2009 (9) TMI 642 - AT - Service Tax

Court waives pre-deposit for Cenvat credit demand. Key ruling on input services eligibility.

HINDUSTAN COCA COLA BEVERAGES PVT. LTD. Versus CCE., MEERUT-II

The judge ruled in favor of the appellant, waiving the pre-deposit of Cenvat credit demand and interest for hearing the appeals. The judge found that ... Waiver of pre-deposit - Cenvat credit - The event management service has been availed in connection with sales promotion and being linked with the sales promotion activity. It is, prima facie, covered by the definition of the ‘input service’ in Rule 2(l) of the Cenvat Credit Rules, 2004 An amount of Rs. 55,761/- has been denied on the ground that the nature of the service is not mentioned on the invoices, but as mentioned by the learned Counsel for the appellant, from the invoices, it appears that these services are for supply of the manpower, in respect of which service tax has been paid by the service, providers and this service is, prima facie, also covered by the definition of the “input service” As regards the rent of bus for staff, I agree with the appellant’s Counsel that this is tour operators service which has to be treated as input service as this service was used by the appellant for bringing their staff to the factory and back and also for other purposes in connection with their business - Decided in favor of the assessee Issues:Waiver of pre-deposit of Cenvat credit demands upheld by the Commissioner (Appeals) for event management service, outdoor catering, earth work, rent of bus for staff, and manpower supply.Analysis:The case involved applications for waiver of pre-deposit of Cenvat credit demands, as upheld by the Commissioner (Appeals) in an order-in-appeal. Initially, the Joint Commissioner had allowed Cenvat credit for various services, including event management, outdoor catering, earth work, rent of bus for staff, and manpower supply. However, the Commissioner (Appeals) reversed this decision disallowing a credit amount of Rs. 77,053, particularly objecting to invoices lacking a mention of the nature of services received. The Deputy Commissioner also allowed service tax credit for event management but disallowed it for other services, confirming a Cenvat credit of Rs. 77,053. The total Cenvat credit demand confirmed by the Commissioner (Appeals) amounted to Rs. 91,032, leading to the appellant filing appeals along with stay petitions against these decisions.Upon hearing both parties, the advocate for the appellant argued that the disallowed service tax credit was factually incorrect as the invoices clearly indicated payment of service tax for manpower supply. Additionally, the services for event management, earth work, and rent of bus for staff were essential for business operations and should be considered as input services under the Cenvat Credit Rules, 2004. The Departmental Representative defended the impugned order, asserting that the denial of Cenvat credit was justified based on the findings of the Commissioner (Appeals).After careful consideration and perusal of the records, the judge found that event management services, earth work (which was actually manpower supply), and rent of bus for staff were prima facie covered under the definition of 'input service.' The judge agreed with the appellant's counsel that the invoices clearly indicated services related to manpower supply, which had service tax paid by the providers. The judge also recognized the rent of bus for staff as an essential service for business purposes. Consequently, the judge waived the requirement of pre-deposit of Cenvat credit demand and interest for hearing the appeals, allowing the stay petitions.This judgment highlights the importance of correctly interpreting the nature of services received and their eligibility for Cenvat credit under the relevant rules. The decision underscores the need for a thorough analysis of invoices and services to determine their alignment with the definition of input services for claiming Cenvat credit.