2023 (5) TMI 1401 - AT - Central Excise

CENVAT Credit - input services - transport by Air Service - renting of immovable property service - cricket match ticket - hotel membership fee - services related to property in Goa - advertisement - car repair - courier services. Transport by Air Service - HELD THAT - The submissions indicate that the Chairman of the Company used the said services for co-ordinating various aspects of manufacture and marketing of the goods and therefore the contention that the transport by Air Service was used in relation to manufacture of final product is accepted. Renting of immovable property service - HELD THAT - Electricity admittedly is used in manufacture of final products. Therefore rent paid for the premises used for captive power plant is relevant to decide admissibility of Service Tax paid on such rent the Service Tax paid on rent of the premises used for captive power generation for availment of CENVAT Credit is allowed. Courier service - advertisement service - car repair - HELD THAT - The credit on the services allowed. Cricket match ticket - hotel membership - service for property in Goa - HELD THAT - There are no nexus of services such as cricket match ticket hotel membership and service for property in Goa with manufacturing activity and therefore the same are not admissible for availment of CENVAT Credit. Appeal allowed in part.

Summary

Issues:
Denial of CENVAT Credit on various services including transport by Air Service, renting of immovable property service, cricket match ticket, hotel membership fee, services related to property in Goa, advertisement, car repair, and courier services.

Analysis:
The case involved two appeals concerning the denial of CENVAT Credit on various services used by the appellants, who were manufacturers of PVC pipes and fittings. The appellants were issued show cause notices proposing to deny CENVAT Credit for Service Tax paid on services such as transport by Air Service, renting of immovable property service, and others for the financial years 2012-13 to 2014-15 and subsequent periods. The learned Commissioner (Appeals) in two separate impugned orders denied CENVAT Credit on various services, citing lack of documentary evidence and the absence of a nexus with manufacturing activities.

The appellant contended that the Air Service was utilized for transporting the Chairman to deal with manufacturing and marketing aspects, justifying its relation to the manufacture of the final product. Additionally, the appellant argued that electricity generated on rented premises was used for manufacturing final products like PVC pipes, making the Service Tax on rent admissible for CENVAT Credit. The Revenue opposed these submissions and supported the impugned orders.

The tribunal carefully examined the submissions and records. It acknowledged that transport by Air Service was indeed used in relation to the manufacture of the final product based on the Chairman's involvement in coordinating manufacturing and marketing activities. The tribunal also accepted that electricity was crucial for manufacturing final products, thereby allowing the Service Tax paid on rent for the premises used for captive power generation. Furthermore, the tribunal held that services like courier service, advertisement service, and car repair should be considered input services eligible for CENVAT Credit.

However, the tribunal found no nexus between services such as cricket match tickets, hotel membership fees, and services related to property in Goa with the manufacturing activities, leading to the disallowance of CENVAT Credit for these services. Consequently, the tribunal partially allowed the appeals, permitting CENVAT Credit on specific services while disallowing it on others.

In conclusion, the tribunal's judgment clarified the admissibility of CENVAT Credit on services like transport by Air Service, renting of immovable property service, advertising service, car repair service, and courier services, based on their direct relation to manufacturing activities. Services lacking a clear connection with manufacturing were not considered eligible for CENVAT Credit.