2019 (5) TMI 586 - AT - Central Excise

CENVAT Credit - various input services - denial on account of nexus - credit availed after 01.04.2011, when the provision of service has been completed prior to 01.04.2011 - HELD THAT - Most of these services are availed by the appellant for carrying out the business of manufacture. During the relevant period, the definition of input service had a wide ambit as it included the phrase activities relating to business - Various decisions of the Tribunal as well as the Hon ble High Courts have held the above services to be eligible for credit. The disallowance of credit is unjustified - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availing ineligible credit of input services.
2. Eligibility of credit for services availed prior to 01.04.2011.
3. Nexus of services with the business of manufacture.

Issue 1: Availing ineligible credit of input services:
The appellants were availing the facility of CENVAT Credit of duty paid on inputs and service tax paid on input services. Show Cause Notices were issued for availing ineligible credit of input services. The Original Authority partially confirmed the demand along with interest and penalty. The Commissioner (Appeals) upheld the decision. The appellant argued that the definition of "input service" during the relevant period was broad and covered services essential for the business of manufacture, making them eligible for credit.

Issue 2: Eligibility of credit for services availed prior to 01.04.2011:
The appellant contended that the services in question were availed before 01.04.2011, even though the credit was taken after this date. The Master Circular dated 28.02.2011 by the Department supported the eligibility of credit in such cases. The Tribunal noted that the services were indeed rendered before 01.04.2011, making the appellants eligible for credit as per the Circular.

Issue 3: Nexus of services with the business of manufacture:
The respondent argued that the appellant failed to establish a nexus between the services availed and the business of manufacture, questioning the eligibility for credit. However, the Tribunal observed that during the relevant period, the definition of "input service" included activities relating to business, which encompassed the services in question. Referring to various Tribunal and High Court decisions, the Tribunal concluded that the services were essential for carrying out the business of manufacture, making the disallowance of credit unjustified.

In conclusion, the Tribunal set aside the impugned order to the extent of disallowing credit on the services in question, allowing the appeals with consequential reliefs as per the law. The judgment emphasized the broad interpretation of "input service" during the relevant period and the importance of establishing a nexus between the services availed and the business activities for determining the eligibility of credit.