2017 (11) TMI 1408 - HC - Service Tax

Tribunal Upheld: Various Services Qualify as Input Services under CENVAT Credit Rules

The court upheld the Tribunal's decision, confirming that services such as Goods Transport Agency, outdoor catering, Clearing and Forwarding agents, cargo ... CENVAT credit - input services - GTA services - auction services - insurance services - rent-a-cab services - outdoor Catering services - Club or Association services - Clearing & Forwarding (C&F) agency services -cargo handling services - insurance services - Held that: - the issue is squarely covered by the decision in the case of Commissioner, Central Excise Versus M/s Manglam Cement Ltd. [2017 (11) TMI 483 - RAJASTHAN HIGH COURT]. Scope of place of removal - Held that: - in the case cited, the Tribunal has recorded a finding that from the verification of bills, it is found that transport charges are required to be borne out by the assessee. Therefore, that issue is also required to be decided in favor of assessee. Regarding Cargo Handling Services and Insurance Service, reliance placed in the decision of Gujarat High Court in Commissioner of Central Excise and Customs vs. Ultratech Cement Ltd. [2014 (9) TMI 187 - GUJARAT HIGH COURT] and it is held that the issue is answered in favor of assessee. Regarding Rent a Cab Service, reliance placed in the decision in the case of The Commissioner of Central Excise Service Tax Bengaluru-IV, Versus Ultra Tech Cement Ltd. [2016 (7) TMI 1080 - KARNATAKA HIGH COURT], where it was held that credit is allowed. Regarding Club and association services, it is clear that it is club activities for going for a sale or any other assigned work. It will be operational, manufacturing activity. The credit on all services allowed - appeal dismissed - decided against Revenue. Issues Involved:1. Eligibility of CENVAT credit for various services under the CENVAT Credit Rules, 2004.Issue-wise Detailed Analysis:1. Eligibility of CENVAT Credit for Goods Transport Agency (GTA) Services:The primary issue was whether the GTA services for outward transportation from the depot to the buyer’s premises qualify as 'Input Services' under the CENVAT Credit Rules, 2004. The court referred to decisions in Excise Appeal Nos. 22/2017, 23/2017, 44/2015, and 49/2017, which dealt with similar questions. The Tribunal had allowed the credit, but the Department argued against it, citing various High Court rulings. The court noted that the definition of 'Input Service' includes services related to the clearance of final products from the place of removal. It emphasized that services like outward transportation can be considered input services if they are integral to the business of manufacturing and delivering the final product.2. Eligibility of CENVAT Credit for Outdoor Catering Services:The court examined whether outdoor catering services, provided to comply with the Factories Act, 1948, qualify as input services. The Tribunal had allowed this credit, referencing the Bombay High Court's decision in the case of Ultratech Cement Ltd., which held that such services have a nexus with the manufacturing process. The Department argued against this, citing rulings that outdoor catering services are primarily for employee welfare and not directly related to manufacturing. However, the court upheld the Tribunal’s decision, stating that these services are integral to the business of manufacturing as they are mandated by law and affect the overall business operations.3. Eligibility of CENVAT Credit for Clearing and Forwarding (C&F) Agents:The court considered whether services provided by C&F agents qualify as input services. The Tribunal had allowed the credit, stating that C&F services are essential for the storage and distribution of goods, thus promoting sales. The Department contended that these services are post-clearance activities and should not qualify. However, the court upheld the Tribunal’s decision, aligning with the view that C&F services are integral to the business of manufacturing and distribution.4. Eligibility of CENVAT Credit for Cargo Handling Services:The court reviewed whether cargo handling services for export qualify as input services. The Tribunal had allowed the credit, considering these services essential for the export process. The Department argued that these are post-removal services. The court upheld the Tribunal’s decision, noting that cargo handling services are crucial for the export of goods and thus fall within the definition of input services.5. Eligibility of CENVAT Credit for Rent-a-Cab Services:The issue was whether rent-a-cab services used for employee transportation qualify as input services. The Tribunal allowed the credit, citing that these services are necessary for ensuring timely employee attendance, which directly impacts manufacturing. The Department opposed this, arguing that these services are for employee welfare. The court upheld the Tribunal’s decision, referencing the Karnataka High Court’s ruling that such services are integral to business operations.6. Eligibility of CENVAT Credit for Insurance Services:The court examined whether insurance services, including group accidental insurance and fidelity insurance for workers, qualify as input services. The Tribunal had allowed the credit, stating that these services are essential for business operations. The Department argued that these services are not directly related to manufacturing. The court upheld the Tribunal’s decision, noting that insurance services are necessary for risk management in business operations.7. Eligibility of CENVAT Credit for Auction and Club House Services:The court reviewed whether auction services for selling waste and scrap and club house services for business purposes qualify as input services. The Tribunal had allowed the credit, considering these services integral to business operations. The Department argued that these services are not essential for manufacturing. The court upheld the Tribunal’s decision, stating that these services are part of the business activities related to manufacturing.Conclusion:The court upheld the Tribunal's decision on all issues, affirming that various services, including GTA, outdoor catering, C&F, cargo handling, rent-a-cab, insurance, and auction services, qualify as input services under the CENVAT Credit Rules, 2004. The appeals by the Department were dismissed, and the issues were decided in favor of the assessee.