2015 (12) TMI 1486 - AT - Central Excise

Denial of CENVAT Credit - House-keeping and Rent-a-Cab service - Held that - With regard to the service tax paid on housekeeping service, it is no doubt, a fact that the said service has been used for keeping the factory premises neat and clean, which is a statutory requirement of Section 11 of the Factories Act, 1948. Thus, said services has the nexus with the manufacture of final product, because without compliance with the provisions of the Factories Act, manufacturing activities are not possible. As regards, the rent-a-cab service for transportation of employees, it is not a welfare measure, but a basic necessity, for the reason that unless the workers reach the factory premises in time, the manufacturing activities either directly or indirectly will suffer. Thus, the disputed services should qualify as input service for the purpose of getting the cenvat benefit - Decided against Revenue.

Summary

Issues:
- Appeal against the order allowing cenvat credit on house-keeping and rent-a-cab services
- Interpretation of input services for business activities
- Comparison of conflicting judgments on cenvat credit eligibility

Analysis:
1. The appeal was filed by the Revenue against the order of the Ld. Commissioner of Central Excise (Appeals) allowing cenvat credit on house-keeping and rent-a-cab services, considering them as input services for the respondent's business activities.

2. The Revenue contended that the impugned order was not legal, citing a judgment of the Hon'ble Bombay High Court in a previous case, which stated that welfare activities not directly related to business do not qualify for cenvat credit unless a clear nexus is established.

3. On the other hand, the respondent argued that the disputed services met the definition of input services for cenvat credit and relied on various decisions to support their claim, emphasizing the importance of these services for the manufacturing process and citing relevant case laws.

4. The Tribunal heard both parties and analyzed the nature of the services in question. It acknowledged that housekeeping services were essential for compliance with statutory requirements under the Factories Act, directly impacting the manufacturing process. Similarly, the rent-a-cab service for employee transportation was deemed a basic necessity to ensure smooth operations.

5. The Tribunal concluded that the disputed services indeed qualified as input services for cenvat credit, as they were directly linked to the manufacturing activities and were not merely welfare measures. It distinguished the present case from the judgment cited by the Revenue, highlighting the nexus between the services and the final product's manufacture, as established in previous decisions and upheld by different courts.

6. Ultimately, the Tribunal found no fault in the impugned order and dismissed the Revenue's appeal, emphasizing the significance of the disputed services in facilitating the manufacturing process and justifying their eligibility for cenvat credit based on established legal principles and precedents.