2024 (2) TMI 667 - AT - Central Excise

Denial of CENVAT Credit - services provided to the employee for transportation to and fro the workplace by bus, provision for canteen services, Mathadi services - denial on the ground that there was no statutory requirement/obligation to provide those services - HELD THAT - On renovation of executive toilets and housekeeping of administrative building, the denial was on account of the fact that those were not used by the workmen nor having any nexus to the manufacture of final product and on denial of professional fee as well as maintenance of canteen building, no reason is assigned by the leaned Commissioner. This being the observation of the Commissioner on record, it is apparently cleared that he has accepted only the core work including laborious activities undertaken during the production process and excluded all other ancillary and incidental activities that go with the manufacturing process and form its integral part. Be that as it may, when all these services are specifically held by this Tribunal and confirmed by the Appellate Courts like Hon'ble High Courts and Hon'ble Supreme Court to be valid inputs for the purpose of manufacture, there is no reason for us to depart from the judicial precedent set by this Tribunal when they themselves are integral part of manufacture process for which these services availed by the Appellant can be said to be valid input services against which credit are admissible. The order passed by the Commissioner of Central Excise, Thane-II is hereby set aside - Appeal allowed.

Summary

Issues involved:
Denial of CENVAT Credit along with interest and penalty through adjudication proceeding.

Issue 1: Denial of CENVAT Credit

The Appellant, a manufacturer of wire rods, wire ropes, wires, etc., faced denial of CENVAT Credit amounting to Rs. 52,92,917 for the period from August 2007 to July 2011. The Department issued a show-cause notice proposing recovery of the amount along with interest and imposition of penalty. The Commissioner confirmed the proposal, leading to an appeal before the CESTAT. The matter was remanded for de novo adjudication, where the demand, penalty, and interest were re-confirmed without acknowledging a payment of Rs. 60,000 made by the Appellant earlier. The legality of this order was challenged in the current appeal.

Issue 2: Interpretation of Services for CENVAT Credit

During the appeal hearing, the Appellant's Counsel argued that denial of credit for services like bus transportation for employees, renovation of canteen, professional fees, etc., was based on misinterpretation of legal judgments. The Counsel cited various cases where similar services were deemed eligible for CENVAT Credit by the Tribunal and higher courts. The Departmental Representative defended the Commissioner's order, emphasizing that only services integral to the manufacturing process qualify for credit.

Judgment:

Upon reviewing the submissions, the Tribunal noted that denial of CENVAT Credit on certain services was unjustified. The Commissioner's decision to exclude services like bus transportation, canteen provision, and others, on the basis of lack of statutory obligation or direct connection to the manufacturing process, was deemed incorrect. The Tribunal emphasized that these services, as established in previous rulings, form an integral part of the manufacturing process and are valid input services eligible for credit. Therefore, the appeal was allowed, setting aside the Commissioner's order with any consequential relief.

Separate Judgment by Judges:
No separate judgment was delivered by the judges in this case.