2018 (2) TMI 894 - AT - Central Excise

CENVAT credit - input services - Repair and Renovation of their Paint Shop - Garden Maintenance and Cutting of Trees - Safety issues - House Keeping and Cleaning - Erection, Commissioning and Installation Service - Health service - Driver s TA charges services - Rule 2(l) of the Cenvat Credit Rules 2004 - Held that - As per Rule 2(l) of Cenvat Credit Rules 2004 for renovation services assessee is entitled to avail cenvat credit - credit allowed. Garden Maintenance and Cutting of Trees - Held that - to run the factory it is compulsory for the assessee to maintain garden and require periodical cutting of trees - credit allowed. Safety issues services - Held that - safety of the employees/workers is essential part of their manufacturing activity - the employees of the firm cannot work in their factory and without workers factory cannot run - credit allowed. Housekeeping and Cleaning Service - Held that - Housekeeping and Cleaning is an integral part of the manufacturing activity, without availing that services full efficiency of the workers cannot be obtained - credit allowed. Erection Commissioning and Installation Service - Held that - The said service has been availed by the assessee for painting of excavators which is the final product manufactured by the assessee. Without painting, these excavators cannot be sold by the assessee - credit allowed. Health Service - Held that - the Health Services are integral part of manufacturing activity - Without said facility workers do not feel safe in working in the factory - credit allowed. Driver TA charges service - Held that - The TA charges paid to the Driver for the work of factory are a part of manufacturing activity of the appellant and directly related to the manufacturing activity - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against denial of Cenvat credit on various services.

Analysis:
The case involved an appeal against an order denying Cenvat credit on different services availed by the appellant, a manufacturer of Construction Equipments and Excavators. The Revenue contended that certain services were not 'Input Services' as per Rule 2(l) of the Cenvat Credit Rules 2004, leading to the issuance of a show-cause notice. The Commissioner (Appeals) allowed credit on some services but disallowed it on others, prompting both sides to appeal.

Repair and Renovation of Paint Shop:
The appellant claimed Cenvat credit for repair and renovation of the Paint Shop. The Revenue argued that these services were construction services. However, the Tribunal noted that the charges were specifically for renovation/repair, making the appellant eligible for Cenvat credit under Rule 2(l) of the Cenvat Credit Rules 2004.

Garden Maintenance and Cutting of Trees:
The appellant was required by the Pollution Control Board to maintain a garden on their premises, including periodic tree cutting. The Tribunal recognized these services as integral to the manufacturing activity, allowing Cenvat credit based on Rule 2(l) of the Cenvat Credit Rules 2004.

Safety Issues Services:
Safety issues were deemed essential for the employees to work in the factory, making it a crucial part of the manufacturing activity. Consequently, the Tribunal ruled in favor of allowing Cenvat credit on safety issue services under Rule 2(l) of the Cenvat Credit Rules 2004.

Housekeeping and Cleaning Service:
The Revenue contended that housekeeping and cleaning were not part of the manufacturing activity. However, the Tribunal emphasized the importance of cleanliness for a conducive working environment, linking it to the efficiency of workers. Hence, Cenvat credit was allowed for these services under Rule 2(l) of the Cenvat Credit Rules 2004.

Erection Commissioning and Installation Service:
These services were availed for painting excavators, the final product. The Tribunal recognized their significance in the manufacturing process, leading to the allowance of Cenvat credit for these services.

Health Service:
Maintaining medical facilities like first aid boxes was crucial for minor accidents in the factory, ensuring worker safety. The Tribunal considered health services as integral to the manufacturing activity, permitting Cenvat credit under Rule 2(l) of the Cenvat Credit Rules 2004.

Driver TA Charges Service:
TA charges paid to drivers for factory work were directly related to the manufacturing activity. Consequently, the Tribunal upheld the appellant's right to claim Cenvat credit on these services.

In conclusion, the Tribunal found in favor of the appellant, allowing Cenvat credit on the disputed services. The appeal by the appellant was allowed, while the Revenue's appeal was dismissed.