2012 (8) TMI 318 - AT - Central Excise

Tribunal Allows Appeal on Cenvat Credit for Input Services

The Tribunal allowed the appeal, overturning the denial of Cenvat credit on housekeeping, rent-a-cab, and courier services for manufacturers of home ... Cenvat credit on house keeping, rent-a-cab and courier services – Held that:- there was nexus between input services and final products - no reason to deny the credit of service tax paid on the three input services Issues:1. Eligibility of Cenvat credit on housekeeping, rent-a-cab, and courier services.2. Adjudication of duty demand and penalties imposed.Analysis:Issue 1: The appellants, manufacturers of home appliances, claimed Cenvat credit on housekeeping, rent-a-cab, and courier services used in manufacturing. The Revenue contended the appellants were not eligible for credit on these services. The Commissioner allowed credit for GTA services but denied credit for the three aforementioned services, leading to duty demand and penalties. The counsel for the Appellant cited relevant cases supporting credit eligibility, emphasizing the approval of a decision by the High Court in a similar case.Issue 2: The Commissioner, while acknowledging relevant decisions, refrained from following them due to pending appeals before the High Court. However, the Tribunal found no reason to deny credit for the three input services based on the nexus between input services and final products. Citing precedents and the approach adopted by High Courts, the Tribunal allowed the appeal, overturning the denial of credit and duty demand imposed by the Commissioner.This judgment highlights the importance of establishing a nexus between input services and final products in claiming Cenvat credit. It also underscores the significance of judicial precedents in determining credit eligibility, even if decisions are under appeal. The Tribunal's decision to allow the appeal emphasizes the need for consistency in applying legal principles and considering established case law in tax matters.