2019 (4) TMI 158 - AT - Central Excise

CENVAT Credit - input services - cleaning service - maintenance and repair services - expenditure for works in residence of director was rendered in the factory or its property - Held that - Each of those services are in conformity with the definition of inputs in rule 2(l) of CENVAT Credit Rules 2004 - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Dispute over CENVAT credit denial for various services including housekeeping, civil works, travel agent services, and commission agents.

Analysis:
1. The dispute in this case revolves around the denial of CENVAT credit to M/s S H Kelkar & Co Pvt Ltd for various services, including housekeeping expenses, civil works, travel agent services, and commission agents. The initial show-cause notice was issued for the denial of credit amounting to ?22,35,336 on taxes included in the consideration for these services. The first appellate authority allowed the credit for services rendered by commission agents but denied ?4,39,615, leading to appeals from both the Revenue and the appellant.

2. The Revenue appealed against the dropping of demand for ?18,58,473, while the appellant challenged the denial of credit for cleaning service, maintenance, repair services, and works in the director's residence within the factory premises. The lower authorities denied the CENVAT credit by stating that the post-manufacturing costs were not covered under the CENVAT Credit Rules and the nexus between the services and manufacturing activity was not satisfactorily evidenced by the appellant.

3. The appellant relied on various precedents, including decisions from the Tribunal and the High Court, to support their claim for CENVAT credit on these services. The Tribunal's decisions in cases like Indian Additives Ltd and Vidyut Metallics Pvt Ltd were cited to argue that services like housekeeping of factory premises and travel agent services are eligible for CENVAT credit. Additionally, the absence of any specific bar on availing CENVAT credit for such works until 2011 under the CENVAT Credit Rules 2004 was highlighted.

4. After considering the arguments from both sides and analyzing the definition of inputs under rule 2(l) of the CENVAT Credit Rules 2004, the Tribunal found that each of the services in question fell within the definition of inputs. Consequently, the impugned order denying the CENVAT credit was set aside, allowing the appeal of M/s S H Kelkar & Co Pvt Ltd while dismissing the Revenue's appeal. The decision was made in accordance with the established legal principles and the litigation policy of the Government of India.