2019 (3) TMI 178 - AT - Central Excise

CENVAT Credit - input services - security guard for providing security of guest house - cycle stand and residential premises outside the factory premises - Held that - The scope for any service to be called as the input service is vide enough, as the definition takes into its ambit the words directly or indirectly in or in relation to manufacture of final product and clearance of final product . Thus, the definition is not at all restrictive in nature confining itself to the services specifically availed for manufacturing activities, but stands extended to the services, which are having any nexus either direct or indirect to the activity of manufacture of the dutiable product. Hon ble High Court of Andhra Pradesh in the case of CCE, Hyderabad vs. ITC Ltd. 2011 (11) TMI 516 - ANDHRA PRADESH HIGH COURT has held that where the manufacturer with an objective to have the instant availability of the work force involved in the process of manufacture provides the facilities as that of accommodation any services utilized for the purpose have a nexus, though indirectly to the manufacturing activity. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of Cenvat Credit for service tax paid on security guard services outside factory premises

Analysis:
1. The appellant, engaged in manufacturing ball bearing and axle-boxes, availed Cenvat Credit on duty paid and input services. The Department issued a show cause notice proposing disallowance of service credit amounting to ?1,21,293 for security guard services outside the factory premises. The proposal was confirmed initially but rejected in the appeal under challenge.

2. The appellant cited precedents where similar issues were decided in their favor by the Tribunal. The services in question were in the immediate vicinity of the place of manufacture, unlike in previous cases. The appellant argued that the services qualified as input services and requested the appeal to be allowed.

3. The Department rebutted the appellant's arguments by relying on a Commissioner (Appeals) finding and Board's letter dated 20th September, 2010. They justified the order by referring to decisions of Tribunal Chennai and Tribunal Delhi. The Department requested the appeal to be dismissed.

4. The definition of "input service" was crucial in determining whether the impugned services qualified. The definition includes services used directly or indirectly in relation to the manufacture of final products. The scope is not restrictive, extending to services with any nexus to manufacturing activities. Legal precedents were cited to support the broad interpretation of input services.

5. The Tribunal observed that the impugned services had a nexus, albeit indirectly, to the manufacturing activity. Citing decisions of co-ordinate Benches, the Tribunal set aside the order under challenge and allowed the appeal.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision on the denial of Cenvat Credit for security guard services outside the factory premises.