2018 (1) TMI 418 - AT - Central Excise

CENVAT credit - input services - Services rendered at Medical Centre - Held that - There are no findings from the lower authorities regarding the location of the medical centre and primary use of the health centre. If the said medical centre is not located in the factory or if the said medical centre is primarily used by the families of the employees and not by the personal engaged in the factory then the credit would not be admissible - matter is remanded to the original adjudicating authority to determine these facts and decide the issue afresh. Works contract construction services - fireproofing work undertaken in respect of Fluidized Catalytic Cracking unit, DHDS (De-hydro De-blending unit, inside the refinery and the water proofing work undertaken in certain building in the factory premises - whether the said service comes within the ambit of input service or not? - Held that - the services of fireproofing and waterproofing of existing structures does not quality as construction or execution of works contract of the building or civil structure or part thereof. The demand in respect of fireproofing work and waterproofing work is therefore, set aside - dismantling of Sulphur Pelletizer Shed is also does not amount to construction or execution of works contract of the building or civil structure or part thereof and thus would not be hit by the exclusion clause (A) of Rule 2 (l) of Cenvat Credit Rules, 2004 - demand set aside. CENVAT credit - Help Desk Assistant used for repairs carried out at the colony adjacent to refinery - Held that - The definition post 01/03/2011 specifically excludes services used primarily for personal purposes. Therefore, Help desk assistant at estate has no relation to the activity of manufacture in the factory premises and thus credit of the same cannot be permitted, the same is denied. CENVAT credit - training given to employees about investment of salaries and pension plans - Held that - the training given to employees in respect of investment of salaries and pension plans is nothing to do with the manufacturing process and is mainly for personal use of consumption of employees. It is thus not admissible as input service. Appeal allowed in part.

Issues Involved:
1. Denial of credit on services rendered at the Medical Centre.
2. Denial of credit on Works Contract and Construction Services.
3. Denial of credit on Help Desk Assistant at Estate.
4. Denial of credit on Training given to employees.

Detailed Analysis:

1. Denial of Credit on Services Rendered at the Medical Centre:
The appellant argued that services at the medical centre are essential as per Rule 73(W) of the Maharashtra Factory Rules, 1963, mandated by Section 41-C of the Factories Act, 1948, for factories carrying on hazardous processes. They contended that these services are indirectly related to manufacturing and thus should be covered under the main part of the definition of "input service," which should prevail over the exclusion clause. However, the Tribunal noted that health services primarily for personal consumption are excluded from the definition of input service as per Rule 2(l)(C) of CCR, 2004. The Tribunal found that there were no clear findings from lower authorities regarding the location and primary use of the medical centre. Thus, the matter was remanded to the original adjudicating authority to determine these facts and decide the issue afresh.

2. Denial of Credit on Works Contract and Construction Services:
The appellant claimed credit for fireproofing and waterproofing services used in various units within the refinery, arguing these services are directly related to manufacturing activities. The Tribunal noted that services of fireproofing and waterproofing existing structures do not qualify as construction or execution of works contract of a building or civil structure. Therefore, the demand in respect of fireproofing and waterproofing work was set aside. Similarly, dismantling of the Sulphur Pelletizer Shed was found not to amount to construction or execution of works contract of a building or civil structure, and thus, the demand on this count was also set aside.

3. Denial of Credit on Help Desk Assistant at Estate:
The appellant argued that the Help Desk Assistant service, used for repairs at the colony adjacent to the refinery, has an indirect relation to manufacturing. However, the Tribunal found that this service is not directly or indirectly related to the manufacturing process. The Tribunal noted that the decision in the case of Manikgarh Cement, relied upon by the appellant, pertained to the definition of input services prior to 01/03/2011 and was thus distinguishable. The Tribunal held that the Help Desk Assistant service at the estate has no relation to the manufacturing activity in the factory premises and denied the credit.

4. Denial of Credit on Training Given to Employees:
The appellant claimed credit for training fees paid to experts providing guidance to employees about investment of salaries and pension plans. The Tribunal found that this training is primarily for personal use and consumption of employees and is not related to the manufacturing process. The Tribunal noted that the exclusion clause 1(C) includes services primarily for personal use or consumption of employees. Therefore, the credit for training fees was denied.

Conclusion:
The Tribunal partially allowed the appeal, setting aside the demands related to fireproofing, waterproofing, and dismantling of the Sulphur Pelletizer Shed. However, it remanded the issue of the medical centre for further fact-finding and denied the credits for the Help Desk Assistant service and training fees. The demand of penalty was confirmed with respect to the denied credits.

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