2017 (1) TMI 969 - AT - Central Excise

CENVAT credit - various services - input service in terms of Rule 2 (l) of Cenvat Credit Rules, 2004 or not? - nexus with manufacturing activity - Held that - the credit on these services cannot be denied on restrictive interpretation as adopted by the lower authorities. As already noted the appellants gave a long list of decided case laws justifying that the legal position in respect of these various input services which has been consistently and favourably settled in favour of the appellant - CENVAT credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of Cenvat credit on various services under Cenvat Credit Rules, 2004.

Analysis:
The appellant, engaged in manufacturing transformers and parts, availed Cenvat credit on services like gardening, air travel, canteen, maintenance, club membership, etc. The Revenue contended these services did not qualify as input services under Rule 2(l) of Cenvat Credit Rules, 2004. The original authority disallowed the credit and imposed a penalty, upheld by the Commissioner (Appeals).

The appellant argued that the denial lacked detailed scrutiny of each service's connection to their manufacturing activity. They provided a write-up justifying the eligibility of credit based on the nature of input services and relevant case laws. The Revenue reiterated its stance during the appeal.

The Tribunal examined each service individually: air travel for business purposes, maintenance of office equipment, credit card payments for employee expenses, car repair for official use, housekeeping for factory upkeep, club membership for business meetings, canteen services under the Factories Act, and more. The Tribunal found these services directly related to the manufacturing activity of the appellant.

Considering the appellant's detailed justifications and citing various favorable case laws, the Tribunal concluded that the denial of credit was unjustified. They referenced multiple cases where eligibility of credit on similar services was upheld, highlighting the consistent legal position. Consequently, the impugned order was set aside, and the appeal was allowed.

In summary, the Tribunal's decision emphasized the need for a detailed examination of the connection between input services and manufacturing activities. By considering the appellant's arguments, relevant case laws, and the direct relevance of the services to manufacturing, the Tribunal overturned the denial of Cenvat credit, emphasizing the importance of a thorough legal justification for such decisions.