2013 (6) TMI 618 - AT - Service Tax

Cenvat Credit - Input Services - housekeeping services keeping he factory premises neat and clean and construction services for construction of certain office rooms in the factory premises. - Held that - So far as construction services is concerned, the same undisputedly has been used for construction of office room in the factory premises. - the definition of input service specifically covers the services used in relation to setting up, modernization, renovation or repairs of a factory, premises. Thus the construction service used for construction of office rooms of the appellant s factory was specifically covered by the definition of input service during the period in dispute. - Decided in favor of assessee. As regards the housekeeping service, the same undisputedly has been used for keeping the factory premises neat and clean which is a statutory requirement of Section 11 of the Factories Act, 1948. In view of this, the service have to be treated as services used by the manufacturer in or in relation to the manufacture of final product as without compliance with provision of the Factories Act, manufacturing operations are not possible. - Credit allowed. - Decided in favor of assessee.

Summary

Issues:
1. Eligibility for Cenvat Credit on service tax paid for housekeeping and construction services.

Analysis:
The dispute in this case revolves around the eligibility of the appellant, a manufacturer of auto parts, for Cenvat Credit on service tax paid for housekeeping services and construction services used for certain office rooms in the factory premises. The original adjudicating authority denied the Cenvat Credit, leading to a demand of Rs. 2,27,224 along with interest and a penalty. The Commissioner (Appeals) upheld this decision, prompting the appellant to file an appeal along with a stay application.

Upon hearing both sides, the Tribunal decided to waive the requirement of pre-deposit and proceeded with the final disposal of the appeal due to the simplicity of the issue at hand. The appellant's counsel argued that construction services were essential for setting up office rooms in the factory premises, making them eligible for Cenvat Credit. Similarly, the housekeeping services were deemed necessary to comply with the Factories Act, 1948, thus making them integral to the manufacturing process.

The Tribunal carefully examined the definitions of 'input service' under the Cenvat Credit Rules, 2004, during the relevant period of 2006-2009. It was established that construction services used for office room construction fell within the ambit of input services as per the defined criteria. Additionally, the housekeeping services, being a statutory requirement under the Factories Act, were considered essential for manufacturing operations, thereby qualifying for Cenvat Credit.

Consequently, the Tribunal set aside the impugned order, allowing the appeal and stay application in favor of the appellant. The decision was based on the acknowledgment of the construction and housekeeping services as eligible for Cenvat Credit during the disputed period.

This judgment highlights the importance of interpreting the definitions of input services in tax matters and emphasizes the significance of statutory compliance in determining the eligibility for tax credits in manufacturing processes.