2014 (8) TMI 497 - AT - Central Excise

CENVAT Credit - input services being Insurance, Garden Maintenance and Clearing and Forwarding / C&F services - nexus with manufacturing activity - Held that - the appellants are eligible to avail input services credit on the above three items - Decided in favour of assessee.

Summary

Issues: Denial of Cenvat credit on insurance, garden maintenance, and clearing and forwarding services.

Insurance:
The appellants, engaged in manufacturing wheels and components, appealed against denial of cenvat credit on insurance, including marine insurance for export products. The adjudicating authority disallowed credit on insurance for employees and marine insurance, citing ineligibility for exporters. However, the Karnataka High Court decision in a similar case favored allowing credit on insurance for employees. The Tribunal's precedent in U.G. Sugar & Industries Ltd. case supported the inclusion of insurance for outward transportation as an "input service credit." Consequently, denial of credit on marine insurance was deemed unsustainable.

Garden Maintenance:
Regarding denial of credit on factory garden maintenance, the authority argued that such expenses did not directly relate to production activities. However, the appellants cited the Karnataka High Court decision in CCE Bangalore Vs Millipore India Pvt. Ltd., which allowed input service credit on activities like garden maintenance as part of production costs. The Tribunal's decisions in related cases further supported the allowance of credit on gardening services. Contrary decisions by single Member Bench in earlier cases were deemed not applicable. Denial of credit on garden maintenance was found unsustainable.

Clearing and Forwarding Services:
The denial of credit on C&F services for exports was based on the authority's view that such credit is only eligible for imports, not exports. The appellants, however, referenced various Tribunal decisions supporting the eligibility of input service credit on C&F services for exports. Notably, the Tribunal's decision in Rawmin Mining and Indus. Ltd. case confirmed the admissibility of cenvat credit on C&F services for FOB exports. Consequently, the appellants were deemed eligible to avail cenvat credit on C&F services for FOB exports. In conclusion, the appellants were allowed to avail input services credit on insurance, garden maintenance, and clearing and forwarding services, with consequential relief granted.