2024 (12) TMI 882 - AT - Central Excise

CENVAT Credit - input services - transportation by road service - technical testing and analysis service - denial on the ground that no supporting documents were submitted. Disallowance of the input credit on the disputed services - no supporting documents were produced - HELD THAT - On perusal of the documents filed by the appellants as part of the appeal papers in respect of business auxiliary service, C F agent service, management consultancy service, consultancy/professional charges, storage/warehousing charges. The aforesaid services have been used in or in relation to the manufacture of final products inasmuch as these services are in the nature of bank guarantee commission paid to the bank for raising funds for working capital, services used for obtaining advance licenses for the final product, surveillance audit service, C F agents service upto the place of removal i.e., Zirakpur and Guwahati depots, management of certain operations, services of environment clearance certification and training, ISO audit etc., godown/warehousing services at the depots. Further, it is also found that the learned Commissioner (Appeals) had not given any finding in rejection of the input credit on these above input services, except that he found that there is no supporting documents. In view of the above, and on the basis of supporting duty/service tax paying documents produced by the appellants, CENVAT credit in respect of the above input services are allowed. Transportation service - HELD THAT - The representative copy of the invoices evidencing the service tax paid thereon and the excise invoices issued by the appellants for stock transfer from their factory to their sales depots. In view of the above factual position, CENVAT credit on the above service of transportation by road allowed being the eligible credit in respect of input service having been covered under the inclusive category of specific services viz., outward transportation upto the place of removal . Technical testing and analysis service - HELD THAT - The appellants have produced three invoices issued by the Mumbai Waste Management Ltd., for comprehensive analysis and technical testing of waste sample. As testing of waste arising in the course of manufacture is a legal requirement for any manufacturer for compliance with environmental laws and regulations of the State, it is found that such credit of service tax in respect of testing and analysis service is eligible as input service. Further, the certificate issued by the Mumbai Waste Management Ltd., for the appellants-manufacturer factory at Tarapur, being a registered member for safe and secure disposal of hazardous waste in terms of hazardous waste management rules and regulations of the State, in the nature of input service used is directly in relation to manufacture in compliance with statutory regulations dealing with hazardous waste management. Such certification is not in any way connected with the membership of a club, which, when used primarily for personal use or consumption of any employee alone, is excluded under the category of specified exclusions given under clause (C) of Rule 2(l) of the Rules of 2004. Hence, the input credit of service tax paid on technical testing and analysis, obtaining registered membership for safe disposal of hazardous waste by the factory of the appellants, is eligible as input service in terms of Rule 2(l) of the Rules of 2004. The impugned order is set aside to the extent it had disallowed the CENVAT Credit, imposed penalty on the appellants and the appeal filed by the appellants is allowed in their favour with consequential relief, if any, as per law.

Summary

Issues:
- Disallowance of CENVAT credit on input services
- Interpretation of the definition of 'input service' under CENVAT Credit Rules, 2004
- Review of the impugned order by the Tribunal

Analysis:

The case involved an appeal by a company against the Order-in-Appeal passed by the Commissioner (Appeals)-III, GST & Central Excise, Mumbai, regarding the disallowance of CENVAT credit on various input services availed by the company during the disputed period. The company, engaged in manufacturing excisable goods, had availed CENVAT credit on services such as business auxiliary, consultancy, transportation, and testing services. The department initiated show cause proceedings, leading to the original authority allowing a partial amount of credit and ordering recovery and penalties. The Commissioner (Appeals) later set aside the original authority's order, prompting the department to appeal to the Tribunal. The Tribunal remanded the case back to the Commissioner (Appeals) for specific findings on each service. Subsequently, the impugned order dated 30.07.2020 disallowed a portion of the credit and reduced penalties, leading to the current appeal before the Tribunal.

The Commissioner (Appeals) disallowed CENVAT credit on certain input services, citing lack of supporting documents and changes in the definition of 'input service' post-April 2011. The Commissioner disallowed credit for transportation by road and technical testing services based on the amended definition. However, the Tribunal found merit in the company's argument that supporting documents were not fully considered, allowing credit for services like business auxiliary, consultancy, and storage/warehousing. The Tribunal also allowed credit for transportation and technical testing services after reviewing the invoices and their relevance to the manufacturing process.

The Tribunal referenced a previous case involving the same company to support the eligibility of certain input services for CENVAT credit, emphasizing the statutory nature of services like technical testing and analysis for waste disposal. The Tribunal set aside the impugned order's disallowances and penalties, ruling in favor of the company and granting consequential relief. The judgment was pronounced in open court on 16.12.2024, overturning the disallowance of CENVAT credit and penalties imposed by the Commissioner (Appeals) in the impugned order.