Tribunal allows appeal for cenvat credit on service tax paid for statutory compliance

The Tribunal allowed the appeal in favor of the appellant, setting aside the denial of cenvat credit for service tax paid on Manpower Recruitment and Supply Agency service during January 2013 to June 2013. The Tribunal held that the exclusion clause under Rule 2(l)(C) of the Cenvat Credit Rules, 2004 did not apply as the services provided were for statutory compliance, specifically under the Factories Act, 1948, and Mines Act, 1952, and not for personal consumption. The previous Tribunal decision supporting this interpretation was cited, emphasizing that exclusion clauses do not apply when services are rendered for legal obligations.

---

---

Issues:
- Eligibility to avail cenvat credit of service tax paid on Manpower Recruitment and Supply Agency service during January 2013 to June 2013.

Analysis:
The issue in this case revolves around the eligibility of availing cenvat credit for the service tax paid on Manpower Recruitment and Supply Agency service during a specific period. The Revenue argues that the service provider supplied manpower consisting of Nurses and Doctors, falling under the Exclusion Clause of Rule 2(l)(C) of the Cenvat Credit Rule, 2004. Both lower authorities upheld the denial of cenvat credit, leading to the imposition of a penalty by the adjudicating authority.

The appellant's counsel argues that the posting of medical professionals in the factory is mandatory under the Factories Act, 1948, and Mines Act, 1952. They contend that the services of the Manpower Recruitment and Supply Agency were sought to comply with these statutory provisions, and the Doctors and Nurses provided were utilized in the factory for the manufacture of the final product, cement. Reference is made to a previous Tribunal decision in their favor for a different period, emphasizing that the lower authorities deviated from this precedent based on the Exclusion Clause under Rule 2(l)(C). The counsel asserts that the exclusion clause does not apply to services provided for statutory compliance and are not for personal consumption.

Upon considering the arguments from both sides and examining the records, the Tribunal focuses on the Exclusion Clause under Rule 2(l)(C) of the Cenvat Credit Rules, 2004. The clause excludes cenvat credit for services related to health services, but there is no specific definition of health services in the Finance Act, 1994. The Tribunal notes that the posting of Doctors and Nurses was at the request of the appellant to comply with statutory obligations, not for personal consumption. Reference is made to a previous Tribunal decision to support this interpretation, emphasizing that exclusion clauses do not apply when services are provided for legal obligations rather than personal use.

In conclusion, the Tribunal finds that the denial of cenvat credit based on the Exclusion Clause is unsustainable. The impugned order is set aside, and the appeal is allowed in favor of the appellant.

---