2016 (5) TMI 1243 - AT - Central Excise

Whether the eligibility for credit on input services is to be denied since the same was used outside the factory - Held that - as per definition of input services there is no requirement in law that the credit can be taken only on the service tax paid on the services received in the factory premises supported by the Tribunal s decision in the case of L.G. BALAKRISHNAN & BROS. Ltd. Vs. CCE, Coimbatore 2010 (6) TMI 211 - CESTAT, CHENNAI . By following the decision of Tribunal in the case of Ramgarh Chini Mills Vs. CCE, Kanpur 1998 (2) TMI 278 - CEGAT, NEW DELHI , the Cenvat credit will be admissible to them if the bills are in the name and address of their Corporate Office, LAB (R& D Unit) and the marketing Office and not in their factory. In the instant case, there is no dispute about the genuineness of the transaction and the duty paid documents are not doubted, therefore, credit cannot be denied. Cenvat being a beneficial piece of legislation, which was enacted for removing the cascading effect, the denial of credit sighting procedural irregularities is unsustainable. Hence the impugned order is set aside. - Decided in favour of appellant

Summary

Issues:
- Denial of Cenvat credit on certain input services received at locations other than the factory premises.
- Interpretation of the definition of input services under Rule 2(l) of the Cenvat Credit Rules, 2004.
- Applicability of case laws in determining eligibility for Cenvat credit.
- Admissibility of credit based on invoices with addresses different from the factory premises.

Analysis:
The case involved M/s. Star Drugs and Research Labs Ltd., manufacturers of medicaments, facing denial of Cenvat credit by the department for services not received at their factory but at other locations. The services in question included calibration charges, recruitment services, maintenance charges, and more, totaling &8377;1,46,090. The adjudicating authority allowed credit for some services but rejected it for specific periods. The Ld. Commissioner (Appeals) upheld the demand but set aside the penalty. The appellant argued that their centralized registration covered all relevant locations, and the services were essential for the Hosur Unit's functionality, citing Rule 2(l) of the Cenvat Credit Rules, 2004.

The appellant relied on case laws like L.G. BALAKRISHNAN & BROS. Ltd. and Modern Petrofils to support their claim. The Revenue's representative reiterated the findings, stating the services were not used in relation to manufacturing final products. The appellant countered, emphasizing the definition of Rule 2(l) and the necessity of the services for the factory's operation. The Tribunal deliberated on whether credit eligibility could be denied for services used outside the factory, highlighting the broad scope of input services under Rule 2(l) and referencing the L.G. BALAKRISHNAN & BROS. Ltd. judgment.

Regarding invoices with addresses different from the factory, the Tribunal referred to the case of Ramgarh Chini Mills, where credit was allowed despite the address discrepancy. Since there was no dispute about the transaction's genuineness and the duty paid documents, the denial of credit based on procedural irregularities was deemed unsustainable. Ultimately, the Tribunal set aside the impugned order and allowed the appeal, emphasizing the beneficial nature of Cenvat legislation in removing cascading effects.

In conclusion, the judgment clarified the interpretation of input services under Rule 2(l), emphasized the importance of services for manufacturing units, and highlighted the precedents supporting credit eligibility even with address variations on invoices.