2013 (6) TMI 617 - AT - Service Tax

Cenvat Credit - Input Services - The services are certification of the factory work, payment made to advocates for legal services related to manufacturing activities, repair and maintenance of the factory, audit and accounting of the factory, packaging services for export purposes, advertisement expenses, quality upgradation and so on. - Held that - From the submissions made by the appellant, the services on which credit has been availed relate to audit and accounting services, repair and maintenance services, packaging service, legal services etc. All these services have nexus and are integrally connected with the business of manufacturing and therefore, they are all eligible input service as defined in Rule 2(l) of the CENVAT Credit Rules, 2004. The decision of the Hon ble High Court of Bombay in the case of Ultratech Cement Ltd. (2010 (10) TMI 13 - BOMBAY HIGH COURT) applies to the facts of this case. - Credit allowed.

Summary

Issues:
- Appeal against Order-in-Appeal No. YDB (28)/MV/2012 dated 18.05.2012 passed by the Commissioner of Central Excise (Appeals), Mumbai regarding CENVAT credit on service tax paid on various services.
- Eligibility of CENVAT credit on services related to manufacturing activities.
- Interpretation of "input service" as defined in Rule 2(l) of the CENVAT Credit Rules, 2004.
- Nexus between services availed and manufacturing activity.

Analysis:
1. The appellant, a cigarette manufacturer, availed CENVAT credit on service tax paid for various services under 64 invoices, including certification of factory work, legal services, repair and maintenance, audit, packaging for export, advertisement, and quality upgradation. The department contended that the appellant was not entitled to the credit, leading to a show-cause notice. The original authority confirmed the demand without discussing the nexus between services and manufacturing activity, imposing a penalty. The lower appellate authority mechanically dismissed the appeal, prompting the appellant to appeal further.

2. The appellant argued that services availed had a nexus with manufacturing, citing a Bombay High Court case to support their claim. They explained the nature of services and their connection to manufacturing in submissions to lower authorities. The appellant's advocate emphasized that as long as services relate to the business of manufacturing final products, they qualify as "input service" under Rule 2(l) of the CENVAT Credit Rules, 2004.

3. The Revenue representative reiterated lower authorities' findings, leading to the matter being brought before the appellate tribunal. The tribunal, after considering the submissions, noted that the services in question, such as audit, repair, packaging, and legal services, were integrally connected to the manufacturing business. Referring to the Ultratech Cement Ltd. case, the tribunal concluded that all services availed had a nexus with manufacturing, making them eligible as "input services."

4. Consequently, the tribunal allowed the appeal, granting consequential relief as applicable. The stay application was also disposed of, affirming the appellant's entitlement to CENVAT credit on the services related to manufacturing activities. The judgment emphasized the importance of establishing a nexus between services availed and the core manufacturing processes to determine eligibility for CENVAT credit under the relevant rules.