2019 (4) TMI 1006 - AT - Service Tax

CENVAT credit - input services - service of the car was carried out on the vehicle which is used to ferry the employees inside the manufacturing unit and also to transport the work-in-progress - HELD THAT - The repair service of the car which is used to ferry the employees inside the factory and also used for material for work-in-progress is eligible as the same is indirectly related to the manufacture. Similarly the repair of the MD car is also in connection with the manufacture of the final product and is eligible - credit allowed. Photography for ground breaking function - hiring charges - cleaning and debris removal - HELD THAT - The services fall in the definition of input service as the same is directly or indirectly related to the manufacture of the final product and thereby fall in the definition of input service - credit allowed. Rent-a-cab service - HELD THAT - The learned consultant did not press for the same being small amount - credit not allowed. Except rent-a-cab on which the appellant has not pressed for cenvat credit, other services fall in the definition of input service and the appellant is entitled to cenvat credit of the same - Appeal allowed in part.

Summary

Issues:
1. Rejection of appeal by Commissioner (Appeals) regarding irregular credit availed by the appellant.
2. Eligibility of cenvat credit for service tax paid on various items by the appellant.

Analysis:
1. The appeal was filed against the order of the Commissioner (Appeals) rejecting the appellant's appeal. The appellant, a manufacturer of tungsten and molybdenum wires, had availed credit of duty/service tax paid on items not fitting the definition under Rule 2(e) of the Cenvat Credit Rules. The department demanded reversal of irregular credit amounting to ?2,92,104. The lower authority confirmed a demand of ?19,549 along with interest and penalty. The appellant contended that the impugned order was unsustainable in law, arguing that certain services, like car repair for employee transport and work-in-progress, photography service, hiring charges, and cleaning services, were eligible for credit as they were related to manufacturing activities.

2. The appellant's consultant argued that services like car repair for employee transport and work-in-progress, photography service, hiring charges, and cleaning services were indirectly related to manufacturing and eligible for credit. The AR defended the order, stating that some services were excluded from the 'input service' definition and rightly denied cenvat credit. After hearing both parties and reviewing the evidence, the Judicial Member found that car repair for employee transport and work-in-progress, repair of the MD's car, photography for ground-breaking functions, hiring charges, and cleaning and debris removal services were directly or indirectly related to manufacturing the final product. The Member held that these services fell within the 'input service' definition, except for rent-a-cab services, which the appellant did not press for credit. Therefore, the appeal was partly allowed, granting cenvat credit for repair of vehicles and other eligible services.

In conclusion, the Appellate Tribunal CESTAT Bangalore partially allowed the appeal, granting cenvat credit for services related to car repair, photography, hiring charges, and cleaning and debris removal, while excluding rent-a-cab services.