2019 (2) TMI 858 - AT - Central Excise

CENVAT Credit - input services - Chartered Accountancy Services - IT service and manpower service for providing maintenance staff at their Mumbai Headquarter - period July, 2016 to March 2017 - denial on the ground that the said services were not used in the manufacturing unit of the appellant which is located in Bharuch, Gujarat - Held that - It is seen that the CA services and management consultancy services have been claimed to be used for statutory audit and accounting of the operation. Thus, these services are specifically included in the definition of input services. Similarly, insurance advisory service has been claimed to be used for insurance of goods. It is seen that both these services are otherwise covered in the inclusive part of definition of input services. The place where these services have been obtained - the said place is not registered as input service distributor - Held that - It is seen that the requirement for distribution of input credit would arise only if there are more than one factory premises in respect of which the input services are received at a place. In the instant case, the appellant have only one factory premises and thus, the question of distribution of input credit does not arise. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of Cenvat Credit, demand of interest, and imposition of penalty.

Analysis:
The appeal was filed against the denial of Cenvat Credit, demand of interest, and penalty imposition. The appellant availed CENVAT Credit on input services for Chartered Accountancy Services, IT service, and manpower service. The denial was based on the argument that these services were not used in the manufacturing unit of the appellant located in Gujarat. The counsel argued that there was no restriction on the use of services within the factory premises in the definition of input services. It was pointed out that similar issues were decided in a previous Tribunal order. The appellant claimed that the services were essential for their operations and should not be denied.

Regarding specific services like Chartered Accountancy, management consultancy, and insurance brokerage advisory, the benefit was allowed for Chartered Accountancy services in the Order-in-Original. The management consultancy services were for acquiring new plants. The counsel argued that these services fell within the inclusive part of the definition of input services. It was emphasized that since the appellant had only one factory, there was no need for registration of the Head Quarter as an input service distributor. The services were used for statutory auditing, certification of accounts, and insurance of goods, justifying the claim for credit.

The impugned order denied credit on certain services based on the place where they were obtained and the lack of registration as an input service distributor. The Tribunal found that the services in question, including Chartered Accountants, management consultants, and insurance advisory, were used for essential purposes like statutory audit, accounting operations, and insurance of goods. These services were considered part of the definition of input services. Since the appellant had only one factory premises, the issue of distribution of input credit did not arise. Consequently, the Tribunal set aside the impugned order and allowed the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, allowing the Cenvat Credit for the disputed services and overturning the denial based on the location of service usage and registration as an input service distributor. The judgment highlighted the importance of the services for the appellant's operations and clarified the applicability of input service definitions in such cases.