2018 (11) TMI 1446 - AT - Central Excise

CENVAT Credit - input services - Landscaping Services - Catering Services - period April, 2011 to January, 2014 - Held that - The Hon ble jurisdictional High Court in the case of Wipro Ltd. 2017 (5) TMI 188 - MADRAS HIGH COURT after considering the rival contentions as well as decisions of other fora, has held Housekeeping/Landscaping Services to be eligible input services - credit allowed. Canteen services - Held that - The issue stands settled in the case of M/s Reliance Industries Ltd. 2016 (8) TMI 123 - CESTAT MUMBAI , wherein the Mumbai Bench of this Tribunal, after considering the decisions of various fora, has inter alia held Outdoor Catering Service to be eligible for credit for the period after 01.04.2011 - credit allowed. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Eligibility of Landscaping/Gardening Services and Catering Services for CENVAT Credit
- Nexus of Canteen Services with manufacturing activities
- Allegation of improper and ineligible Credit availed on services
- Appeal against Order-in-Appeal upholding lower adjudicating authority's decision
- Waiver of penalty due to no mala fide intention

Analysis:

Issue 1: Eligibility of Landscaping/Gardening Services and Catering Services for CENVAT Credit
The appellant, a manufacturer of Sanitary Wares, availed CENVAT Credit on Landscaping and Catering Services. The dispute centered around whether these services qualified as "input services" under the CENVAT Credit Rules. The appellant argued citing a High Court decision that Housekeeping and Landscaping Services were eligible for CENVAT Credit, emphasizing the importance of statutory obligations. The Tribunal concurred with the High Court's ruling, stating that expenses on maintaining factory premises in an eco-friendly manner could be considered part of the final product's cost, making these services eligible for CENVAT Credit.

Issue 2: Nexus of Canteen Services with manufacturing activities
Regarding Canteen Services, the appellant relied on a Mumbai Tribunal decision that Outdoor Catering Services were eligible for credit post-April 2011. The Tribunal found the Mumbai Tribunal's decision applicable to the present case, thus allowing CENVAT Credit for Canteen Services as well.

Issue 3: Allegation of improper and ineligible Credit availed on services
The Department alleged that the Credit availed on Landscaping and Catering Services was improper and ineligible. However, based on the High Court and Tribunal decisions, the Tribunal ruled in favor of the appellant, stating that the Order-in-Appeal was unsustainable and set it aside.

Issue 4: Appeal against Order-in-Appeal upholding lower adjudicating authority's decision
The appellant had appealed against the Order-in-Appeal, which upheld the lower adjudicating authority's decision confirming the proposals made in the Show Cause Notices. The Tribunal overturned this decision based on the legal precedents and allowed the appeals with consequential benefits.

Issue 5: Waiver of penalty due to no mala fide intention
The appellant argued that there was no mala fide intention to evade payment or duty, as they had been regularly filing returns and believed the Credit availed was in order. The Tribunal did not find any mala fide intention and granted the waiver of penalty.

In conclusion, the Tribunal allowed the appeals, finding the appellant eligible for CENVAT Credit on Landscaping/Gardening Services, Canteen Services, and dismissing the penalty due to the absence of mala fide intent. The judgment emphasized the importance of statutory compliance and the applicability of legal precedents in determining the eligibility of services for CENVAT Credit.