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2014 (7) TMI 486 - AT - Central ExciseWaiver of pre-deposit - cenvat credit - Repair and Maintenance services - Nexus with the business of the assessee and not welfare activity undertaken by the assessee - Held that - Applicant is that the repair and maintenance of the garden, pest control and estate maintenance at the factory premises are integral part of the manufacturing activities. The Hon ble Supreme Court in the case of Maruti Suzuki Ltd. (2009 (8) TMI 14 - SUPREME COURT) denied the Cenvat credit after examining the tests required for entitlement of credit and held that these services have no nexus with the manufacturing activity and hence Cenvat credit is not admissible. The Hon ble Bombay High Court in the case of Commissioner of Central Excise, Nagpur Vs Manikgarh Cement reported in 2010 (10) TMI 10 - BOMBAY HIGH COURT observed that expression relating to business would qualify an input service, the activity must have nexus with the business of the assessee and not welfare activity undertaken by the assessee. Services are activities relating to manufacture and also in keeping with the statutory orders of the Pollution Control Board, would be examined at the time of appeal hearing at length. Hence, prima facie, the applicant failed to make a case for waiver of pre-deposit of entire amount duty along with interest and penalty. - Stay granted partly.
Issues: Application for waiver of pre-deposit of Cenvat credit, denial of credit on repair and maintenance services
Waiver of Pre-deposit of Cenvat Credit: The applicant filed an application for waiver of pre-deposit of Cenvat credit amounting to Rs. 16,30,451 along with interest and penalty. The applicant, engaged in manufacturing motorcycles, argued that the repair and maintenance services for garden, pest control, and estate maintenance at the factory premises were integral to manufacturing activities. The Counsel cited previous Tribunal decisions stating these services were in relation to manufacturing activities and eligible for credit. However, the Revenue's Authorized Representative referred to recent Tribunal decisions and the Supreme Court's ruling in Maruti Suzuki Ltd. case, denying credit for similar services. The Tribunal, after considering both arguments, noted that the repair and maintenance services lacked nexus with manufacturing activities as per the Supreme Court's decision in Maruti Suzuki Ltd. case. The Tribunal also referenced the Bombay High Court's observation that activities qualifying for credit must have a nexus with the business of the assessee. Consequently, the Tribunal directed the applicant to deposit Rs. 4,00,000 within four weeks, with the balance dues waived pending appeal. Denial of Credit on Repair and Maintenance Services: The main contention revolved around whether repair and maintenance services for garden, pest control, and estate maintenance at the factory premises qualified for Cenvat credit. While the applicant argued these services were integral to manufacturing activities and in compliance with Pollution Control Board orders, the Tribunal found that the Supreme Court's ruling in Maruti Suzuki Ltd. case established the lack of nexus between these services and manufacturing activities. The Tribunal emphasized the need for activities to have a direct connection with the business of the assessee to qualify for credit, as highlighted in the Bombay High Court's judgment. The Tribunal, therefore, concluded that the applicant failed to demonstrate a strong case for the waiver of the entire pre-deposit amount, directing a partial deposit and stay on recovery pending appeal. In summary, the judgment addressed the application for waiver of pre-deposit of Cenvat credit and the denial of credit on repair and maintenance services. The Tribunal considered the arguments presented by both parties, referencing relevant case laws and legal precedents to determine the eligibility of the services for Cenvat credit. Ultimately, the Tribunal directed the applicant to make a partial deposit while waiving the balance dues, pending the appeal hearing to further examine the nexus between the services and manufacturing activities.
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