2017 (3) TMI 842 - AT - Central Excise

CENVAT credit - Cleaning service - Agri-Horticulture services - servicing of Cars - denial on the ground that it cannot be assumed that cars are used only for activities which have nexus with the manufacture and that they could have been used for transporting personal effects of employees and for their personal use etc - Held that - such a conclusion is peremptory and based on assumptions and presumptions and without any evidence in the face of appellant s averments that the said vehicles have been used only for purposes which have nexus with the manufacturing or business activities - the said service is very much an eligible input service for the purpose of Rule 2(l) ibid. Cleaning service - Held that - The list of eligible input services given in Rule 2(l) ibid being inclusive, it is only in the nature of examples of the type of services that would be permissible and therefore, can include many more of its genre. Further, cleaning service is also not specifically excluded from Rule 2(l) as it existed during the relevant period - credit allowed. Agri-Horticulture services - Held that - credit remain allowed. Appeal allowed in toto - decided in favor of appellant.

Summary

Issues:
1. Denial of input service credit for servicing of cars
2. Denial of input service credit for cleaning service
3. Denial of input service credit for Agri-Horticulture services

Analysis:
1. The appellant challenged the denial of input service credit for servicing cars, claiming the cars were owned and used for manufacturing and business activities. The lower authority upheld the disallowance, citing potential personal use of the cars. However, the judge found this conclusion to be based on assumptions without evidence. Referring to a precedent from the Hon'ble High Court of Karnataka, it was determined that service tax paid for repair and maintenance of company vehicles qualifies as an eligible "input service." Therefore, the judge held that servicing of cars is indeed an eligible input service under Rule 2(l).

2. Regarding the denial of input service credit for cleaning service, the lower appellate authority ruled it did not fall under Rule 2(l) as it was not explicitly listed. However, the judge emphasized that the list in Rule 2(l) is illustrative and inclusive, allowing for services beyond those specifically mentioned. Since cleaning service was not excluded from the rule during the relevant period, the judge concluded that it should be considered an eligible input service.

3. The issue of denial of input service credit for Agri-Horticulture services was addressed based on a previous decision by the Tribunal in the appellant's case. Citing the precedent, the judge ruled that Agri-Horticulture services cannot be disallowed as input services. Therefore, all three services in question were deemed eligible input services under Rule 2(l) during the disputed period. Consequently, the appeal was allowed in full, entitling the appellant to any consequential benefits as per the law.

This comprehensive analysis of the judgment highlights the arguments presented, the legal reasoning applied, and the ultimate decision reached by the Tribunal in favor of the appellant on all three issues related to input service credit denial.