2018 (2) TMI 887 - AT - Central Excise

CENVAT credit - utilization of security service for the hostel maintained at their factory at a remote location - penalty u/r 15(2) of CCR 2004 read with section 11AC of CEA 1944 - Held that - reliance placed in the case of Reliance Industries Ltd. Versus Commissioner of CE & ST (LTU) , Mumbai 2015 (11) TMI 100 - CESTAT MUMBAI , where it was held that Appellant has various factories which are situated in remote areas. In order to run the factories smoothly, without any stoppages, they had constructed township/residential colonies near factory premises and accommodated the employees working in such factories - CENVAT credit is maintainable - appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against recovery of tax credit for security services utilized for hostel maintenance at a remote location.

Analysis:

1. Burden of Recovery: The appellant, M/s Gabriel India Limited, sought relief from the burden of recovering tax credit amounting to &8377; 12,22,678 availed between January 2008 and February 2012 for utilizing 'security service' for a hostel at their factory's remote location. The penalty imposed under rule 15(2) of CENVAT Credit Rules, 2004, along with interest, was also challenged. The Commissioner of Central Excise (Appeals) upheld the original authority's decision, leading to the current appeal.

2. Appellate Authority's Rulings: The first appellate authority relied on various Tribunal decisions and the Bombay High Court's judgment to deny the credit availment. Notably, the case of M/s EXL Service Com (I) Pvt Ltd v. Commissioner of Central Excise & Service Tax (LTU), New Delhi was cited, which referred to the Bombay High Court's decision in Commissioner of Central Excise v. Manikgarh Cements. The appellant's counsel, however, referenced the Tribunal's decision in Reliance Industries Ltd v. Commissioner of Central Excise & Service Tax (LTU), Mumbai.

3. Tribunal's Decision: After hearing both sides and examining the records, the Tribunal noted that the judgment in the case of Manikgarh Cements was distinguished in the Tribunal's determination in the case of Reliance Industries Ltd, under similar circumstances as the present appeal. The Tribunal emphasized that a decision is authoritative only on the issues raised and decided therein, not on matters not presented or considered. Consequently, the Tribunal set aside the impugned order and allowed the appeal based on the precedent set by the Tribunal in the Reliance Industries Ltd case.

This detailed analysis of the judgment highlights the legal arguments, precedents, and the Tribunal's reasoning leading to the decision in favor of the appellant, M/s Gabriel India Limited, regarding the recovery of tax credit for security services utilized for hostel maintenance at a remote location.