2020 (12) TMI 364 - AT - Central Excise

CENVAT Credit - input services or not - service of repairs and renovation of factory premises - service of running health centre - disposal of hazardous waste. Service tax credit on repairs/maintenance of civil structure/building - HELD THAT - There are no such service to allege that the appellant has taken Cenvat credit on the services relating to construction of various civil structures or building/laying on foundation or making structure for spot capital goods. The allegation in the show cause notice to deny service tax is without any basis and nobody bother about to find out what was the audit objection and what is the allegation in the show cause notice, both authorities below as did not pay any head to the request of the appellant to go through the factual position of the case. Instead of doing so, both the authorities has supported the show cause notice which does not have any basis. On this along ground, the whole show cause notice can be quashed but in the interest of justice, the merits of the case are required to be discussed. Admittedly, in this case the appellant has taken Cenvat credit on repairs and maintenance of factory premises for building which is allowed as Cenvat credit in terms of definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004 - credit is allowed. Cenvat credit of manpower service for running health centre - HELD THAT - Admittedly, in the case in hand the appellant is required to maintain health centre in terms of Factories Act, 1948, therefore, the appellant are entitled to avail Cenvat credit on health services in question - Credit allowed. CENVAT Credit - Disposal of hazardous waste - HELD THAT - As per show cause notice the total Cenvat credit of ₹ 37,23,475/- was proposed to disallow to the appellant, but the Ld. Commissioner (Appeal) hold that the appellant is entitled to avail Cenvat credit on the said service but allowed Cenvat credit only to the tune of 37,17,304/-. The reasons are best known to the Ld. Commissioner (Appeal) for denial of Cenvat credit of ₹ 6,171/- for the service of disposal of hazardous waste, as the reasons have not been disclosed by the Ld. Commissioner (Appeal), in the impugned order for denial of Cenvat credit of ₹ 6,171/- the act of ld. Commissioner (Appeal) cannot be appreciated - Credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Admissibility of Cenvat credit on repair and renovation services for factory premises.
2. Entitlement to Cenvat credit for running a health center for employees.
3. Disposal of hazardous waste - denial of Cenvat credit.

Admissibility of Cenvat Credit on Repair and Renovation Services:
The appellant contested the denial of Cenvat credit on repair and renovation services for factory premises during the period of April 2011 to March 2014. The appellant argued that these services fall within the amended definition of input service under Rule 2(l) of Cenvat Credit Rules, 2004. An objection was raised during an audit, alleging that Cenvat credit was wrongly availed on construction services. However, the appellant clarified that the credit was for repair and maintenance services, not construction. The tribunal found that the appellant was entitled to avail Cenvat credit on the repair and renovation services amounting to ?9,32,087.

Entitlement to Cenvat Credit for Running a Health Center:
Regarding the manpower service for running a health center, the appellant justified their entitlement based on the Factories Act, 1948, which mandates maintaining a health center for employees. Citing a previous tribunal ruling, the appellant argued that providing health services to employees in emergency situations, without extra cost, should not be excluded from Cenvat credit. The tribunal concurred, allowing the Cenvat credit of ?3,34,319 for the health services provided.

Disposal of Hazardous Waste - Denial of Cenvat Credit:
The issue of disposal of hazardous waste involved a discrepancy in the denial of Cenvat credit by the Commissioner (Appeal). While the total credit proposed to be disallowed was ?37,23,475, the Commissioner allowed credit only to the tune of ?37,17,304, without specifying the reasons for denying ?6,171. The tribunal found the lack of disclosure for this denial unacceptable and ruled in favor of the appellant, allowing the Cenvat credit of ?6,171. Consequently, the impugned order and show cause notice were set aside, and the appeal was allowed with any consequential relief.

In conclusion, the tribunal upheld the appellant's entitlement to Cenvat credit for repair and renovation services, running a health center, and disposal of hazardous waste, emphasizing adherence to the Cenvat Credit Rules and statutory requirements.