2017 (1) TMI 707 - AT - Central Excise

Tribunal Allows Cenvat Credit for Specific Services with Precedents

The tribunal allowed Cenvat Credit for services like 'Manpower Supply' and 'R&D Lab Utilisation' based on precedents from Karnataka High Court and ... CENVAT credit - input services - Manpower Supply service - plantation/grass cutting - Civil construction at new land - rain protection work - sprinkler system civil work - R&D Lab Utilisation - civil work for dispensary, cutting and dismantling of old structure and equipments - denial on the ground that the said services were not utilised in or in relation to manufacture of their finished goods hence not an input service as defined under per 2(l) of CCR, 2004. Held that: - the credit availed on Garden Maintenance services is covered by the judgment of Hon’ble Karnatak High Court in M/s Millipore India Pvt Ltd.[2011 (4) TMI 1122 - KARNATAKA HIGH COURT] - on R&D Lab Utilisation Services i.e., Testing and Certification service by the judgment of Gujrat High Court in M/s Cadila Health Care Ltd’s case [2013 (1) TMI 304 - GUJARAT HIGH COURT] - credit allowed. In relation to other services, since no detailed reasons with evidences had been furnished about its claim of use in or in relation to the manufacturing business, hence, it is remanded to the Adjudicating Authority for verification of the said claim - matter on remand. Appeal partly allowed and partly on remand. Issues:1. Availment of Cenvat Credit on input services like 'Manpower Supply' and 'R&D Lab Utilisation'.2. Disallowance of Cenvat Credit on services like Civil Construction, rain protection work, etc., due to lack of evidence.3. Interpretation of 'input service' as per CCR, 2004.4. Applicability of judgments by Karnataka High Court and Gujarat High Court on similar cases.Analysis:1. The appellant availed Cenvat Credit on services such as 'Manpower Supply' and 'R&D Lab Utilisation' for activities like plantation/grass cutting, civil construction, etc. The Commissioner of Central Excise disallowed the credit, stating that these services were not directly related to the manufacturing process. The appellant argued that services like garden maintenance and R&D lab utilization are admissible based on judgments by the Karnataka High Court and Gujarat High Court. The tribunal agreed, citing the relevant judgments and allowed the credit for these services.2. However, for services like Civil Construction, rain protection work, and sprinkler system civil work, the appellant failed to provide detailed evidence establishing a direct nexus with the manufacturing business. The tribunal noted the lack of evidence and remanded the matter to the Adjudicating Authority for verification. The appellant was instructed to provide necessary evidence to support their claim before the Adjudicating Authority.3. The tribunal highlighted the definition of 'input service' as per para 2(l) of the CCR, 2004, emphasizing the requirement for services to be used in or in relation to the manufacture of finished goods to qualify for Cenvat Credit. The decision to allow or disallow credit was based on whether the services directly contributed to the manufacturing process.4. The tribunal referenced specific judgments by the Karnataka High Court and Gujarat High Court to support the admissibility of Cenvat Credit for certain services. The judgments provided precedents for considering services like garden maintenance and R&D lab utilization as eligible for credit, depending on their relevance to the manufacturing activities. The tribunal's decision was guided by the interpretations and applications of these judgments in similar cases.