2014 (5) TMI 420 - AT - Service Tax

Waiver of pre deposit - cleaning service/housing keeping service - Held that - Section 11 of the Factory Act cast a legal duty on the factory owner to maintain cleanliness in the factory. Therefore, prima facie expenses incurred on house keeping and cleanliness of the factory is incidental to manufacture of cylinder head/block casting etc. Thus, we are of the considered view that appellant has been able to make out a prima facie case for waiver of the pre-deposit condition - Stay granted.

Summary

Issues:
- Waiver of pre-deposit of demand of Cenvat credit, interest, and penalty.

Analysis:
The appellant sought waiver of the pre-deposit condition of demand amounting to Rs. 6,42,722/-, interest, and penalty related to Cenvat credit availed on house-keeping services. The appellant, engaged in manufacturing aluminium products, availed Cenvat credit on cleaning services from 2005-06 to 2008-09. The Revenue contended that the credit was inadmissible as it was not directly related to the manufacturing process. A show cause notice was issued, and after due process, the demand was confirmed with interest and penalty.

The appellant argued that under Section 11 of the Factory Act, maintaining cleanliness in the factory is a statutory obligation, and expenses on house-keeping services qualify as input services. The Revenue, however, supported the decision of the adjudicating and appellate authorities. After considering the arguments, the tribunal noted that the Factory Act mandates cleanliness in the factory, making expenses on house-keeping incidental to manufacturing activities. Consequently, the tribunal found a prima facie case for waiving the pre-deposit condition. Therefore, the stay application was allowed, and the pre-deposit of Cenvat credit demand, interest, and penalty was waived for the appeal hearing.

The judgment demonstrates a nuanced understanding of the statutory obligations under the Factory Act and their relation to input services in the context of availing Cenvat credit. By recognizing the link between maintaining cleanliness in the factory and the manufacturing process, the tribunal granted relief to the appellant by waiving the pre-deposit condition. This decision underscores the importance of interpreting legal provisions in alignment with the practical aspects of industrial operations to ensure a fair application of tax laws.