2010 (6) TMI 306 - AT - Service Tax

Cenvat credit on input services - services utilised by the party in relation to generation of steam and electricity - services were utilised towards maintenance of the plant - service tax paid on cars insurance - maintenance of air cooler pay loader dumper repairing and changing of damaged asbestos sheet of canteen building - security services were provided at a place other than the factory premises - rent-a-cab services - service tax paid on the services of commission agent - service tax paid on mobile phones - Held that - Cenvat credit on service tax paid on input services allowed except in the case of security services were provided at a place other than the factory premises - appeal is disposed of accordingly

Summary

Issues:
Admissibility of Cenvat credit on input services.

Detailed Analysis:

Repair and Maintenance of power plant:
The Department contested the availability of credit on services used for steam and electricity generation, arguing that since steam and electricity are not duty-bound, credit should not be allowed. However, the Tribunal's precedent in a similar case favored the assessee. It was acknowledged that the generated steam and electricity were internally consumed by the party, leading to the conclusion that the credit was rightfully allowed by the Commissioner (Appeals).

Insurance of Cars and Two Wheelers:
The Department objected to allowing credit for service tax on vehicle insurance due to the disallowed excise duty on cars. The party referred to a Tribunal decision supporting the allowance of service tax on vehicle maintenance and repair. Drawing a parallel, the credit for insurance premium was deemed valid as it related to vehicle maintenance activities. Consequently, the Commissioner's decision to allow the credit was upheld.

Repair and Maintenance and cleaning services:
An amount was allowed for service tax on maintenance and cleaning services. The Department argued that these services were not directly linked to the manufacturing process or product clearance. However, the party contended that these activities, conducted within the factory premises, were essential for business operations, citing a Tribunal ruling supporting their eligibility for credit. Consequently, the Commissioner's decision was upheld.

Security Services:
Credit for security services was denied as they were provided outside the factory premises without a direct nexus to manufacturing activities. The lack of evidence establishing the connection led to the reversal of the Commissioner's decision, restoring the original authority's ruling.

Rent-a-cab Services:
Credit for rent-a-cab services was allowed by the Commissioner, challenged by the Department for not being directly related to the manufacturing process. The party's explanation highlighted the services' role in business activities, supported by a Tribunal decision. Consequently, the Commissioner's decision to allow the credit was upheld.

Commission on Sale:
Credit for commission agent services was allowed as they were related to sales activities of finished goods. The engagement of the agent in sales activities was considered integral to business operations, justifying the credit allowance made by the Commissioner.

Mobile Phones services:
The Commissioner allowed credit for service tax on mobile phones, contested by the Department. The party relied on a High Court decision supporting such credit, leading to the affirmation of the Commissioner's decision.

The judgment did not face challenges regarding the allowance of credit for other services, thus not addressed in the appeal. The appeal was consequently disposed of based on the above determinations.