2010 (1) TMI 469 - AT - Service Tax

Input Service - the appellants are manufacturers of Hermetically Sealed Compressors and the parts thereof and availed benefit of Cenvat credit on the service tax paid by them on catering/canteen services and Mediclaim Insurance services. Both the lower authorities are of the view that the said credit cannot be allowed to them as these two services are for the welfare of the staff and does not have part in the manufacturing process. Coming to such a conclusion both the lower authorities have held that the appellants are not eligible for the Cenvat credit and duty amount was confirmed and interest was also levied under section 11AB and penalty of Rs. 10, 000 was imposed but set aside the penalty imposed. Held that - in the light of the various decisions assessee was entitled to avail Cenvat Credit.

Summary

Issues:
- Eligibility for Cenvat credit on service tax paid on catering/canteen services and Mediclaim Insurance services.

Analysis:
The appeal was filed against the Order-in-Appeal which denied the appellants the benefit of Cenvat credit on service tax paid for catering/canteen services and Mediclaim Insurance services, as these were considered services for the welfare of staff and not part of the manufacturing process. Both lower authorities confirmed the duty amount, levied interest, and imposed a penalty, which was later set aside. The appellants argued that the issue was covered by previous decisions of the Larger Bench and cited relevant cases. The Judicial Member considered the submissions and records. The main issue was whether the appellants were eligible for Cenvat credit on these services. The Judicial Member agreed with the appellants, stating that the issue was covered by previous decisions of the Larger Bench and allowed the appeal, setting aside the impugned order and providing consequential relief if any. The decision was based on the precedent set by previous cases, including GTC Industries Ltd.'s case and Millipore India Ltd.'s case.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by both parties, the legal basis for the decision, and the outcome of the appeal.