2013 (10) TMI 715 - AT - Central Excise

Cenvat Credit - Input Services cleaning activity of factory premises - Amendment of Rule 2(l) of CENVAT Credit Rules - Waiver of Pre-deposit Held that - Cleaning factory premises is a statutory requirement as per provisions of section 11 of Factories Act 1948 and therefore this activity has a clear nexus with manufacturing process and the order of lower authorities is wrong because the main part of the definition covers input services used by manufacturer whether directly or indirectly in relation to manufacture of final products - these activities are in relation to manufacture of final product and therefore the order is without any basis - Following NTF (India) Pvt. Ltd. Vs CCE Delhi 2013 (6) TMI 618 - ITAT DELHI the activities would constitute input services - The amendment made in definition of input services on 01-04-2011 does not alter this position prima facie - the requirement of pre-deposit of dues arising from the order for admission of appeals waived - Stay granted.

Summary

Issues:
Three stay petitions in three appeals arising from the same impugned order regarding duty demands, interest, and equal penalty under Cenvat Credit Rules, 2004 for housekeeping, rent-a-cab & tour operators, and outdoor catering services.

Analysis:
1. The Commissioner (Appeals) set aside the demand for the impugned services for the period Oct 2010 to Mar 2011 and sustained the demand for the period Apr 2011 to Jun 2011. The amendment in the definition of 'input services' from Apr 1, 2011, was noted, and the dispute was narrowed down to Rs.14,270 for cleaning services during Apr 2011 to Jun 2011. The appellant contested the demand for housekeeping services along with interest and penalty.

2. The applicant, a manufacturer of excisable goods, availed services for cleaning waste during the manufacturing process. Lower authorities held that post-amendment of Rule 2(l) of CENVAT Credit Rules, 2004, these services could not be considered 'input services' due to the omission of 'activities relating to business' from the definition.

3. The advocate argued that cleaning factory premises is a statutory requirement under the Factories Act, 1948, and is directly linked to the manufacturing process. He contended that these activities are related to the manufacture of final products, emphasizing that the order lacked basis and the appeals should be accepted without pre-deposit.

4. The Revenue's representative opposed the argument, stating that the services lacked nexus with the manufacture of final products. However, the Tribunal had previously ruled in other cases that such activities constitute 'input services,' indicating that the 2011 amendment did not change this position. Consequently, the requirement for pre-deposit of dues from the impugned order for appeal admission was waived, with a stay on the collection of dues during the appeal's pendency.