2016 (11) TMI 1449 - AT - Service Tax

Successful Appeal Grants Cenvat Credit for Repair Services as Essential Input

The appeal was allowed in its entirety, with the Member (T) finding that repair and maintenance services, including co-ordination fees paid by the ... CENVAT credit - input services - co-ordination fees paid by appellant - Held that: - It cannot be disputed that in any organization, whether a manufacturing unit or service provider, repair and maintenance are vital for ensuring smooth functioning of the manufacture or business - This being the case, and also considering that they do not feature in the exclusions, impugned services will very much be in the nature of eligible ‘input service’ for the purpose of Rule 2(l) ibid - credit allowed - appeal allowed in toto. Issues: Denial of Cenvat credit on input services related to co-ordination fees paid by the appellant.In this judgment, the issue revolves around the denial of Cenvat credit on input services, specifically co-ordination fees paid by the appellant. The appellant availed services for major repairs to buildings and maintenance work, which were essential for their business activities. The advocate for the appellant highlighted clauses from the sub-lease agreement to support their case. It was mentioned that a similar issue had been remanded by the Tribunal in an earlier period, and in the subsequent adjudication, the services were deemed to be related to the business of manufacturing and qualified as 'input service' under Rule 2(l) of the CCR, 2004.The Assistant Commissioner (AR) reiterated the correctness of the impugned order, upholding the denial of credit on co-ordination services. However, the Member (T) found that the Commissioner (Appeals) had erred in upholding the denial based on the ground that co-ordination services were not explicitly mentioned in the inclusive list of services under the definition of 'input services.' The Member clarified that the inclusive part of the definition should be interpreted as examples of eligible services for Cenvat credit, emphasizing the necessity of services having a nexus with manufacturing or business activities and not being specifically excluded. Repair and maintenance services were deemed essential for the smooth functioning of any organization, and since they were not excluded, the impugned services were considered eligible as 'input services' under Rule 2(l) of the CCR, 2004. Consequently, the appeal was allowed in its entirety with any consequential relief as per the law.