2020 (11) TMI 542 - AT - Central Excise

CENVAT credit - input services - gardening services - appellants are engaged in manufacturing of gear motors - denial on account of nexus - HELD THAT - The compliance of various environment related laws and factories act mandate clean environment in factory. Thus, the said service becomes essential for functioning of the factory. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of Cenvat credit for gardening services.

Analysis:
The appeal was filed against the denial of Cenvat credit for gardening services by the appellant, a manufacturer of gear motors. The appellant had been availing the credit, which was contested by the Revenue. The appellant's Counsel argued that similar services, such as manpower for gardening, had been allowed in their own case by the Tribunal in a previous order. Reference was also made to a Karnataka High Court judgment allowing Cenvat credit for gardening services in similar circumstances.

The Assistant Commissioner (AR) relied on the changed definitions post-2011, highlighting that the previous Tribunal decision in the appellant's case was before these amendments. It was pointed out that the term 'relating to business' was removed from the input service definition from 01.04.2012, suggesting that gardening services might not be covered.

The Tribunal noted its previous decision in the appellant's case, where CENVAT Credit on similar services was allowed based on the definition of 'Input Service' under the Cenvat Credit Rules 2004 and supported by High Court judgments. The Counsel for the appellant also referenced another order in their favor post-2012 amendments.

Additionally, a High Court of Karnataka judgment emphasized the broad and inclusive nature of the definition of input services, stating that activities related to business, including services like landscaping, fall under this definition. It was highlighted that maintaining a clean environment in the factory premises is essential for compliance with environmental laws and factory regulations, making such services crucial for factory functioning.

In conclusion, the impugned order denying Cenvat credit for gardening services was set aside, and the appeals were allowed based on the precedents, the broad interpretation of input services, and the necessity of such services for factory operations.