2018 (12) TMI 725 - AT - Central Excise

CENVAT Credit - input services - air travel agent services - hotel services - debit and credit card services - Held that - The appellant has now produced before the Tribunal, the documents with regard to air travel and hotel services to argue that these services were used for official purposes only. On going through this document, it is seen that the minutes of meeting would show that the officers of the company are required to attend the LSPM Meeting. This meeting is intended to plan the strategy and the production requirement. The list of participants who have attended the meeting also is furnished. All these would indicate that appellant has availed such services for official purposes only. However, since the documents have not been verified, the matter requires to be remanded to the adjudicating authority, who shall verify whether the services of air travel agent and hotel services are availed for official purposes. Debit and credit card services - Held that - The Ld. DGM of the Company has explained that credit / debit card services (service tax paid for transactions using such card) was availed when the customers had used cards for making payment. The said activity is definitely related to manufacturing activity and the disallowance stating that these have no nexus with manufacturing activity is incorrect - credit allowed. Air travel agent services - accommodation services - Held that - The errors in calculation with respect to all these three services are to be considered afresh by the adjudicating authority. The reconsideration of calculation errors shall be confined to services impugned in this appeal and services remanded by Commissioner (Appeals) only. Appeal allowed in part and part matter on remand.

Summary

Issues: Disallowance of credit on air travel agent services, hotel services, and debit and credit card services.

Analysis:
1. The case involved the appellants, manufacturers of lubricants, holding Central Excise registration, who availed CENVAT Credit of service tax paid on various services based on ISD Invoices from their Branch Offices. The department contended that the credit on certain services lacked nexus with manufacturing activity, leading to a show cause notice for recovery and penalties. The original authority partially allowed credit, while the Commissioner (Appeals) partly upheld the appeal and remanded certain issues. However, credit for air travel agent services, hotel/accommodation services, and debit/credit card services was disallowed, prompting the appeal to the Tribunal.

2. The appellant argued that air travel and accommodation services were for official purposes, supported by documents showing participation in meetings like Lube Sales Production Meeting (LSPM) crucial for production planning. They contended that post-demonetization, debit/credit card transactions were significant for manufacturing activities, citing relevant case laws. The appellant also highlighted calculation errors in credit availed, seeking corrections and emphasizing that demand should be on the Head Office, not the appellant.

3. The respondent supported the disallowance, stating lack of evidence for official use of services and non-submission of documents for debit/credit card services. They suggested remand for verification of documents and consideration by the adjudicating authority, dismissing the appellant's case law references.

4. Upon review, the Tribunal found the appellant's documents indicated official use of air travel and hotel services for production-related meetings, necessitating verification by the adjudicating authority. For debit/credit card services, the Tribunal disagreed with the disallowance, recognizing their relevance to manufacturing activities. The matter was remanded for reconsideration of credit eligibility and calculation errors, limited to the services in question.

5. Consequently, the appeal was partly allowed, and partly remanded for further assessment by the adjudicating authority, ensuring correct consideration of credit eligibility and calculation errors within the specified services, as per the directions provided.