CESTAT Hyderabad Overturns Order Denying CENVAT Credit for Bulk Drug Manufacturers

The Appellate Tribunal CESTAT HYDERABAD set aside the impugned order disallowing CENVAT credit on specific input services for the appellants engaged in the manufacture of bulk drugs and drug intermediates. The tribunal found the denial of credit unsustainable, allowing the appeal with any necessary consequential reliefs.

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Issues Involved:
Denial of CENVAT credit on input services.

Analysis:
The appeal dealt with the denial of CENVAT credit on input services by the appellants, who are engaged in the manufacture of bulk drugs and drug intermediates. The original authority allowed a partial amount of credit but disallowed credit for 16 specific services, demanding recovery of a substantial sum along with interest and imposing a penalty. The appellants, aggrieved by this decision, appealed to the first appellate authority, which upheld the original order, leading to the current appeal before the Appellate Tribunal CESTAT HYDERABAD.

The appellant's counsel presented a detailed breakdown of the inadmissible credit for various services, such as accommodation services, air transport, convention services, director's sitting fees reimbursement, design services, mandap keeper services, works contract services, event management, foreign exchange broker, interior decorator services, restaurant services, banquet services, authorized service station service, club membership services, public relations services, insurance auxiliary service, and subscription service. The counsel clarified that certain amounts were not pressed due to duplication claims or being covered under a separate show-cause notice, limiting the current claim to a specific amount. The counsel argued that credit for several services had been allowed in subsequent periods or in the appellant's own case by the Commissioner(Appeals), citing relevant judgments and emphasizing that the services were not used for personal consumption by any employee.

In light of the arguments presented and the precedents cited, the tribunal found the denial of credit to be unsustainable. The impugned order disallowing the credit on input services was set aside, and the appeal was allowed with any consequential reliefs deemed necessary.

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