CESTAT Mumbai allows CENVAT credit for specified services, remands case for fresh consideration of factual submissions

CESTAT Mumbai set aside adjudicating authority's order denying CENVAT credit for specified services during April 2007-October 2011 and November 2011-September 2012. The authority had rejected credit claiming services weren't used in manufacture but for post-clearance goods under rule 2(l) of CENVAT Credit Rules, 2004. CESTAT found the adjudicating authority's findings inadequate and remanded the matter for fresh consideration of factual submissions and judicial determinations regarding each service.

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Issues Involved:
1. Entitlement to CENVAT credit of tax paid on specified services.
2. Interpretation of the definition of "input services" under rule 2(l) of CENVAT Credit Rules, 2004.
3. Eligibility of specific services for CENVAT credit.
4. Adjudicating authority's reasoning and findings.

Summary:

The core issue in both appeals is the entitlement to CENVAT credit of tax paid on specified services procured by the appellant for the periods from April 2007 to October 2011 and from November 2011 to September 2012. The Commissioner of Central Excise, Thane-I confirmed demands amounting to Rs. 1,17,35,760 u/r 14 of CENVAT Credit Rules, 2004 read with section 11A of Central Excise Act, 1944, along with interest and imposed penalties of like amounts u/r 15 of CENVAT Credit Rules, 2004 read with section 11AC of Central Excise Act, 1944.

The appellant, a manufacturer of 'tubes,' 'pipes,' and other 'articles of stainless steel,' argued that the disputed services were received before 1st April 2011 and covered by 'activities relating to business' in the 'inclusive' leg of 'input services' as defined in section 2(l) of CENVAT Credit Rules, 2004. They relied on the decision of the Hon'ble High Court of Bombay in Coca Cola India Private Limited v. Commissioner of Central Excise, Pune-III [2009 (15) STR 657 (Bom)], which elaborated on the inclusive nature of the term 'input services.'

The appellant further cited the Hon'ble High Court of Bombay's decision in Commissioner of Central Excise, Nagpur v. Ultra Tech Cement Ltd [2010 (20) STR 577 (Bom)], which held that the definition of 'input service' is very wide and covers services used directly or indirectly in or in relation to the manufacture of final products, as well as services integrally connected with the business of manufacturing the final product.

The adjudicating authority, however, held that the services procured by the appellant did not conform to rule 2(l) of CENVAT Credit Rules, 2004 as they were not used in or in relation to manufacture but for goods after clearance. The authority dismissed the appellant's contentions, stating that the definition of 'input service' is not restrictive, but the services in question were not ejusdem generis with the services mentioned in the definition.

The Tribunal found that the adjudicating authority's reasoning was not cogent and lacked adequate consideration of the factual submissions and judicial determinations relevant to each service. Consequently, the Tribunal set aside the impugned order and remanded the matter back to the adjudicating authority to decide afresh upon proper consideration of the appellant's submissions and relevant judicial precedents.

The operative part of the order was pronounced in the open court on 20th June 2023.

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