2015 (10) TMI 2066 - AT - Central Excise

Manufacturing entities win appeal on Cenvat credit for services including garden maintenance

M/s Esab India Ltd Versus CCE, Chennai-II

The Tribunal allowed the appeal of manufacturing entities regarding the admissibility of Cenvat credit on various services, including garden maintenance, ... Admissibility of cenvat credit - Various services - Held that:- In regard to the outdoor catering, the Hon’ble High Court of Madras in the case of M/s. Turbo Energy Ltd. (2015 (3) TMI 632 - MADRAS HIGH COURT), in various CMAs allowed the assessees CMA and rejected the Revenue miscellaneous petitions and held that the outdoor catering service is eligible for cenvat credit. In regard to the Xerox machine and subscription charge, insurance charges, etc., we find that all these are related to the manufacture of final products, the Hon’ble Allahabad High Court in the case of HCL Technologies (2014 (11) TMI 663 - ALLAHABAD HIGH COURT), dismissed the revenue appeal and upheld the Tribunal order allowing the subscription of magazines. In the present case, the appellants have subscribed to the Indian Institute of Welding, Kolkata. This Tribunal in the case of Axles India Ltd. (2015 (1) TMI 505 - CESTAT CHENNAI), wherein the issue inclusive definition of Rule 2 (l) of CCR and relied various High Court decisions and rejected the Revenue appeal. By following the ratio referred above, we hold that the appellants are eligible for cenvat credit for all the services. Accordingly, the impugned order is set aside - Decided in favour of assessee. Issues:Admissibility of Cenvat credit on various inputs including garden maintenance, travel, lunch expenses, rental of Xerox machine, car hire charges, subscription charges, and insurance charges.Analysis:Admissibility of Cenvat Credit on Various Inputs:The appellants, engaged in manufacturing welding electrodes and fluxes, appealed against the Commissioner's order denying service tax credit. The issue revolved around the admissibility of Cenvat credit on different services utilized for manufacturing. The appellants had availed credit for various input services, but faced a show cause notice for an ineligible service tax credit amount. The Commissioner allowed some credits but disallowed others, such as labor charges for garden maintenance, travel, lunch expenses, Xerox machine rental, car hire charges, subscription charges, and insurance charges.Arguments and Rulings:The appellants argued that garden maintenance was mandatory as per the Pollution Control Board's order and cited relevant case law to support their claim. They contended that services like outdoor catering, Xerox machine rental, subscription charges, and insurance were directly related to manufacturing activities. The Advocate relied on specific court decisions to justify the admissibility of these credits. However, the Revenue maintained its stance on disallowing certain credits, stating they were not directly linked to the manufacturing process.Judgment and Conclusion:After considering both parties' arguments and examining the records, the Tribunal held that the issue of admissibility of Cenvat credit on the services in question was well-settled by various High Courts and Tribunals. The Tribunal found that the appellants were eligible for Cenvat credit on all the services, including garden maintenance, outdoor catering, Xerox machine rental, subscription charges, and insurance. Citing relevant court decisions, the Tribunal concluded that the appellants were entitled to the credits and set aside the Commissioner's order. The appeal was allowed, and no penalty was imposed on the appellants.In conclusion, the Tribunal's detailed analysis and reliance on legal precedents established the appellants' eligibility for Cenvat credit on the disputed services, ultimately leading to the allowance of the appeal and the removal of any penalty.