2019 (5) TMI 215 - AT - Central Excise

CENVAT credit - input services - Security service provided in their Managing Director s residence - HELD THAT - The stand of the appellant that there is a camp office at the residence of the Managing Director for which security service is provided and it is in relation to the manufacture and the cost of the security service is also included in the CAS-4 for the purpose of payment of excise duty is legally tenable - The findings of the Commissioner (A) that the appellant have not produced any evidence to show that there is a camp office; to counter this ground, the learned counsel for the appellant submitted that it is well known fact that the Managing Directors have camp offices in their residences and there is no need to produce evidence to that effect. The security services provided at the residence of the Managing Director fall in the definition of input service as it is in relation to manufacturing and therefore, the denial of CENVAT credit is not legally sustainable in law - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Eligibility of CENVAT credit on security services provided at Managing Director's residence
- Interpretation of 'input service' under Rule 2(l) of CENVAT Credit Rules, 2004
- Nexus of security services with manufacturing process
- Legal sustainability of denial of CENVAT credit

Eligibility of CENVAT Credit on Security Services:
The appeal challenged the rejection of CENVAT credit on security services provided at the Managing Director's residence. The appellant argued that the security service was essential for the manufacturing process and was factored into the product's value for excise duty payment. Reference was made to a previous order where similar credit was allowed. The appellant contended that the denial of credit lacked legal basis.

Interpretation of 'Input Service' under Rule 2(l) of CENVAT Credit Rules, 2004:
The appellant highlighted the definition of 'input service' under Rule 2(l) of CENVAT Credit Rules, 2004, emphasizing that the security service should be considered an eligible input service. It was argued that the service directly related to the manufacturing process and should qualify for CENVAT credit.

Nexus of Security Services with Manufacturing Process:
The appellant stressed that the security services provided at the Managing Director's residence were connected to the manufacturing activities, as evidenced by the inclusion of service costs in the CAS-4 for excise duty payment. The Commissioner's assertion that evidence of a camp office was lacking was countered by the appellant's claim that such offices are common knowledge for Managing Directors.

Legal Sustainability of Denial of CENVAT Credit:
After reviewing submissions and evidence, the Tribunal found merit in the appellant's arguments. It noted that previous orders had allowed similar credits, which were not challenged by the Revenue. The Tribunal concluded that the denial of CENVAT credit for security services related to manufacturing was legally untenable. Consequently, the impugned order was set aside, and the appeal of the appellant was allowed.