2018 (8) TMI 411 - AT - Central Excise

CENVAT Credit - various input services - Cooking and providing Food - Cleaning and washing for worker s Canteen - other services used to provide food in the Canteen - Professional Fee paid for selection of Manager - Shifting burnt blade with ash to area outside factory premises - Renovation of Union room - Held that - Appellant are required to maintain the Canteen under Section 46 of the Factories Act, 1948 - reliance placed in the case of Easun MR Tap Changers Pvt. Ltd. Vs. C.C.E & ST 2016 (9) TMI 363 - CESTAT CHENNAI , where it was held that anteen is an integral part of the factory and clean maintenance of the factory including its precincts are a statutory requirement under Section 11 of the Factories Act, 1948. Therefore, this service has to be treated as a service used by the manufacturer in or in relation to the manufacture of final product as without complying with the said provisions of the Factories Act, 1948, manufacturing operations are not possible - credit allowed. Professional Fee paid for selection of Manager - Held that - Issue decided in the case of JAYPEE SIDHI CEMENT PLANT VERSUS C.C.E & S.T., JABALPUR 2016 (7) TMI 348 - CESTAT NEW DELHI , where it was held that the posting of Doctors and Nursing staff is at the behest of the appellant in order to comply with statutory obligation under the Factories Act, 1948 and Mines Act 1952, the same cannot be considered as the procurement from personal consumption of the workers - credit allowed. Shifting burnt blade with ash to area outside factory premises - Held that - Issue is covered by the decisions of the Tribunal in the cases of Godrej & Boyce Manufacturing Company Limited Vs. CCE Chennai 2016 (9) TMI 538 - CESTAT CHENNAI , where it was held that credit on same is to be allowed - credit allowed. Renovation of Union room - Held that - The renovation of Union room is not covered within the inclusive clause of definition. It cannot be said that the said service was used in or in relation to the manufacture of the final product - denial of credit on renovation work undertaken in recreation room for separate union room along with interest is upheld - demand upheld. Appeal allowed in part.

Summary

Issues:
- Denial of Cenvat credit on various input services
- Eligibility of Cenvat credit on canteen services
- Eligibility of Cenvat credit on professional fee for manager selection
- Eligibility of Cenvat credit on shifting burnt blade with ash
- Denial of Cenvat credit on renovation work in the recreation room for a separate union room

Analysis:
The appeal was filed against the Order-in-Appeal passed by the Commissioner of CGST & CX, Kolkata, denying Cenvat credit of a specific amount along with interest and imposing a penalty. The appellants, engaged in manufacturing Safety Razor Blades and Cold Rolled Stainless Strip, contested the denial of credit on various input services. The Adjudicating authority allowed credit on services by a Cleaning and Forwarding Agent but disallowed a significant amount. Both the Revenue and the appellant appealed, leading to the Commissioner (Appeals) upholding the Adjudication Order.

The appellant argued that credit was wrongly denied on input services, citing precedents where the Tribunal allowed credit on similar services. The denial of credit on Input Services related to the Canteen, such as cooking, providing food, cleaning, and washing, was challenged. The appellant justified the necessity to maintain the Canteen under the Factories Act, 1948. The Tribunal's decisions in Hindustan Coca Beverages Pvt. Ltd. and Easun MR Tap Changers Pvt. Ltd. supported the appellant's entitlement to credit on Canteen Services.

However, the eligibility of Cenvat credit on the professional fee paid for the selection of a Manager was disputed. The Tribunal's decisions in Intregra Software Service Pvt. Ltd. and Jay Pee Sidhi Cement Plant were referenced to argue against the denial of credit on this input service. Similarly, the eligibility of Cenvat credit on shifting burnt blade with ash outside the factory premises was contested, citing precedents like Godrej & Boyce Manufacturing Co. Ltd. and Indian Additive cases.

Regarding the denial of Cenvat credit on renovation work in the recreation room for a separate union room, it was argued that such credit was necessary for ensuring continuous production. However, the judgment clarified that the renovation of the union room did not fall within the inclusive clause of the definition, as it was not directly related to the manufacture of the final product. Consequently, the impugned Order was modified to uphold the denial of credit on renovation work while setting aside the denial of credit on other issues and penalty. The appeal was disposed of accordingly.