2024 (1) TMI 1378 - AT - Central Excise

Denial of CENVAT Credit - input services - courier service - vehicle repair service - insurance and photocopy services - credit was denied on the ground that the same are not eligible input services as they have not been used by the appellant directly or indirectly in or in relation to the manufacture of final product and clearance of final product upto the place of removal - HELD THAT - It is found that during the relevant period the phrase used in the definition of input services activities relating to business has been given very widen interpretation by various decisions of the Tribunal. Further it is found that all these input services on which Cenvat credit has been denied by the Ld. Commissioner have been held as input services on which Cenvat credit cannot be denied. The Tribunal by its decisions cited above have consistently held that the insurance services for ensuring the assets of the company as well as medical claim of the employees and courier services vehicle repair services and photocopy services are having nexus with the manufacture of the final products and these services have been used in relation to the manufacture of final products and its clearance from/upto the place of removal. The denial of Cenvat credit on impugned input services is not sustainable in law therefore the impugned order is set aside and the appeal of the appellant allowed with consequential relief if any as per law and hold that they are entitled to Cenvat credit on input services. Appeal allowed.

Summary

Issues:
Denial of Cenvat credit on input services including courier service, vehicle repair service, insurance, and photocopy services.

Analysis:
The appellant, engaged in the manufacture of 'Sugar Confectionary,' availed Cenvat credit on excise duty paid on inputs and service tax paid on input services. A show cause notice was issued alleging wrongful availment of Cenvat credit on services like courier, vehicle repair, insurance, and photocopy services. The denial was based on the lack of direct or indirect use of these services in relation to the manufacture and clearance of final products.

The appellant contended that the definition of input service during the relevant period was broad, covering services used directly or indirectly in manufacturing and clearance. They argued that the phrase 'in relation to' expanded the scope of input services. The appellant cited various tribunal decisions supporting the inclusion of insurance, courier, vehicle repair, and photocopy services as eligible input services.

Regarding insurance services, the appellant received coverage for assets and medical claims of employees, essential for business operations. The appellant presented agreements with insurance companies to support their claim. Tribunal decisions were cited to justify the inclusion of insurance services as 'activities relating to business.'

For courier services, it was argued that they were crucial for delivering business documents, thus falling under 'activities relating to business.' The appellant relied on tribunal decisions to support the eligibility of courier services as input services.

Regarding vehicle repair services, the appellant stated that maintenance was necessary to keep business vehicles operational for various activities. Tribunal decisions were referenced to support the inclusion of vehicle repair services as eligible input services.

Concerning photocopy services, the appellant highlighted their importance in day-to-day business operations for copying essential documents. Tribunal decisions were cited to justify the inclusion of photocopy services as input services.

The appellant also argued against invoking the extended period, claiming no suppression of facts. The authorized representative reiterated the findings of the impugned order.

After considering submissions and reviewing the definition of input service, the tribunal found that denial of Cenvat credit on the mentioned input services was unsustainable in law. Relying on precedent, the tribunal held that the services had a nexus with manufacturing final products and their clearance, thus allowing the appeal and granting Cenvat credit on the input services.