2010 (1) TMI 301 - AT - Service Tax

Cenvat Credit- the appellant is a manufacturer of rubber seals case bottom bush blanks and polymers. The appellant is availing credit of Service tax paid on manpower supply service. The credit of the Service tax availed by the appellant was disputed by the Revenue on the ground that the Service tax paid on the maintenance of gardens does not come under the purview of input service used in or in relation to the manufacture of final product in terms of Rule 2(1) of the Cenvat Credit Rules 2004. Held that-in the light of the decision of Coca Cola India Pvt. Ltd. v. CCE Pune-II 2009 -TMI - 34433 - BOMBAY HIGH COURT the appellant is eligible to avail the Cenvat credit of the Service tax paid on the garden maintenance services falling under Manpower supply . Thus the impugned order is incorrect and liable to be set aside. The impugned order is set aside and the appeal is allowed with consequential relief if any.

Summary

Issues:
1. Eligibility of Cenvat Credit on Service tax paid for garden maintenance services under "Manpower supply".

Analysis:
The appeal concerned the eligibility of Cenvat Credit on Service tax paid for garden maintenance services under the category of "Manpower supply". The appellant, a manufacturer of rubber seals and polymers, availed credit of Service tax paid on manpower supply services for garden maintenance. However, the Revenue disputed the eligibility of this credit, arguing that the services did not qualify as input services related to the manufacture of final products. The dispute arose from a show cause notice issued by the Revenue, leading to the adjudicating authority confirming the demand and imposing penalties. The appellant then appealed to the Commissioner (Appeals) who upheld the original order, prompting the current appeal.

The appellant's counsel argued that maintaining the garden was a statutory requirement imposed by the Karnataka State Pollution Control Board (KSPCB) under environmental laws. The appellant's factory had to adhere to pollution control norms, treat effluents, and use the treated water for irrigation within the factory premises. The counsel cited the appellant's ISO certifications emphasizing environmental management. The appellant relied on the decision of the Hon'ble High Court of Bombay in the case of Coca Cola India Pvt. Ltd. and a Tribunal decision in the case of Millipore India Ltd. to support their claim for Cenvat Credit.

In response, the Revenue's representative contended that garden maintenance services did not qualify as services used directly or indirectly in relation to the manufacture and clearance of excisable goods. They cited a Tribunal decision in the case of Kirloskar Oil Engines Ltd. to support their argument.

Upon considering the submissions and records, the Tribunal analyzed the statutory requirements imposed by the KSPCB on the appellant regarding garden maintenance and water usage. The Tribunal noted that the appellant was obligated to maintain the garden within the factory premises to comply with environmental regulations. Referring to the judgment of the Hon'ble High Court of Bombay in the Coca Cola India Pvt. Ltd. case, the Tribunal concluded that the appellant was eligible to avail Cenvat Credit on the Service tax paid for garden maintenance services falling under "Manpower supply". The Tribunal distinguished this case from the Kirloskar Oil Engines Ltd. decision, emphasizing the statutory requirement and environmental compliance in the current scenario.

In light of the statutory obligation and environmental considerations, the Tribunal held that the appellant was entitled to avail Cenvat Credit on the Service tax paid for garden maintenance services. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant with consequential relief, if any. The judgment was pronounced on 22-1-2010.