2019 (1) TMI 427 - AT - Central Excise

CENVAT Credit - input services - Classification of services - outward transport / GTA services or hiring services? - It appeared to the department that CHEP had been employed only to deliver the appellant s finished goods i.e. various automobile parts to their customer situated at various places - Held that - The services provided by CHEP, appellants were nothing but hiring of specialized packing equipment to the appellant to enable safe and secure transportation of the goods manufactured by them and not for transportation of the finished goods per se - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of cenvat credit based on services provided by a third party.
2. Interpretation of the nature of services provided by the third party.
3. Application of the definition of input services under Rule 2(l) of the CCR 2004.
4. Disallowance of cenvat credit and imposition of penalties.

Analysis:
1. The appellants, engaged in manufacturing automobile electrical components, availed cenvat credit based on invoices from a third party, CHEP India Pvt. Ltd., for delivering finished goods to customers. The department alleged that the services provided by CHEP had no direct nexus with manufacturing, leading to proceedings proposing denial of credit and penalties under the law.

2. The Tribunal noted discrepancies in the nature of services provided by CHEP as hiring of equipment according to the agreement, while the department claimed it involved outward transportation. The matter was remanded for reevaluation based on evidence presented.

3. Upon de novo adjudication, it was found that the services by CHEP did not directly relate to manufacturing as per the amended definition of input services under Rule 2(l) of the CCR 2004. The original authority disallowed the cenvat credit and imposed penalties, which were upheld by the Commissioner (Appeals).

4. During the hearing, the appellant argued that the agreement with CHEP focused on hiring equipment for safe transportation, not for transporting finished goods. The Tribunal analyzed the agreement and found that the services were indeed for specialized packing equipment to ensure secure transportation of goods, not for direct transportation of finished products.

5. Ultimately, the Tribunal set aside the lower authorities' conclusions, ruling in favor of the appellants. The decision highlighted that the services provided by CHEP were for hiring specialized packing equipment, allowing the appeal and any consequential benefits as per the law.

This comprehensive analysis of the judgment showcases the issues, arguments presented, legal interpretations, and the final decision rendered by the Tribunal.