2012 (9) TMI 173 - AT - Central Excise

Appellants win appeal for input service credit on outdoor catering under CENVAT Credit Rules

The appeal was allowed in favor of the appellants as they were deemed entitled to input service credit on outdoor catering services under the CENVAT ... Disallowance of input service credit on outdoor catering service - Held that:- As decided in CCE, Nagpur Versus Ultratech Cement Ltd.[2010 (10) TMI 13 - BOMBAY HIGH COURT] that as per Rule 2(l) of CCR 2004 any input service is eligible for CENVAT credit which has been used by the assessee in the course of their business of manufacture - Services having nexus or integral connection with the manufacture of final products as well as the business of manufacture of final product would qualify to be input service under Rule 2(l) of 2004 Rules - in favour of assessee. Issues:Appeal against denial of input service credit on outdoor catering service under CENVAT Credit Rules, 2004.Analysis:The Commissioner denied input service credit to the appellants on outdoor catering service, stating it was not covered under the definition of Rule 2(l) of CENVAT Credit Rules, 2004. The Commissioner emphasized that rules should not be interpreted beyond the powers under which they were made. He observed that the catering services were for employee welfare, not related to the manufacture of the final product, hence not eligible for CENVAT credit.Upon examination, it was found that Rule 2(l) of CCR 2004 allows input services eligible for CENVAT credit if used in the course of business manufacture. Reference was made to a judgment by the Hon'ble High Court of Bombay in the case of CCE Nagpur Vs Ultratech Cement Ltd., which clarified the interpretation of the rule. The appellants were deemed entitled to input service credit on outdoor catering services as they were used in the course of their manufacturing business. The Commissioner's interpretation was deemed inconsistent with the High Court's ruling in the Ultratech Cement case. Consequently, following the High Court's decision, the appeal was allowed, and the impugned order denying the credit was set aside.This judgment highlights the importance of interpreting rules in alignment with judicial precedents and ensuring that input services used in the course of business activities are eligible for CENVAT credit. The ruling emphasizes the need for a consistent and accurate application of legal provisions to determine the eligibility of credits under the CENVAT Credit Rules, 2004.