2017 (12) TMI 270 - AT - Central Excise

Tribunal allows CENVAT credit for most input services, penalties reduced

The tribunal allowed CENVAT credit for various input services used by the appellant, except for Membership of Clubs, Services Provided by Director of ... CENVAT credit - various input services - denial on the ground that appellant failed to provide necessary evidence before the authority below for which there was disallowance of the cenvat credit of the respective amount involved in each appeal ordered and also on the ground of nexus - Held that: - on all services, except 4 services, namely Membership of Clubs, Reverse services by Director of company, Clubs and Association services, and Real Estate Agents services, the manner of disallowance made by the learned authorities below is without any cogent reason and evidence to the contrary. The disallowances were mechanical in nature - Therefore there cannot be any doubt at all about the availment of the input credit for manufacture of output establishing the nexus between the two - credit allowed on all the services except 4 services as mentioned. CENVAT credit - Membership of Clubs - Reverse services by Director of company - Clubs and Association services - Real Estate Agents services - Held that: - cenvat credit availed on these services are not eligible to get any cenvat credit on the facts and circumstances of the case since appellant did not bring out any appealable reason to satisfy that it has a proven case of nexus and integral connection between the input service and output manufactured - credit on these 4 services denied. Penalty - Held that: - the penalties shall stand reduced to the extent of credit of input services disallowed. Appeal allowed in part. Issues Involved:1. Eligibility of CENVAT credit for various input services.2. Nexus of input services with the manufacture and clearance of final products.3. Documentary evidence to substantiate the use of input services.4. Application of exclusion clauses under Rule 2(l) of the CENVAT Credit Rules, 2004.Detailed Analysis:1. Air Travel Agents:The appellant contended that the services were used for booking flights for employees to attend dealer meets, business trips for sales promotion, seminars, and training for product development. The adjudicating authority denied the credit, stating the service was not specified and lacked documentary evidence. The tribunal found the appellant's reasoning logical and allowed the credit.2. Commercial and Industrial Construction:The appellant argued that services were used for factory repairs and maintenance. The adjudicating authority disallowed the credit, citing a lack of tangible evidence and the service falling under the exclusion clause. The tribunal allowed the credit, finding the appellant's justification reasonable.3. Event Management Services:The appellant claimed the services were used for seminars related to manufacturing processes and sales promotion. The adjudicating authority denied the credit, stating no nexus with manufacturing was established. The tribunal allowed the credit, agreeing with the appellant's justification.4. Mailing List and Compilation Services:The appellant stated these services were used for statutory compliance under Company Law. The adjudicating authority disallowed the credit due to a lack of nexus with manufacturing. The tribunal allowed the credit, finding the appellant's reasoning logical.5. Mandap Keeper Services:The appellant argued that these services were used for customer relation meets and sales promotion activities. The adjudicating authority denied the credit, citing no nexus with manufacturing. The tribunal allowed the credit, agreeing with the appellant's justification.6. Membership of Clubs:The appellant contended the services were used for participating in events for product development and sales promotion. The adjudicating authority disallowed the credit, citing the exclusion clause. The tribunal upheld the disallowance, finding no appealable reason to establish a nexus with manufacturing.7. Outdoor Catering Services:The appellant claimed these services were used during customer relation meets, marketing meetings, and seminars for sales promotion. The adjudicating authority denied the credit, citing the exclusion clause. The tribunal allowed the credit, agreeing with the appellant's justification.8. Photography Services:The appellant argued that these services were used for product photo shoots and sales promotion. The adjudicating authority disallowed the credit, stating no nexus with manufacturing. The tribunal allowed the credit, finding the appellant's reasoning logical.9. Public Relation Services:The appellant claimed these services were used for typesetting and translation of text for sales promotion. The adjudicating authority denied the credit, citing no nexus with manufacturing. The tribunal allowed the credit, agreeing with the appellant's justification.10. Rail Travel Agent Services:The appellant argued that these services were used for booking rail tickets for business trips related to sales promotion and product development. The adjudicating authority disallowed the credit, stating no nexus with manufacturing. The tribunal allowed the credit, finding the appellant's reasoning logical.11. Services Provided by Director of Company under Reverse Charge:The appellant stated these services were received from non-executive directors during meetings. The adjudicating authority disallowed the credit due to a lack of details. The tribunal upheld the disallowance, finding no appealable reason to establish a nexus with manufacturing.12. Short Term Accommodation:The appellant claimed these services were used during customer relation meets and seminars for sales promotion. The adjudicating authority denied the credit, citing no nexus with manufacturing. The tribunal allowed the credit, agreeing with the appellant's justification.13. Sound Recording Services:The appellant argued that these services were used for sales promotion. The adjudicating authority disallowed the credit due to a lack of details. The tribunal allowed the credit, finding the appellant's reasoning logical.14. Survey and Map Making:The appellant claimed these services were used for land surveys to set up manufacturing activities. The adjudicating authority denied the credit, citing no nexus with manufacturing. The tribunal allowed the credit, agreeing with the appellant's justification.15. Telecommunication Services:The appellant argued that these services were used for communication between employees, vendors, and customers. The adjudicating authority disallowed the credit, stating no nexus with manufacturing. The tribunal allowed the credit, finding the appellant's reasoning logical.16. Telephone Services:The appellant claimed these services were used for communication related to manufacturing and sales. The adjudicating authority denied the credit, citing no nexus with manufacturing. The tribunal allowed the credit, agreeing with the appellant's justification.17. Tour Operator Services:The appellant argued that these services were used for arranging trips for dealer meets and seminars for sales promotion. The adjudicating authority disallowed the credit, stating no nexus with manufacturing. The tribunal allowed the credit, finding the appellant's reasoning logical.18. Travel Agent Services:The appellant claimed these services were used for booking transport and hotels for business-related activities. The adjudicating authority denied the credit, citing no nexus with manufacturing. The tribunal allowed the credit, agreeing with the appellant's justification.19. Clubs and Association Services:The appellant argued that these services were used for membership fees of export promotion councils. The adjudicating authority disallowed the credit, citing the exclusion clause. The tribunal upheld the disallowance, finding no appealable reason to establish a nexus with manufacturing.20. Real Estate Agent Services:The appellant claimed these services were used to find guest houses for employees on market visits and audits. The adjudicating authority denied the credit, stating no nexus with manufacturing. The tribunal upheld the disallowance, finding no appealable reason to establish a nexus with manufacturing.21. Rent-a-Cab Operator Services:The appellant argued that these services were used for employee transportation. The adjudicating authority disallowed the credit, citing the exclusion clause. The tribunal allowed the credit, agreeing with the appellant's justification.22. Works Contract Services:The appellant claimed these services were used for attending appeal matters of the company. The adjudicating authority denied the credit due to a lack of tangible evidence. The tribunal allowed the credit, finding the appellant's reasoning logical.23. Insurance Services:The appellant argued that these services were used for insuring factory and office premises. The adjudicating authority disallowed the credit, stating no nexus with manufacturing. The tribunal allowed the credit, finding the appellant's reasoning logical.24. Intellectual Property Services:The appellant claimed these services were used for renewing trademarks of subsidiary companies. The adjudicating authority denied the credit, stating no nexus with manufacturing. The tribunal allowed the credit, agreeing with the appellant's justification.25. Renting of Immovable Property Services:The appellant argued that these services were used for storing finished products at depots. The adjudicating authority disallowed the credit, stating no nexus with manufacturing. The tribunal allowed the credit, finding the appellant's reasoning logical.26. Architect Services:The appellant claimed these services were used for office renovation and structural audits. The adjudicating authority denied the credit due to an inadvertent submission of the wrong invoice. The tribunal allowed the credit, agreeing with the appellant's justification.Conclusion:The tribunal allowed the CENVAT credit for most of the services, finding the appellant's reasoning logical and the disallowance by the adjudicating authority mechanical and without cogent reason. However, the credit for Membership of Clubs, Services Provided by Director of Company under Reverse Charge, Clubs and Association Services, and Real Estate Agent Services was disallowed due to a lack of appealable reason to establish a nexus with manufacturing. Penalties were reduced accordingly.