2021 (12) TMI 617 - AT - Central Excise

CENVAT Credit - input services - nexus of input services used in the factory, to the manufacturing process or not - Electrical Maintenance - Maintenance of 66 KVA Power line supplying power to plant - underground water used in utility and used by workmen - Maintenance of computer hardware on shop- floor, AMC charges for desktops, laptops, scanners, etc, used in the factory - AMC charges for datamax (barcode) Printers. Electrical Maintenance Service - credit denied on the ground that the service is a work contract which is excluded within the ambit of definition of input service - HELD THAT - This was not the charge either in the show cause notice or finding in the Order-In-Original. From this ground the Learned Commissioner (Appeals) clearly erred in denying the credit. Moreover, this service was used for Electrical Maintenance which is directly related to the manufacturing activity of the appellant, therefore, the credit is admissible. Maintenance of 66KV power line supplying power to plant - HELD THAT - The maintenance of 66KV power line supplying power to plant has also direct use in the manufacturing activity of the appellant s factory hence, the credit is admissible. Analysis of underground water used in utility and used by workman - HELD THAT - This activity is to make the underground water usable by the human being. It is obligatory on the part of the manufacturer to provide treated water to their employee, therefore, it is in relation to the manufacture of final product hence, the credit is clearly admissible on this service. Maintenance of Computer Hardware on shop floor, AMC charges for Desktops, printers, Scanners, Laptop and FM service for resident engineers - HELD THAT - The service of Maintenance of Computer Hardware on shop floor and AMC charges of various equipments such Desktops, printers and Scanners are for the purpose of manufacturing activity of the appellant and not for the personal use of the resident engineers. Merely because the engineers are resident it was wrongly presumed that all these services are for their personal use. When all the services were used within the premises of the factory it is clear that the said services are used in relation to the manufacture of final product, therefore, the credit is admissible. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
- Entitlement for Cenvat credit on input services used in the factory.
- Admissibility of Cenvat credit on specific input services.

Analysis:
1. The main issue in this case was whether the appellant was entitled to Cenvat credit for various input services used in their factory. The specific input services in question were related to electrical maintenance, power line maintenance, water analysis, computer hardware maintenance, and AMC charges for various equipment.

2. The lower authorities had denied Cenvat credit on these input services, stating that there was no nexus to the manufacturing process. However, the appellant argued that all the services were directly used in or in relation to the manufacturing of the final product, making the credit admissible. The appellant also cited relevant judgments to support their claim.

3. The Revenue, represented by the Learned Superintendent, reiterated the findings of the impugned order, supporting the denial of Cenvat credit on the input services.

4. Upon careful consideration of the submissions from both sides and a review of the records, it was crucial to ascertain the use of the services and whether they were directly related to the manufacturing of the final product. The Commissioner (Appeals) had denied Cenvat credit on the input services based on specific findings related to each service.

5. The judgment analyzed each input service individually. For services like electrical maintenance and power line maintenance, the credit was found admissible as they were directly related to the manufacturing activity of the factory. However, for services like water analysis and computer hardware maintenance, the Commissioner (Appeals) had denied the credit, citing reasons such as personal benefit to employees and lack of direct relation to manufacturing activities. The judgment overturned these denials, stating that these services were indeed used in relation to the manufacture of the final product.

6. Ultimately, the impugned order was modified, and the appeals were allowed, recognizing the admissibility of Cenvat credit on the input services in question. The judgment was pronounced in open court on 15.12.2021.