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2023 (8) TMI 1046 - AT - Service TaxCENVAT Credit - input services or not - services used in the residential colony of the assessee-appellant - nexus with output service or not - period of dispute involved in this case is from April, 2009 to March, 2011 - HELD THAT - The definition of input service under the un-amended provisions of Rule 2(l) of the CENVAT Credit Rules, 2004 (effective up to 31.03.2011) is relevant for consideration of the present dispute - On reading of the statutory provisions, it reveals that in the inclusive part of the definition, the phrase activities relating to business is specifically finding place for the purpose of consideration of the services as input service for grant of the benefit of CENVAT Credit to the manufacturer/service provider - It is found that the cost of the disputed services together with the service tax paid thereon towards maintenance and repair of the residential colony situated adjacent to the factory premises had been considered by the appellant for calculation of the cost of production of manufacture of final products and on clearance of the same, they had discharged appropriate duty liability, which has also not been disputed by the Department. The appellant had, in fact, incurred the expenses towards maintenance of the residential colony situated adjacent to factory and such cost has also formed an element of the cost, while preparing the periodic statement of the cost of production, on which appropriate Central Excise duty liability has been discharged. Thus, denial of CENVAT benefit by the authorities below cannot be sustained It is also found that in the appellant s own case for the earlier period, this Bench in MANIKGARH CEMENT VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR 2017 (9) TMI 776 - CESTAT MUMBAI has allowed the CENVAT benefit to the appellant on the identical set of facts. There are no merits in the impugned order, insofar as it has upheld denial of the CENVAT benefit to the appellant - the appeal is allowed in favour of the appellant.
Issues involved: Denial of CENVAT benefit of Service Tax paid on various services used in the residential colony
Summary: The judgment concerns the denial of CENVAT benefit of Service Tax paid on services used in the residential colony of the assessee-appellant. The authorities held that since the disputed services were used outside the factory and had no connection with the manufacture of final products, they could not be considered as 'input service' for the purpose of availing the CENVAT benefit. The period of dispute was from April 2009 to March 2011, under the un-amended provisions of Rule 2(l) of the CENVAT Credit Rules, 2004. The definition of 'input service' includes "activities relating to business," which is crucial for considering services as input service for granting the CENVAT Credit to the manufacturer/service provider. The appellant had considered the cost of disputed services towards maintenance and repair of the residential colony adjacent to the factory premises in the cost of production of final products, on which appropriate Central Excise duty liability had been discharged. The show-cause notice referenced the statement of the Dy. General Manager (Finance) of the appellant company, indicating that the expenses on maintenance of the residential colony were business-related and indirectly linked to the manufacture of excisable goods. A certificate by Chartered Accountants confirmed that the cost of services for construction, repairs, and maintenance in the residential colony formed part of the value of final products manufactured by the appellant. The Tribunal noted that in the appellant's earlier case, CENVAT benefit was allowed on identical facts. The Tribunal emphasized that once the cost of services is taken as expenses and included in the cost of the final product, the credit is admissible. Consequently, the Tribunal found no merit in the impugned order upholding the denial of the CENVAT benefit and allowed the appeal in favor of the appellant, with any consequential relief as per law.
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