2012 (6) TMI 578 - AT - Service Tax

Cenvat Credit service tax paid on manpower recruitment, maintenance, electrical maintenance, ship fees, mobile phone services, insurance of building involved, service tax in rent a cab and the mobile services Held that - services were covered by Order of this Tribunal dated 20.1.2010 wherein the Tribunal has not allowed Cenvat credit in respect of the services given holding that these are not services connected to the manufacture of the goods in respect of the appellants - Credit not available Availment of Cenvat Credit on the canteen services Held that - Cenvat credit is not admissible to the appellants if the cost of the food is borne by the workers of the factory.

Summary

Issues:
- Availment of Cenvat credit on various services
- Applicability of Section 11A of the Central Excise Act
- Specific services in question: maintenance, repairs, technical inspection, survey, manpower recruitment, ship fees, mobile phones, insurance, canteen services, rent a cab

Analysis:

1. Availment of Cenvat Credit on Various Services:
The appellant, engaged in the business of hot briquetted iron and sponge iron, availed Cenvat credit on excise duty and service tax for input services. Show Cause Notices were issued, questioning the credit taken on service tax paid to service providers for various services. The appellant contended that these services were essential for their manufacturing activities, directly or indirectly connected to the manufacture of final products. The advocate cited case laws to support the claim that these services were relevant to manufacturing activities, justifying Cenvat credit. However, the Revenue argued that previous tribunal orders and a High Court decision had already addressed similar issues, denying Cenvat credit for certain services. The tribunal found that except for canteen services, the appellant was not entitled to Cenvat credit on the mentioned services based on previous decisions.

2. Applicability of Section 11A of the Central Excise Act:
A preliminary objection was raised regarding the invocation of Section 11A for recovery of Cenvat credit. The tribunal previously addressed this issue, ruling that Section 11A could be applied where Cenvat credit was utilized for excise duty on final products. As the credit in question was used for such duty, the objection against invoking Section 11A was overruled. The tribunal upheld the applicability of Section 11A based on the relevant rules and considerations, dismissing the objection raised by the appellant's counsel.

3. Specific Services in Question:
The services in question included maintenance, repairs, technical inspection, survey, manpower recruitment, ship fees, mobile phones, insurance, canteen services, and rent a cab. The tribunal's decision, based on previous orders and legal precedents, concluded that Cenvat credit was not admissible for most of these services, except for canteen services where the charges were borne by the employees. The High Court decision further supported the denial of Cenvat credit for canteen services when the cost was covered by the workers. Consequently, all seven appeals filed by the appellant were dismissed by the tribunal.

In conclusion, the tribunal's judgment upheld the denial of Cenvat credit for various services, except for canteen services, based on previous decisions and legal interpretations. The invocation of Section 11A for recovery of Cenvat credit was deemed appropriate, and the appellant's claims were not found to be justified in most instances.