9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (10) TMI 815 - AT - Central ExciseCENVAT Credit - input services - security services used in head office - security activities related to residential premises of its employees - denial on the ground of nexus - Held that - The security service used/utilized by the appellant in its head office should be considered as an input service for the purpose of availment of the cenvat benefit - However, the disputed service utilized by the appellant for providing the security activities related to residential premises of its employees should not be considered as input service inasmuch as such service cannot be considered as used in relation to manufacture of the final product. Since such service has no nexus with the manufacturing activities undertaken by the appellant, it should not be eligible for the cenvat benefit. Demand of Interest - Held that - Since the appellant had sufficient balance in its cenvat account, it cannot be said that there is loss of revenue to the Government exchequer and for that purpose, Revenue has to be compensated by way of charging interest. Thus, interest demand cannot be confirmed against the appellant. Penalty - Held that - There is no element of fraud, collusion, suppression etc. on the part of the appellant in defrauding the Government revenue, by availing ineligible cenvat credit. Hence, imposition of penalty also is not proper and justified. Appeal allowed in part.
Issues:
- Availment of cenvat credit on security services used in different premises. - Interpretation of Rule 2(l) of the Cenvat Credit Rules, 2004. - Applicability of cenvat benefit to services utilized in head office and residential premises. - Nexus between services availed and manufacturing activities. - Justification of cenvat demand, interest, and penalty. Analysis: Issue 1: Availment of cenvat credit on security services used in different premises The appellant, a central excise registered assessee, availed cenvat credit on service tax paid for security services utilized in various premises, including the head office and residential premises of key personnel. The department disputed this claiming lack of nexus with manufacturing activities, leading to show cause proceedings and eventual confirmation of cenvat demand, interest, and penalty. Issue 2: Interpretation of Rule 2(l) of the Cenvat Credit Rules, 2004 The appellant argued that under the unamended definition of input service, activities relating to business should be considered as input service. The amended definition post-April 2011 required the service to be received by the manufacturer. The appellant contended that services used outside the factory but related to business activities should be eligible for cenvat benefit. Issue 3: Applicability of cenvat benefit to services utilized in head office and residential premises The Tribunal analyzed Rule 3 of the Rules, which stipulates that input service should be received by the manufacturer of the final product. It was observed that services used in the head office related to manufacturing activities could be eligible for cenvat benefit. However, services utilized in residential premises lacked nexus with manufacturing and were deemed ineligible for cenvat benefit. Issue 4: Nexus between services availed and manufacturing activities The Tribunal considered the connection between the services availed and manufacturing operations crucial for determining cenvat benefit eligibility. Services directly related to manufacturing activities were deemed eligible, while those lacking a direct nexus were excluded from cenvat benefit. Issue 5: Justification of cenvat demand, interest, and penalty The Tribunal found the denial of cenvat benefit on security services used in the head office unjustified, setting aside the impugned order. However, it ruled that the appellant should reverse cenvat credit for services used in residential premises. No interest or penalty was deemed necessary due to no loss of revenue or fraudulent intent. In conclusion, the appeal was partly allowed in favor of the appellant, setting aside the cenvat demand on security services used in the head office but requiring reversal of credit for services in residential premises, without imposing interest or penalty.
|
