2018 (5) TMI 386 - AT - Central Excise

CENVAT credit - various input services - Outdoor catering and canteen related service - House keeping at Guest House - Transit house - Hostels - Manpower and Security Services at the township and various installations outside factory premises - AC Maintenance at Hospital & upkeep of medical dept. - Garden Maintenance Service - Postal Services (Speed Post) - Tyre retreading - Hospitality Service. Held that - the definition of input service not only covers services which fall under the means part, but also covers services which are covered under the inclusive part of the definition. In CCE & St, LTU, Chennai vs Rane TRW Steering Systems Ltd, the Hon ble jurisdictional High Court held that gardening services where an employer spends money to maintain their factory premises in an eco-friendly manner is eligible for credit. The credit in respect of postal services has been disallowed for the reason that the document issued by the postal department does not contain a few details. The department has no dispute with regard to the service tax paid on such document and also with regard to the availment of postal services. The department cannot then deny the credit. Credit on all services allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Disallowance of CENVAT credit on various input services for the period 10/2007 to 10/2009.
- Appeal against the disallowance of credit, demand, interest, and penalties by the original authority.
- Applicability of the term "activity relating to business" in the definition of input services.
- Dispute over the eligibility of credit on services such as outdoor catering, housekeeping, gardening, postal services, and others.
- Interpretation of relevant legal precedents regarding the eligibility of credit on input services.

Analysis:
1. The case involved the disallowance of CENVAT credit on various input services by the original authority for the period 10/2007 to 10/2009. Show Cause Notices were issued, leading to appeals by the assessee against the disallowance, demand, interest, and penalties imposed.

2. The key issue revolved around the eligibility of credit on input services, particularly concerning the term "activity relating to business" in the definition of input services. The Commissioner's order denied credit on certain services, citing a lack of nexus with manufacturing activity.

3. The assessee argued that the definition of input services had a wide ambit before 1/4/2011, referencing legal precedents such as the case of Coca Cola India Ltd vs CCE, Pune. The appellant contended that services like outdoor catering, housekeeping, gardening, and postal services were essential for their business activities.

4. The legal representatives presented arguments based on precedents like Wipro Ltd Vs CCE, Pondicherry and CCE, Chennai Vs BHEL to support the eligibility of credit on the disputed services. The department, however, maintained that the services in question were not necessary for manufacturing or product clearance.

5. The Tribunal, after considering the arguments and legal precedents, concluded that the disallowance of credit was unjustified. They held that the services in question were indeed eligible for credit. Consequently, the appeal filed by the assessee was allowed, while the department's appeal was dismissed.

6. The judgment highlighted the importance of establishing a nexus between input services and business activities for claiming CENVAT credit. It also clarified the interpretation of legal precedents regarding the eligibility of credit on various services, emphasizing the need for a broad understanding of the definition of input services.

Conclusion:
The Tribunal's decision favored the assessee, allowing the appeal and dismissing the department's appeal. It underscored the significance of a comprehensive interpretation of the definition of input services and the necessity of establishing a clear connection between the services availed and the business activities conducted.