2023 (12) TMI 842 - AT - Central Excise

Recovery of CENVAT Credit alongwith interest and penalty - input services - erection, installation and commissioning of research and development centre - garden maintenance service - canteen services - bus transport service - HELD THAT - The biggest component of the disallowance in the impugned order is the service availed for establishment of research and development centre at the premises of appellant and, primarily, based on circular of Central Board of Excise Customs (CBEC) issued in 2008. The said circular relates to availment of services of commercial and industrial construction service which, to the extent utilized for erection of immovable property, was ruled as ineligible - it is found that this narrow perspective of the activity undertaken by the appellant is not appropriate inasmuch as it was not restricted to construction of a building but outfitting as research and development centre which was essential for manufacture. The issue which came to be considered by the Central Board of Excise Customs (CBEC) was the excisability of movable goods, upon being fixed permanently, to acquire the character of non excisability which excluded application of Central Excise Act, 1944 while the present dispute does not relate to output service but to the manufacturing undertaken by the appellant which stands on an entirely different footing. Insofar as garden maintenance service is concerned, the reliance placed by the Learned Authorised Representative on the decision in STANADYNE AMALGAMATIONS PVT. LTD. VERSUS COMMISSIONER OF C. EX., CHENNAI 2011 (2) TMI 644 - CESTAT, CHENNAI does not appear to reflect the correct law inasmuch as the decision that maintenance and repair of photocopier, air conditioner, water cooler etc., are essential without, which the factory cannot run; therefore, the service tax paid on the services is admissible as credit. Likewise, on the aspect of canteen facility , several decisions of the Tribunal enumerated have set out the terms for availment of credit of tax paid on such services - It would also appear that the appellant has reversed credit insofar as the bus transport service is concerned which, thus, no longer continues as dispute. Thus, on the entitlement of tax paid on the services as CENVAT credit, the impugned order lacks merits - appeal allowed.

Summary

Issues Involved:
The appeal involves the disallowance of CENVAT credit and recovery under rule 14 of CENVAT Credit Rules, 2004, along with penalty, relating to the procurement of various services for the period from August 2005 to September 2011.

CENVAT Credit Eligibility:
The appeal concerns the availment of credit on services such as 'erection, installation and commissioning of research and development centre', 'garden maintenance service', 'canteen services', and 'bus transport service'. The appellant argued that these services qualify as 'input services' under the wide definition provided in rule 2(l) of the CENVAT Credit Rules, 2004. They relied on judicial decisions and circulars to support their contention that the services were used in or in relation to the manufacture of the final product and should not be disallowed.

'Erection, Installation and Commissioning of Research and Development Centre':
Regarding the 'erection, commissioning and installation of research and development centre', the appellant argued that the services were erroneously interpreted by the adjudicating authority based on a circular issued by CBEC in 2008. They contended that the establishment of the research and development centre within the factory premises was essential for manufacturing and should not be considered ineligible for credit. Various judicial decisions were cited to support this argument.

'Garden Maintenance Service' and 'Canteen Services':
The appellant also contested the disallowance of credit for 'garden maintenance services' and 'canteen services'. Judicial precedents and tribunal decisions were cited to argue for the eligibility of these services for CENVAT credit.

Final Decision:
The Tribunal found that the disallowance in the impugned order lacked merit. The eligibility of tax paid on the services for CENVAT credit was established, leading to the setting aside of the impugned order and allowing the appeal.

Separate Judgment:
No separate judgment was delivered by the judges.