2019 (10) TMI 1034 - AT - Central Excise

CENVAT Credit - input services - showroom maintenance charges - hotel management charges - photocopier charges - place of removal. Showroom maintenance charges - HELD THAT - Admittedly, the appellants are selling the goods from their showrooms. If the goods are sold from the showrooms, in that circumstance, the showrooms are the place of removal. But the ld. Commissioner (Appeals) lost the sight to consider the fact to say which is the place of removal. When the appellants are selling their goods from showrooms only, therefore showrooms maintenance expenses are entitled for avail the Cenvat credit in terms of amended definition of input services w.e.f. 01.04.2011 - credit allowed. Hotel expenses - HELD THAT - The hotel expenses have been incurred by the appellants for the salesmen who were visiting various cities to sell of the product. Admittedly, without selling of goods, the question of payment of duty or manufacture of goods have no value. Any goods manufactured and sold attracts duty. Therefore, the goods manufactured by the appellants are required to be sold and the expenses incurred by the appellants upto selling of the goods are entitled as input services, therefore, on hotel expenses charges, the appellants are entitled to avail the Cenvat credit - there is no question of place of removal of the goods, but ld. Commissioner (Appeals) illegally held that this service has been availed beyond the place of removal - credit allowed. Photocopy service - HELD THAT - The appellants have availed the Cenvat credit for photo copies of the documents which are relevant for maintaining their accounts. Admittedly, the services relating to the accounts have been incorporated in definition of input services, but ld. Commissioner (Appeals) failed to examine the said issue - As the photocopies service has been availed by the appellants for photo copies of their various documents for accounting and selling purposes; therefore, the appellants are entitled to avail the Cenvat credit thereon - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues: Denial of Cenvat credit on showroom maintenance charges, hotel management charges, and photocopier charges on the ground that the services are not 'input services' as per Cenvat Credit Rules, 2004.

Showroom Maintenance Charges:
The appellants, engaged in manufacturing and selling footwear, appealed against the denial of Cenvat credit on showroom maintenance charges. The ld. Commissioner (Appeals) had held that these services were availed beyond the place of removal. However, the Tribunal found that since the goods were sold from the showrooms, the showrooms themselves constituted the place of removal. Therefore, the showrooms' maintenance expenses were eligible for Cenvat credit under the amended definition of input services effective from 01.04.2011.

Hotel Management Charges:
Regarding hotel expenses incurred for salesmen visiting various cities to sell products, the Tribunal observed that selling goods was essential for duty payment and the expenses incurred until the sale of goods were considered input services. The ld. Commissioner (Appeals) incorrectly stated that these services were availed beyond the place of removal. The Tribunal disagreed, emphasizing that the expenses related to selling activities were eligible for Cenvat credit, irrespective of the place of removal of goods.

Photocopier Charges:
The appellants availed Cenvat credit for photocopy services relevant for maintaining their accounts. Although services related to accounts were included in the definition of input services, the ld. Commissioner (Appeals) overlooked this aspect. The Tribunal determined that since the photocopy services were used for accounting and selling purposes, the appellants were entitled to avail Cenvat credit for these charges.

The Tribunal found no merit in the impugned order and set it aside, allowing the appeals with any consequential relief. The decision highlighted the importance of considering the nature of expenses in relation to the business activities and the eligibility of such expenses for Cenvat credit under the applicable rules and definitions of input services.