2013 (12) TMI 270 - AT - Service Tax

Denial of CENVAT CRedit - Nexus with manufacture - Held that - appellant had provided the services of Sanitation, Gardening, Water Supply etc. to their factory and maintenance of staff colony - But services of gardening, plantation, sanitation, water supply etc. to the appellant s manufacturing unit and to the residential colony cannot be excluded from the ambit of Rule 2 (l) of Cenvat Credit Rules, 2004 - courier services used in sending documents/invoices to various customers and other offices are definitely relating to manufacturing activity undertaken by the appellant and therefore credit of service tax paid on courier service is allowable. As regards credit taken on supplementary invoices, there is no dispute that the service tax was paid on the differential amount through these supplementary invoices. Since the credit has been taken on the amount which was paid as service tax and relevant particulars are available in the said invoices, therefore, the credit cannot be denied in this case also - Decided in favour of assessee.

Issues:
1. Denial of input service credit for services provided by a manpower service provider.
2. Dispute over credit availed on GTA services through supplementary invoices.
3. Nexus between input services like gardening, sanitation, water supply, and pantry services with the manufacturing activity.
4. Applicability of Rule 2(l) of Cenvat Credit Rules, 2004 to the services provided.
5. Interpretation of the definition of 'input service' under Rule 2(l) of Cenvat Credit Rules, 2004.
6. Judicial precedents supporting the admissibility of credit on certain services.

Analysis:
1. The appellant, engaged in manufacturing excisable goods, availed input service credit for services provided by a manpower service provider. The dispute arose when the Department sought to deny the credit, alleging lack of direct relation to the manufacturing process. The Commissioner (Appeal) upheld the denial, leading to the present appeal. The appellant argued that services like gardening, sanitation, water supply, and pantry services were essential for their manufacturing unit and staff colony, citing judicial precedents to support their claim.

2. The appellant also availed credit on GTA services through supplementary invoices, which was challenged by the Department. However, the appellant contended that the service tax was paid on the differential amount through these invoices, making the credit legitimate. The Tribunal found no dispute regarding the payment of service tax on the differential amount, leading to the allowance of the credit on supplementary invoices.

3. The Tribunal analyzed the definition of 'input service' under Rule 2(l) of Cenvat Credit Rules, 2004, which includes services directly or indirectly related to the manufacturing process. Citing a judgment from the Hon'ble High Court of Andhra Pradesh, the Tribunal emphasized the wide scope of the definition, encompassing services like maintenance of a staff colony that contribute to the manufacturing activity. Services such as gardening, sanitation, water supply, and pantry services were deemed integral to the manufacturing process and thus eligible for input service credit.

4. Based on the interpretation of Rule 2(l) and judicial precedents, the Tribunal concluded that services like gardening, plantation, sanitation, water supply, and pantry services provided to the manufacturing unit and staff colony could not be excluded from the ambit of Cenvat Credit Rules. The Tribunal also upheld the admissibility of credit on courier services, considering them essential for the manufacturing activity. The judgment set aside the Commissioner (Appeals) order and allowed the appeal of the appellant, affirming the legitimacy of the input service credits in question.

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