2024 (11) TMI 607 - AT - Central Excise

CENVAT Credit - input service - Construction Service - Architect Service - Mandap Keeper and Outdoor Catering Service - Club or Association Service - Rent-a-Cab Service - Asset Management Service etc. Rent-a-Cab Service - HELD THAT - The services in respect of Rent-a-Cab Service have been availed for use by the officers of the company to attend the office work; however, in respect of services availed after 01.04.2011, they have paid up the amount of Rs.1,08,463/- disputed in the SCNs and they are not in appeal against the same. Mandap Keeper and Outdoor Catering Services - HELD THAT - It is the contention of the appellants that these services are availed for organizing conferences, field demonstrations, dealers meetings, sponsored programs and training etc. Therefore, these cannot be set to be used by the officers of the company for private purposes. Memberships of the clubs - HELD THAT - Similarly, the memberships of the clubs are taken in respect of Golf Club where the company sponsors a tournament or memberships of various international professional clubs are taken. There is force in the argument of the appellant. The definition of Input Service is vast and encompasses all the activities that are required for the furtherance of the business. The exclusion that is put in place from 01.04.2011 appears to be in respect of services which are not primarily used for personal use of the officers or staff. It is found that no evidence to the effect that the disputed services are availed primarily for the personal use has been brought forth by the SCN and therefore, the submissions of the appellants cannot be brushed aside. Asset Management Services - HELD THAT - Rule 2(l) includes services which are used in relation to Financing of the Company. The definition further provides that the input services can be directly or indirectly in or in relation to the manufacture of final product. Financing is an integral activity not only in the manufacture of any excisable goods but also in any business activity. Therefore, the services availed by the appellants in order to maximize the returns on the investments is for the purpose of furthering of the business. Thus, the appellants being a Public Limited Company has to take care of finances and such an activity includes proper investment. The impugned orders are modified to the extent that demands which are contested by the appellant are set aside and demands which have been paid up by the appellants and not contested in the appeals are upheld - Hence, all the appeals are partly allowed.

Summary

Issues Involved:

1. Admissibility of CENVAT credit on various input services.
2. Validity and specificity of Show Cause Notices (SCNs).
3. Nexus of input services with the business activities of the appellants.
4. Application of amended definition of "Input Service" post-01.04.2011.
5. Payment of uncontested amounts and imposition of penalties.

Detailed Analysis:

1. Admissibility of CENVAT Credit on Various Input Services:

The primary issue in these appeals is the admissibility of CENVAT credit on various input services availed by the appellants. The appellants argued that the definition of "input service" under Rule 2(l) of the CENVAT Credit Rules, 2004 is broad and encompasses all activities related to their business. They contended that the services in question, including Construction Service, Works Contract Service, Interior Decorator's Service, Architect Service, Mandap Keeper's Service, and others, have a direct nexus with their business operations and are thus eligible for credit. The Tribunal noted that in most cases, the issue was settled in favor of the appellants based on precedents cited.

2. Validity and Specificity of Show Cause Notices (SCNs):

The appellants challenged the SCNs for being vague, lacking specific reasons for denying credit under particular headings. They argued that the SCNs merely reproduced the definition of "input service" without detailing how the services availed did not relate to their business activities. The Tribunal found merit in this argument, noting that the SCNs failed to provide evidence or investigation to substantiate the denial of credit.

3. Nexus of Input Services with Business Activities:

The Tribunal examined whether the disputed services were integrally connected to the appellants' business activities. It was argued that services such as Mandap Keeper and Outdoor Catering were utilized for business purposes like conferences and training, not for personal use. The Tribunal agreed, emphasizing that the definition of "input service" is extensive and includes services necessary for business furtherance. The Tribunal found no evidence suggesting the services were primarily for personal use, supporting the appellants' claim.

4. Application of Amended Definition of "Input Service" Post-01.04.2011:

The Revenue relied on the amended definition of "input service" effective from 01.04.2011 to argue against the admissibility of certain services. The appellants countered that the services, such as Construction and Architect Services, were related to repair and redesign of existing facilities, not new construction. The Tribunal acknowledged this distinction, noting that the exclusion post-01.04.2011 applies to services not primarily used for business purposes, which was not the case here.

5. Payment of Uncontested Amounts and Imposition of Penalties:

The appellants did not contest the demand of Rs. 1,08,463/- on Rent-a-Cab Service and had already paid this amount. The Tribunal upheld this demand but found the penalties imposed to be unjustified, setting them aside. The Tribunal modified the impugned orders, setting aside contested demands and upholding those not contested.

Conclusion:

The Tribunal concluded that the appellants succeeded in their appeals regarding the contested demands, as the services availed were integral to their business operations. The impugned orders were modified to reflect this, and penalties were set aside. The appeals were partly allowed, with uncontested demands upheld.