2018 (3) TMI 989 - AT - Central Excise

Cenvat credit - input services - Event Management Services - denial on account of nexus - Held that - the family day function, which is generally celebrated once in a year for families of the workers employed in the factory, certainly motivates the workers to enhance their productivity for the company. In that circumstance, the activity of family day function is related to business activity of the respondent - the respondent is entitled to avail the Cenvat credit of Event Management Services for family day function - appeal dismissed - decided against Revenue.

Summary

Issues: Denial of input service credit for organizing a family day function under Event Management Services category.

Analysis:
The Revenue filed an appeal against the disallowance of input service credit for organizing a family day function under Event Management Services for the period April 2010 to March 2011. The matter was adjudicated, and the Cenvat credit was disallowed, along with the imposition of penalties. The Ld. Commissioner (Appeals) later allowed the appeal in favor of the respondent, leading to the Revenue's current appeal.

The Revenue argued that the family day function is not connected to the manufacturing activity and cannot be considered a business activity. However, the respondent's advocate cited precedents, including a Tribunal judgment and a High Court decision, supporting the allowance of such credits for similar activities.

Upon hearing both parties and reviewing the records, the Member noted that the Ld. Commissioner (Appeals) correctly followed the Tribunal's judgment in a similar case of M/s Maruti Suzuki India Limited. Additionally, referencing the High Court decision in the case of Toyota Kirloskar Motor Pvt Ltd, the Member emphasized the importance of a nexus or integral connection with the manufacture of final products and the business activity to determine input service eligibility.

The Member highlighted the High Court's stance that activities like providing catering services and organizing state functions for employees are integral to the business of manufacturing final products. Drawing parallels, the Member concluded that a family day function, aimed at motivating workers to enhance productivity, is indeed related to the respondent's business activity. Consequently, the Member held that the respondent is entitled to avail the Cenvat credit for Event Management Services related to the family day function.

Ultimately, the appeal by the Revenue was found to lack merit, leading to its dismissal by the Member.