2016 (10) TMI 676 - AT - Central Excise

Denial of CENVAT credit - manufacture of motor vehicle chassis - availing various input services in or in relation to the manufacture of final products - whether the appellant eligible for credit of these input services? - Held that - the decision taken in the appellant s own case M/s Eicher Motors Limited Versus CCE, Indore 2016 (8) TMI 7 - CESTAT NEW DELHI have been relied where it was held that the denial of credit on these services is not justifiable. The Hon ble Bombay High Court in M/s. Coca Cola India Pvt. Ltd. Versus The Commissioner of Central Excise, Pune-III 2009 (8) TMI 50 - BOMBAY HIGH COURT broadly laid down the principles for allowing credit on input services. There is no reason to deny the credit on such input service availed by the appellant as a principal manufacturer. Admittedly, service tax on such services have been remitted by the appellant and the final products value are in terms of the Rule 10 A of the Valuation Rules. However, no credits shall be eligible for the services rendered beyond the place of removal (depot) as these Business Support Services are basically for movement of excisable goods as submitted by the appellants. Denial of CENVAT credit not justified - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Eligibility for credit on various input services.
2. Denial of credit by the Original Authority.
3. Application of previous Tribunal and High Court decisions.
4. Specific services and their relation to manufacturing and marketing activities.
5. Business Support Services and their eligibility for credit.

Detailed Analysis:

1. Eligibility for Credit on Various Input Services:
The appellants, engaged in manufacturing motor vehicle chassis, claimed credit on various input services used in their manufacturing and marketing activities. The services included Advertisement Agency Services, Banking & Financial Services, Business Promotion Services, Training and Development Services, Canteen Services, Courier Services, Customs House Agent Service, Consultancy Services, Commission Agent Services, Event Management Services, Foreign Consultancy Services, Insurance Services, Mandeep Keeper Services, Market Research Services, Real Estate Services, Repair & Maintenance Services, Security Services, and Telephone, Tours & Travel Services.

2. Denial of Credit by the Original Authority:
The Original Authority disallowed the credit on most services, except consultancy and foreign consultancy charges, stating that these services were not used in or in relation to the manufacture of final products. Penalties were also imposed on the appellants and their Senior Manager.

3. Application of Previous Tribunal and High Court Decisions:
The appellants argued that the eligibility of various credits had been settled by previous Tribunal and High Court decisions, which established that such services had a direct nexus with the manufacturing and marketing of excisable goods. They cited numerous case laws to support their claims.

4. Specific Services and Their Relation to Manufacturing and Marketing Activities:
The Tribunal reviewed previous decisions, including the case of Coca Cola India Pvt. Ltd., which allowed credit for services like advertisement, sales promotion, and market research. The Tribunal noted that these services were used in relation to business activities and had a direct impact on the manufacture of final products. The Tribunal also referenced several other cases that supported the eligibility of services such as telephone, tours & travel, business auxiliary & promotion, commission agent, event management, commercial training, banking & financial, security, and mandap keeper services.

5. Business Support Services and Their Eligibility for Credit:
A significant portion of the dispute involved Business Support Services related to logistics for delivering fully manufactured vehicles to dealers. The Tribunal noted that these services were integral to the transaction value of the final products and were used for transportation from the factory to the job worker, from the job worker to the depot, and from the depot to customers. The Tribunal found that these services were eligible for credit as they were part of the manufacturing process and transaction value, in line with Rule 10A of the Central Excise Valuation Rules, 2000. However, credits for services beyond the place of removal (depot) were not eligible.

Conclusion:
The Tribunal concluded that the denial of credit on the various input services was not justified. The services in question had been recognized in previous decisions as eligible for credit, and the principles laid down by the Hon'ble Bombay High Court in the Coca Cola India case supported the appellants' claims. The impugned orders were set aside, and the appeals were allowed, affirming the appellants' eligibility for credit on the disputed services.

Order Pronounced on 7.10.2016.

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