2017 (1) TMI 1357 - AT - Central Excise

CENVAT credit - various input services - period prior to as well as after the amendment to Rule 2 (l) ibid, w.e.f. 01.04.2011 - Held that - the disputed services are either required as mandated or obligated by law e.g. Factories Act etc. or are otherwise very much required for smooth and ancillary running of the plant and for their business activity. There is no allegation that any of the services are availed or used primarily for personal use or for consumption of any employee of the appellant. Further, even for the period after 1.4.2011, none of the services availed are barred by exclusions (A) (B) (BA) and (C) in Rule 2 (l) of the CCR, 2004 - the impugned services availed by the appellant are very much in the nature of eligible input service for the purpose of rule 2(l) of CCR 2004 - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Disputed eligibility of input services for Cenvat credit, disallowance of credits, interest, and penalty under Rule 15 (1) of Cenvat Credit Rules, 2004.

The judgment revolves around the disputed eligibility of certain input services for Cenvat credit availed by the appellant between 01-07-2010 to 31-01-2012, totaling &8377; 9,61,450. The original authority allowed credit on some services but disallowed credits amounting to &8377; 8,41,140 along with interest and a penalty of &8377; 50,000 under Rule 15 (1) of the Cenvat Credit Rules, 2004. The Commissioner (Appeals) rejected the appeal against this order, leading to the current appeal before the tribunal.

The appellant argued that various services, such as Commission Agency Service, Commercial Construction service, Cleaning and Gardening maintenance, Maintenance and Repair service, Man Power Supply service, Civil Sundry works, Outdoor Catering input service, and Rent-a-cab Service, were essential for their manufacturing operations. They highlighted that these services were either legally mandated or crucial for the smooth functioning of their plant, without being primarily for personal use or employee consumption. The appellant also cited a Tribunal's Final Order in a similar case to support their contentions.

After considering the facts and circumstances of the case, the tribunal found that the disputed services were necessary for the appellant's industry operations, either due to legal obligations like the Factories Act or for ancillary running of the plant. The tribunal noted that none of the services were excluded under Rule 2 (l) of the Cenvat Credit Rules, 2004, for the period after 1.4.2011. Consequently, the tribunal concluded that the impugned services qualified as eligible "input services" under Rule 2(l) of the CCR 2004, and hence allowed the appeal in favor of the appellant.