2018 (3) TMI 333 - AT - Central Excise

CENVAT credit - input services - air travel service - architect service - club membership - event management and sponsorship services - Held that - air travel service has been used by the Directors/employees of the appellant for business promotion i.e. for sale and purchase of their goods. Therefore, the said service is directly related to their manufacturing activity - credit allowed. Architect service - Held that - said services of the architect has been availed by the appellant for modernization and renovation of their plant and machinery and same is covered under the inclusive part of definition in terms of Rule 2(l) of CCR 2004 - credit allowed. Club Membership - Held that - the said service have direct nexus with the manufacturing activity of the appellant - credit allowed. Event Management Service - Held that - the said service has been availed by the appellant for attending various conferences and events of business promotion of the appellant - credit allowed. Sponsorship Service - Held that - said service has been availed by the appellant for sponsorship of the various events organized by various social organizations - the service of sponsorship of various events organized by social organizations have no relation to the manufacturing activity of the appellant - credit not allowed. Appeal allowed in part.

Summary

Issues:
Cenvat credit denial on various services - air travel, architect, club membership, event management, sponsorship.

Analysis:
1. Air Travel Service: The appellant used air travel for business promotion related to the sale and purchase of goods. The service directly relates to their manufacturing activity, making them eligible for Cenvat credit as per Rule 2(l) of the Cenvat Credit Rules, 2004.

2. Architect Service: The architect service was utilized for modernization and renovation of plant and machinery, falling under the inclusive part of the definition in Rule 2(l) of the Cenvat Credit Rules, 2004. Consequently, the appellant correctly availed Cenvat credit for this service.

3. Club Membership: Although termed as club membership, the appellant joined various trade bodies crucial for manufacturing goods. Membership in these bodies is necessary for trade operations, establishing a direct nexus with manufacturing activity. Therefore, the appellant is entitled to Cenvat credit under Rule 2(l) of the Cenvat Credit Rules, 2004.

4. Event Management Service: The appellant used event management services for attending conferences and events related to business promotion. This usage qualifies for Cenvat credit as it is linked to the business activities of the appellant.

5. Sponsorship Service: The sponsorship service was utilized for events organized by social organizations, which lacked a direct relation to the manufacturing activity of the appellant. Consequently, Cenvat credit for this service was rightly denied under Rule 2(l) of the Cenvat Credit Rules, 2004.

6. The judgment concludes that the appellant correctly availed Cenvat credit on all services except for sponsorship service, which was not directly related to manufacturing activity. The appellant did not contest the denial of credit on remaining services due to the insignificance of the amount involved, leading to credit denial on those services as well. As a result, the appeal was disposed of based on the observations made during the proceedings.