2018 (5) TMI 860 - AT - Central Excise

100% EOU - CENVAT credit - canteen service - freight service - insurance policy - transportation charges - waster disposal - translation fee - membership subscription - Held that - as far as canteen services are concerned, the Larger Bench of the Tribunal in the case of Wipro Ltd. 2018 (4) TMI 149 - CESTAT BANGALORE has held that the outdoor catering service is not eligible for input service credit post-amendment dt. 01/04/2011 vide N/N. 3/2011 dt. 01/03/2011 - the canteen services post 01/04/2011 is disallowed and prior to 01/04/2011 is allowed. Freight charges - Held that - in the case of export, port is the place of removal and therefore the freight charges fall in the definition of input service and the appellant is eligible for the CENVAT credit - credit allowed. Insurance policy - Held that - as far as insurance policy of plant and machinery is concerned, the appellant is eligible for the credit - with regard to insurance policies of the employees are concerned after 01/04/2011, it has been specifically excluded from the definition of input service as prescribed in Rule 2(l) of CCR, 2004. Transportation charges - Held that - since these charges are used for pick up and drop of the employees engaged in the production and therefore, it falls in the definition of input service - credit allowed. Waste disposal - Held that - waste disposal fall in the definition of input service as it related to business. Therefore appellant is entitled for the CENVAT credit - credit allowed. The appeal is partly allowed but for the purpose of verification of the document, the matter is remanded to the original authority for examining and verifying the documents - appeal allowed in part.

Summary

Issues:
Denial of CENVAT credit for input services including canteen service, freight service, insurance policy, transportation charges, waste disposal, translation fee, and membership subscription.

Analysis:
The appeal was against the order denying CENVAT credit for various input services used by a 100% EOU manufacturer and exporter of rubber contraceptives. The original authority disallowed credit on certain services for goods cleared to DTA, holding them ineligible. The appellant contended that the disallowed credit was essential for their manufacturing activity and business, citing relevant case laws. The Commissioner(Appeals) upheld the denial, leading to the present appeal.

The appellant argued that the impugned order contradicted binding judicial precedents, emphasizing that the input services in question fell within the definition of input services based on Tribunal and High Court decisions. Specifically, they highlighted the eligibility of canteen expenses, freight charges, insurance policy, transportation charges, and waste disposal charges as input services, supported by relevant case laws.

Regarding canteen expenses, the appellant referenced precedents to establish their eligibility as input services. Similarly, for freight charges, insurance policy, transportation charges, and waste disposal, the appellant relied on decisions affirming their status as input services. The appellant's submissions were aimed at demonstrating the eligibility of these services for CENVAT credit.

After considering both parties' arguments and the cited decisions, the Judicial Member found that canteen services post-April 2011 were not eligible for input service credit, as per a Tribunal decision. However, pre-April 2011 canteen services were allowed. Freight charges were deemed eligible as they related to the place of removal in export cases. Insurance policy on plant and machinery was eligible, but coverage for employees post-April 2011 was excluded. Transportation charges for employee pick-up and drop were considered eligible, as were waste disposal charges related to business activities.

Consequently, the appeal was partly allowed, with a remand to the original authority for document verification and a decision on the appellant's CENVAT credit claim based on the cited decisions.