2016 (11) TMI 828 - AT - Central Excise

Denial of CENVAT credit - Housekeeping services - Held that - the jurisdictional High Court in the case of Commissioner of Central Excise and Service Tax Versus M/s. Rane TRW Steering Systems Ltd. 2015 (4) TMI 704 - MADRAS HIGH COURT have held that such services are eligible for cenvat credit. Therefore, respectfully following the ratio laid down in the case, I allow cenvat credit on housekeeping services on the ground that such services form an integral part in the manufacture of final products - Penalty set aside - appeal allowed.

Summary

Issues:
Denial of Cenvat credit on "Housekeeping services" used for factory premises maintenance.

Analysis:
The appeal involved the denial of Cenvat credit on housekeeping services used for maintaining factory premises. The Appellant argued that such services were essential to comply with statutory obligations under the Factories Act, 1948, and other environmental laws. It was contended that any costs incurred for maintaining cleanliness added to the final product's cost, making it an eligible input service. The Appellant cited various decisions supporting their stance, emphasizing the importance of housekeeping services for manufacturing activities. Additionally, a specific case, M/s Indian Additives, was referenced where credit for housekeeping services was allowed, further strengthening the argument.

On the contrary, the Respondent reiterated the stance taken by the Commissioner (Appeals), highlighting that the demand for a specific period had already been paid by the Appellants. The Respondent argued that housekeeping services lacked a direct nexus to the manufacturing process of final products, citing precedents where Cenvat credit was denied for services deemed unrelated to manufacturing activities. The Respondent relied on case laws such as Vikram Ispat Vs CCE, Raigad and CCE Nagpur Vs UltraTech Cement Ltd. to support their position.

The Appellant clarified that even though they paid the demand for the period post-April 2011, it was done under protest, as they considered the period from January to November 2011 as the actual dispute period. The Appellant highlighted the evolving legal landscape, indicating that they now relied on favorable decisions from the Hon'ble Madras High Court and the Tribunal to support their claim for Cenvat credit on housekeeping services.

Upon reviewing the arguments and case records, the Judicial Member found merit in the Appellant's contentions. Citing the case of Indian Additives and the decision of the jurisdictional High Court in the case of Rane TRW Steering Systems, it was held that housekeeping services were integral to the manufacturing process of final products. Consequently, Cenvat credit on housekeeping services was allowed, aligning with the precedents and legal principles established by the Hon'ble High Court of Madras and previous decisions. The penalty was also set aside, and the appeal was allowed in favor of the Appellant. The operative part of the order was pronounced in open court on 06.09.2016.