2015 (9) TMI 1158 - AT - Service Tax

Admissibility Cenvat Credit - input services - Pest Control Services, Construction of Residential Services, Architect Services and Security Services - these services availed either in their factory premises or in the Residential Colonies given by the appellants to its employees - Held that - Services were Availed by the appellant in their factory or the residential colony situated at a far off places close to their factory. Appellant has mainly relied upon the Case Law of Andhra Pradesh High Court in Commissioner of Customs and Central Excise, Hyderabad-III and ITC Limited 2011 (11) TMI 516 - ANDHRA PRADESH HIGH COURT , where Cenvat Credit of Several Services, like; lawn moving, garbage clearing, maintenance of Swimming Pool, collection of household garbage, harvest cutting, weeding, etc; used in maintaining staff colony was upheld. - In view of the ratio laid in the above case law appeals filed by the appellant are allowed - Decided in favour of assessee.

Summary

Issues: Admissibility of Cenvat Credit on various services like Pest Control, Construction of Residential Complex, Architect Services, and Security Services provided at the Residential Colony.

Analysis:
The appellant filed appeals against Orders denying Cenvat Credit on the mentioned services. The appellant's representative argued that these services are essential for maintaining the residential colony close to the factory premises, without which manufacturing activities cannot be carried out effectively. The appellant relied on a case law from Andhra Pradesh High Court and a decision by the Commissioner (Appeal) to support their claim for Cenvat Credit eligibility under Rule 2(l) of the Cenvat Credit Rule 2004.

The Revenue's Authorized Representative contended that the input services were not directly related to the manufacture of excisable goods, and thus, the denial of credit by the lower authorities was justified. After hearing both parties and examining the case records, the issue at hand was whether Cenvat Credit should be allowed on services like Pest Control, Construction of Residential Complex, Architect Services, and Security Services provided at the residential colony near the factory premises.

The appellant mainly relied on the Andhra Pradesh High Court case where Cenvat Credit for various services used in maintaining a staff colony was upheld. The High Court emphasized the importance of providing housing facilities to employees for enhancing productivity and efficiency. It was noted that the staff colony's maintenance was directly linked to the manufacturing activity of the company, and services like lawn mowing, garbage clearing, and maintenance of swimming pools were considered crucial input services falling within the ambit of Rule 2(l) of the Cenvat Rules, 2004.

The High Court also highlighted the nexus between plantation activities and the manufacturing process, stating that activities like distributing saplings and procuring raw materials were integral to the manufacturing operations. The Court emphasized that such activities, essential for ensuring a steady supply of raw materials, should not be excluded from the definition of input services under Rule 2(l) of the Cenvat Rules, 2004.

Based on the precedent set by the above case law, the appeals filed by the appellant were allowed, indicating that the services provided at the residential colony were indeed eligible for Cenvat Credit.