gardening service', 'rent-a-cab service', and 'maintenance service' between April 2007 and December 2012. Interpretation of rule 2(l) of CENVAT Credit Rules, 2004. Nexus between input services and manufacturing activity.

Analysis:

1. Disallowance of Credit: The appellant, M/s Bharat Bijlee Ltd, challenged the disallowance of credit amounting to &8377; 16,15,244 on tax liability for various services availed between April 2007 and December 2012. The first appellate authority had restricted the disallowance to specific amounts for each service, based on the eligibility criteria before the amendment to rule 2(l) of CENVAT Credit Rules, 2004.

2. Interpretation of Rule 2(l): The first appellate authority upheld the disallowance based on the amended rule, emphasizing the necessity of a nexus between the input services and their use in relation to the manufacturing of goods or output services provided. The principle highlighted was that Cenvat credit is not allowed when goods or services are primarily used for personal consumption by employees.

3. Nexus between Input Services and Manufacturing Activity: The appellant argued that the availment of credit for 'rent-a-cab service' was related to manufacturing activity, citing a Tribunal decision. It was contended that detailed evidence of personal consumption was not required for the credit to be proper. Similar arguments were made for the other two services, supported by decisions from the High Court and Tribunal.

4. Decision: The Learned Counsel for the appellant relied on relevant decisions to establish that the findings in the impugned order lacked merit. The Tribunal found merit in the submissions made, setting aside the impugned order and allowing the appeal. The judgment emphasized the importance of establishing a nexus between input services and manufacturing activity for the eligibility of credit.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by both parties, the interpretation of relevant rules, and the ultimate decision rendered by the Tribunal.