2009 (4) TMI 129 - AT - Service Tax

Cenvat Credit Input Service - (i) Colony security service (ii) Transport service for employees (iii) Guest house maintenance service Held that - the scope of the input service is very wide to cover many activities which were indirectly used in or in relation to manufacture of final products. Moreover, the impugned services in the present appeal are also covered in favour of the appellants in various decisions Cenvat credit allowed.

Summary

Issues:
- Availment of Cenvat credit on service tax for colony security service, transport service for employees, and guest house maintenance service.

Analysis:
The appeal was filed against Order-in-Appeal No. 28/2008, challenging the denial of Cenvat credit by the Commissioner of Central Excise, Customs & Service Tax (Appeals) related to various services. The appellants availed the credit for colony security service, transport service for employees, and guest house maintenance service, but the revenue contended that they were not entitled to claim Cenvat credit on these services as input service. The Original authority confirmed the demand of credit taken and imposed a penalty of Rs. 75,000. The Commissioner (Appeals) upheld this decision, stating that these services were not related to the business activity of the appellants.

Upon review of the case records and the definition of 'input service' in the Cenvat Credit Rules, 2004, the Technical Member noted the broad scope of the definition, encompassing services used indirectly in relation to the manufacture of final products. The appellants argued that the colony security service was essential due to the obligation under the Companies Act to provide accommodation to employees, making them entitled to Cenvat credit. They also emphasized that the transport service for employees and guest house maintenance service were related to business activities, justifying the credit claim. The appellants cited relevant case laws supporting their position, including cases where service tax paid on similar services was deemed eligible for credit.

After careful consideration, the Technical Member found that the definition of input service was broad enough to cover activities indirectly used in or related to the manufacture of final products, including the services in question. Citing previous decisions supporting the appellants' position, the appeal was allowed, granting consequential relief in favor of the appellants.