2015 (6) TMI 194 - AT - Service Tax

Appellant granted CENVAT credit refund for input services

The appellant was denied CENVAT credit on services availed, as they were deemed to fall outside the scope of input services. The main issue was whether ... Denial of CENVAT Credit - Nexus with manufacturing activity - Whether the appellants have satisfied the definition of input service for availing the CENVAT credit and whether the demand is barred by limitation - Held that:- issue involved was eligibility of CENVAT credit on services received in respect of security services etc. provided to the residential colony and not to the factory or the premises of the appellant. In this case, the services are clearly covered by inclusive part of the definition which covers financing as one of the headings under which services are eligible. As already observed by me, the services received were received for mobilization of finance by IPO and for conducting study of the business plan and study done in relation to anti-collusion devices proposed to be manufactured by the appellants. All these activities, in my opinion, are clearly covered by the inclusive part of the definition. - appellant is eligible for the benefit of refund of CENVAT credit taken by them and therefore the impugned order has no merits and has to be set aside. Accordingly, the impugned order is set aside - Decided in favour of assessee. Issues involved: Denial of CENVAT credit on services availed by the appellant, eligibility for CENVAT credit, whether demand is barred by limitation.Analysis:1. The appellant availed CENVAT credit of &8377; 28,12,555/- during May 2005 to March 2006, which was denied on the grounds that the services availed had no nexus to the manufacturing activity, falling outside the scope of input services as per Rule 2(l)(2) of the CENVAT Credit Rules, 2004.2. The main issue in the appeal was to determine if the appellant satisfied the definition of input service for availing CENVAT credit and if the demand was barred by limitation.3. The definition of input service under Rule 2(l) of the CENVAT Credit Rules includes services used by the manufacturer directly or indirectly in relation to the manufacture of final products, such as financing, market research, procurement of inputs, and other business-related activities.4. The services received by the appellant were related to financing and planning of business operations, including professional fees for preparing a business plan, filing public issue offer documents, conducting studies, and acting as co-Managers of public issues, all falling under the definition of input services.5. The Commissioner (Appeals) had observed that input services should have a direct nexus to providing output services, relying on a previous Tribunal decision. However, the services received in this case were clearly covered by the inclusive part of the definition, including financing activities.6. The appellant's counsel referenced a decision by the Hon'ble High Court of Bombay, stating that services with a nexus or integral connection to the manufacture of final products or the business of manufacture would qualify as input services under Rule 2(l) of the CENVAT Credit Rules.7. Considering the above, it was found that the appellant was eligible for the refund of CENVAT credit, and the impugned order denying the credit was set aside, allowing the appeal with consequential relief to the appellant.