2016 (7) TMI 351 - AT - Central Excise

Cenvat Credit - input services - credit of service tax paid in respect of housekeeping services and supply of drivers under the man power supply agency service - nexus with manufacturing activity - Held that - appellant succeeds in respect of availment of credit on Housekeeping services. - As regards the availment of credit in respect of hiring of drivers under man power supply service, the allegations and its rebuttal is not backed with proper documents or evidences on record to prove the admissibility of credit by the appellant or its denial by the Ld. Appellate Authority. It is, therefore, difficult to ascertain proper facts in the absence of evidence. In the interest of justice, matter remanded back. - Decided partly in favor of assessee.

Summary

Issues:
1. Availment of cenvat credit on housekeeping services and supply of drivers under the man power supply agency service.
2. Eligibility of input service tax credit on housekeeping services and drivers' services.

Analysis:
1. The appellant, a manufacturer of motor vehicle parts, availed cenvat credit on input services for the period Jan 2008 to October 2012. A show cause notice was issued alleging ineligibility of input service amounting to &8377; 7,27,927/-. The demand was confirmed with interest and penalty under Section 11AC of the Central Excise Act imposed. On appeal, the Commissioner (Appeals) upheld the decision, leading to the present appeal.

2. The counsel for the appellant argued that for the period prior to 1.4.2011, the issue was well settled by Tribunal and High Court decisions. Regarding housekeeping services, the Tribunal had previously allowed the appeal in the appellant's case. Concerning driver services, it was contended that the drivers were used for essential activities related to manufacturing, such as moving raw materials within the factory premises, and did not fall under rent-a-cab services.

3. The respondent argued that post 1.4.2011, rent-a-cab operator service was not an eligible input service. They contended that the drivers' services were only for picking up and dropping off company staff, not directly related to manufacturing activities. Similarly, regarding housekeeping services, it was argued that these services were unrelated to manufacturing activities.

4. The Tribunal found that housekeeping services were necessary for maintaining the factory premises as a statutory obligation under the Factories Act, 1948. Citing various decisions, the Tribunal held that when a manufacturer's statutory obligation is fulfilled using taxable services, cenvat credit cannot be disallowed. Thus, the appellant was allowed to avail cenvat credit for housekeeping services.

5. However, regarding the hiring of drivers under man power supply service, the Tribunal noted a lack of proper evidence to determine the admissibility of credit. Due to insufficient documentation, the issue was remanded to the adjudicating authority for further examination. The Tribunal set aside the penalty imposed, considering the interpretative nature of the issue.

6. In conclusion, the appellant succeeded in availing credit for housekeeping services. The matter of credit for drivers' services was remanded for proper assessment by the adjudicating authority. The appeal was disposed of accordingly.