2023 (12) TMI 1139 - AT - Central Excise

CENVAT Credit - input services - Catering Service, House Keeping services, Interior Decoration services and Garden Maintenance services used in the manufacturing plant - services such as Catering Service, House Keeping services, Interior decoration services and Garden maintenance service, Construction Service, Repair and maintenance service etc used in guest house and Employee Township - HELD THAT - The definition of input service read as a whole makes it clear that the said definition not only covers services, which are used directly or indirectly in or in relation to the manufacture of final product, but also includes other services, which are integrally connected with the business of the manufacturer. Thus, the definition of 'input service' has a wide ambit and extends to all services used in relation to the business / activities relating to business. In the instant case, the housekeeping services, catering services and interior decoration services are availed at the plant/factory and hence denial of the credit in respect of the said services is not justified. Housekeeping services - HELD THAT - These services are very necessary and vital for keeping the factory in good condition. Hence the expenses incurred towards housekeeping services qualify as input service under CENVAT credit Rules, 2004 - reliance can be placed in the case of COMMISSIONER OF CENTRAL EXCISE, DELHI-III VERSUS M/S PRICOL LTD. 2015 (12) TMI 1486 - CESTAT NEW DELHI and BALKRISHNA INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., AURANGABAD 2010 (3) TMI 375 - CESTAT, MUMBAI . Catering services - HELD THAT - The factory of the Appellant is in the remote area and thus the Appellant had to supply food to the workers. Therefore, the service of catering as availed by Appellant is in relation to manufacturing activity, since without food it will not be possible for the employees to work in the factory - reliance can be placed in CCE, NAGPUR VERSUS ULTRATECH CEMENT LTD., 2010 (10) TMI 13 - BOMBAY HIGH COURT . Interior decoration services - HELD THAT - The appellant has incurred expense towards interior decoration of various office buildings canteen within the factory premise which is essential for smooth carrying of day to day business activities. Thus, such expenses incurred by the company also qualify as input service under CENVAT credit Rules, 2004. Garden maintenance services - HELD THAT - In the instant case the Appellant had availed services for maintenance of garden which is essential for the proper functioning and efficiency of a factory, and hence they are eligible for credit as input services - reliance can be placed in BALKRISHNA INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., AURANGABAD 2010 (3) TMI 375 - CESTAT, MUMBAI . Manpower services - HELD THAT - In the instant case the Appellant had availed services for manpower service which is essential for the cleaning, organizing canteen of workers, work related to dispensary within the factory to provide instant medical treatment to the worker when required etc. Thus, these activities certainly have nexus with the business of manufacture - reliance can be placed in M/S. JAYPEE SIDHI CEMENT PLANT VERSUS CCE, BHOPAL 2014 (10) TMI 90 - CESTAT NEW DELHI . Thus, the impugned order denying the Cenvat credit availed on the 'input services' Catering Service, House Keeping services, Interior Decoration services and Garden Maintenance services used in the manufacturing plant, is not sustainable. Cenvat credit availed on the input services used in relation to the guest house and township situated within the factory premises - HELD THAT - The Appellant incurred the expenses on account of construction of guest house and township for their employees within the premise of the plant. Due to location of the plant, they are under statutory obligation to provide a colony to the workers of the factory, to maintain the continuity of activity of manufacturing. Thus, having colony within the factory premise became indispensable. Similarly, to accommodate business delegates, consultants who used to visit time to time for verification and inspection of the plant, the guest house facility became necessary - the Cenvat availed by the Appellant were not related to any services acquired for its employees personal use, instead those were availed by the Appellant for proper functioning of the factory. Reliance can be placed in the case of COMMISSIONER OF CUS. C. EX., HYDERABAD-III VERSUS ITC LIMITED 2011 (11) TMI 516 - ANDHRA PRADESH HIGH COURT - The Appellant is eligible for the Cenvat credit availed on the input services such as Catering Service, House Keeping services, Interior decoration services and Garden maintenance service, Construction Service, Repair and maintenance service etc used in guest house and Employee Township situated within the factory premises. Accordingly, the impugned order denying such credit to the Appellant is not sustainable. The Appellant is eligible for the Cenvat credit availed on the 'input services' which are disputed in this appeal - the demand confirmed in the impugned order is set aside. Since the demand itself is not sustainable, the question of charging interest and imposing penalty does not arise - Appeal allowed.

Summary

Issues Involved:
1. Eligibility for Cenvat credit on various input services used in the manufacturing plant.
2. Eligibility for Cenvat credit on input services used in the guest house and Employee Township.
3. Applicability of extended period of limitation for raising demands.

Summary:

1. Eligibility for Cenvat Credit on Input Services Used in the Manufacturing Plant:
The tribunal examined whether the Appellant is eligible for Cenvat credit on input services such as Catering Service, Housekeeping services, Interior Decoration services, and Garden Maintenance services used in the manufacturing plant. The tribunal noted that the definition of 'input service' under Rule 2(l) of the CENVAT Credit Rules, 2004, has a wide ambit and includes services integral to business activities. It was held that:
- Housekeeping services are essential for maintaining the factory's condition and qualify as 'input service'.
- Catering services are necessary for workers in remote areas and are integral to manufacturing activities.
- Interior decoration services for office buildings and canteens within the factory are essential for business operations.
- Garden maintenance services contribute to the factory's proper functioning and efficiency.

2. Eligibility for Cenvat Credit on Input Services Used in the Guest House and Employee Township:
The tribunal also assessed the eligibility for Cenvat credit on input services used in the guest house and Employee Township within the factory premises. It was observed that:
- The Appellant incurred expenses for the construction and maintenance of guest houses and townships to meet statutory obligations and ensure the continuity of manufacturing activities.
- Services such as consultation on construction, repairs, maintenance, and interior decoration of guest houses and townships are essential for the factory's proper functioning.
The tribunal cited several judicial pronouncements supporting the view that such services have a nexus with manufacturing activities and qualify as 'input services'.

3. Applicability of Extended Period of Limitation:
The Appellant argued that the demands confirmed in the impugned order were barred by the limitation of time as the demand was raised beyond the normal period of one year. The tribunal agreed with the Appellant, noting that there was no suppression of facts or intent to evade payment of duty. The department failed to provide evidence to substantiate the allegation of suppression. Therefore, the demands confirmed by invoking the extended period of limitation were held to be unsustainable.

Conclusion:
The tribunal concluded that the Appellant is eligible for the Cenvat credit availed on the disputed 'input services'. Consequently, the demand confirmed in the impugned order was set aside, and the appeal filed by the Appellant was allowed. The question of charging interest and imposing a penalty did not arise since the demand itself was not sustainable.