2018 (8) TMI 75 - AT - Central Excise

CENVAT Credit - input services - manpower recruitment & supply agency service - training & coaching service - denial on account of nexus - Held that - The use/utilization of the disputed services were within the factory premises of the appellant for complying with statutory requirements mandated under the Factories Act, 1948 read with Maharashtra Factories Rules, 1963 - As per the requirements of said statutes, maintenance of garden and for providing medical / clinical facilities to the employees within the factory premises, is required to be adhered to by the manufacturer - since the appellant had availed such services for complying with the statutory requirements, the service tax paid thereon should be available for Cenvat credit - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether disputed services like 'manpower recruitment & supply agency service' and 'training & coaching service' should be considered as 'input service' for availing CENVAT benefit.

Analysis:
The case involved a manufacturing appellant availing CENVAT Credit on service tax paid for 'manpower recruitment & supply agency service' and 'training & coaching service' used within the factory premises. The Department disputed the credit, arguing that these services were not directly related to the manufacturing process. The Department issued a show cause notice leading to an adjudication against the appellant, denying the credit and imposing a penalty. The Commissioner (Appeals) upheld the decision. The Tribunal had to determine if these disputed services qualified as 'input services' for CENVAT benefit.

Upon review, the Tribunal found that the disputed services were utilized within the factory premises to comply with statutory requirements under the Factories Act, 1948 and Maharashtra Factories Rules, 1963. The appellant used these services for maintaining gardens and providing medical facilities to employees, as mandated by the statutes. The Tribunal held that since the services were used to comply with statutory obligations, the service tax paid on them should be eligible for CENVAT credit. The Tribunal cited precedents like the case of Sri Rama Vilas Services Ltd. v. CESTAT, Chennai and Nhava Sheva Intl. Container Terminal (P) Ltd. v. Commissioner of Central Excise Raigad, where similar services provided within the factory premises were considered 'input services' for manufacturing activities.

Consequently, the Tribunal disagreed with the Commissioner (Appeals) and set aside the impugned order. The appeal was allowed in favor of the appellant, granting them the CENVAT benefit for the disputed services.