2019 (11) TMI 536 - AT - Central Excise

CENVAT Credit - input services - Guest House - period October 2009 to March 2015 - denial on the ground that the guest house maintained by the appellant which has been taken on rent is not an input service - HELD THAT - As contended by the appellant, the guest house has been used by the foreign technicians who used to visit their factory for technical assistance which ultimately resulted in production of their final goods, in that circumstances, the stay of technicians is used for manufacturing activity and the same is eligible as input service in terms of Rule 2(l) of CCR, 2004. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of cenvat credit on Guest House as an input service under Rule 2(l) of CCR, 2004.

Analysis:
The appellant appealed against the impugned order denying cenvat credit on a Guest House, contending that it was used by officials and technical experts visiting the company's factory for maintenance or technical assistance. The appellant argued that the Guest House was indirectly an input service as per Rule 2(l) of CCR, 2004, citing a decision of the Bombay High Court. The Authorized Representative (AR) relied on various decisions, emphasizing the use of the Guest House for official purposes.

The Tribunal observed that none of the decisions cited by the AR discussed the specific use of Guest Houses by the assessee. It highlighted that cenvat credit is allowable for services used directly or indirectly in manufacturing activities, which was missing in the previous decisions. Referring to the Bombay High Court's decision, the Tribunal emphasized the need to determine the purpose of Guest House usage. Considering the appellant's argument that the Guest House was used by foreign technicians for technical assistance leading to final goods' production, the Tribunal held that such stays were for manufacturing activities and thus eligible as an input service under Rule 2(l) of CCR, 2004.

In line with a previous decision involving Honda Motorcycle & Scooter India P. Ltd., the Tribunal allowed the cenvat credit to the appellant, setting aside the impugned order and granting the appeal with any consequential relief. The judgment emphasized the importance of examining the specific use of Guest Houses to determine eligibility for cenvat credit, especially in the context of manufacturing activities.