2019 (11) TMI 47 - AT - Central Excise

CENVAT Credit - input services - denial of credit of service tax paid on input services transferred to them by their head office through ISD invoice in respect of (a) Air Travel services, (b) Repair and Maintenance services and (c) Annual Maintenance Charges (AMC). Air travel services - denial on the ground that the travel was for personal benefit of employees - HELD THAT - It is not in dispute that air travel services are not entirely excluded from the benefit of Cenvat credit. They get excluded only if they are meant for personal use of officers. This fact has not been established by the revenue in the SCN or in the OIO or OIA. From the sample invoices which have been produced, the travel in question was for official work. Accordingly, I allow credit of service tax paid on air travel services. Repair and maintenance services - AMC services - HELD THAT - Undisputedly both these pertain to contracts which involved both supply of material and rendition of services and therefore, can be considered as works contract services. However, the input invoices paid the amounts under different heads. They have not paid it under works contract services. The classification of any goods or services at the input invoice stage cannot be altered while deciding eligibility of credit to the recipient. Therefore, the classification cannot be altered in this case as well - In this case, the works contract services pertain to, as was seen by me from the sample invoices, either maintenance of office equipment or cleaning of carpets, etc., which were used at the head office - the appellant is entitled to Cenvat credit on these services as well. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of Cenvat credit on air travel services, repair and maintenance services, and annual maintenance charges.

Analysis:
The appellant, a manufacturer of Cement and Clinker, distributed credit of service tax availed in their head office among their factories through an ISD invoice. A Show Cause Notice was issued seeking to deny credit on input services transferred through ISD invoice related to air travel services, repair and maintenance services, and AMC. The original authority disallowed the credit, ordered recovery under Rule 14 of CCR, 2004, confirmed interest recovery, and imposed a penalty. The first appellate authority upheld the original order, leading to the current appeal.

The appellant argued that air travel services were for official purposes and not for personal use, hence should not be excluded from input services. They relied on the definition of input service under Rule 2(l) of CCR, 2004. The department failed to prove that the travel was solely for personal benefit. The appellate authority's decision to deny credit was based on the appellant's failure to prove it was not for personal work. The Tribunal disagreed, stating that the burden of proof lies with the department, and since no evidence was provided to establish personal use, credit for air travel services was allowed.

Regarding repair and maintenance services and AMC, they were considered works contract services due to involving both material supply and services. However, the invoices did not classify them as works contract services. The Tribunal ruled that the classification at the invoice stage cannot be altered for credit eligibility. Not all works contract services are excluded from input services; only those related to construction or laying foundations are excluded. The services in question were for maintenance of office equipment and carpets, not construction-related, making the appellant eligible for credit. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.