Appellant wins Cenvat Credit case for various expenses under 'good manufacturing practices'

The Tribunal ruled in favor of the appellant, allowing Cenvat Credit for Drain Trap, Steel Furniture, Outward Freight, Sales Commission, and Courier services. The appellant's arguments regarding compliance with 'good manufacturing practices' under Drugs and Cosmetics Rules were considered valid, leading to the allowance of the credits claimed, except for a specific amount towards Misc. invoices.

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Issues: Appeal against denial of input credit on Drain Trap, Steel Furniture, Outward freight, Sales Commission.

Issue 1 - Drain Trap:
The appellant argued that Drain Trap credit is essential for complying with 'good manufacturing practices' under Drugs and Cosmetics Rules. Referring to schedule M of the Rules, the appellant highlighted clauses related to drainage design, material usage, and furniture requirements. The counsel contended that Drain Trap credit of Rs. 5,655 is fully allowable as it is crucial for manufacturing drugs in compliance with the Rules.

Issue 2 - Steel Furniture:
Regarding Steel Furniture credit of Rs. 28,248, the appellant asserted that it is used in the factory premises, especially in areas like change rooms, essential for maintaining 'good manufacturing practices.' The counsel argued that Steel Furniture credit is fully allowable as the appellant cannot manufacture drugs without adhering to the Rules regarding equipment material and design.

Issue 3 - Outward Freight:
The appellant cited a Tribunal ruling in ABB Ltd. Vs. CCE and S.T., Bangalore, stating that outward freight credit of Rs. 18,453 is eligible as 'Goods Transport Agency service' for transportation of final products up to the customer's place is an allowable input service. The appellant argued that outward transportation up to the place of removal falls under the inclusive clause of 'activities relating to business,' making the credit permissible.

Issue 4 - Sales Commission:
Regarding Sales Commission credit of Rs. 10,663, the appellant contended that it is paid to service providers for procuring orders necessary for selling manufactured goods. The counsel highlighted that such expenses are part of the manufacturing cost on which Excise duty is paid. Referring to Rule 2(l)(ii) of CCR, 2004, the appellant argued that Sales Commission credit is fully allowable.

The Tribunal, after considering the arguments and records, held in favor of the appellant. It allowed the Cenvat Credit of Rs. 5,655 for Drain Trap, Rs. 28,248 on Steel Furniture, Rs. 18,453 towards outward freight, Rs. 10,663 for sales commission, and Rs. 654 paid on Courier services. The Tribunal set aside the impugned order, stating that the appellant is entitled to Cenvat credit in accordance with the law, except for the amount of Rs. 7,361 towards Misc. invoices, which were not contested.

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