2018 (2) TMI 69 - AT - Central Excise

Tribunal remands case for Shops & Establishments Act verification, allows CENVAT credit on services

The Tribunal remanded the case to the original authority to verify if the appellants fell under the Shops and Establishments Act. The impugned orders ... CENVAT credit - input services - house-keeping / cleaning services - Held that: - In the appellant’s own case M/s. Samsung India Electronics Pvt. Ltd. Versus Commissioner of Central Excise, Chennai-IV [2016 (11) TMI 1514 - CESTAT CHENNAI], the Tribunal had analysed the very same and had remanded the matter to consider the issue whether the appellant would fall within the purview of Shops and Establishments Act as contended by them - the matter requires to be remanded to the original authority who shall verify whether the appellants are within the purview of the said Act and dispose the issue - appeal allowed by way of remand. Issues:Disallowance of CENVAT credit on housekeeping/cleaning services.Analysis:The appeals were filed against the disallowance of CENVAT credit on input services, specifically housekeeping/cleaning services, by the Commissioner (Appeals). The appellants, engaged in manufacturing various products, had availed input service tax credit for specific periods. The department contended that these services did not qualify for credit as they were not directly or indirectly used in relation to the manufacture and clearance of final products. A show cause notice was issued, leading to the original authority disallowing the credit, imposing penalties, and confirming the demand. The Commissioner (Appeals) upheld this decision, prompting the filing of the appeals.The appellant's counsel argued that the housekeeping services were essential for maintaining cleanliness and hygiene at the branch offices, as mandated by the Tamil Nadu Shops & Establishments Act. Referring to the Act's provisions, it was highlighted that the services, including lime washing, disinfecting, etc., were necessary to keep the premises clean. The counsel asserted that since the branch offices were used for clearance and marketing of finished products, the services were directly connected to the manufacturing activity. It was emphasized that the Head Office in Delhi distributed the credit to the appellant's factory in Chennai, justifying the availing of the credit.On the other hand, the department representative reiterated the findings of the impugned order, stating that the appellant failed to demonstrate the direct or indirect use of the services in relation to manufacturing finished products. It was argued that since the services were utilized in branch offices located outside the factory premises, they did not qualify as input services eligible for credit. Additionally, it was pointed out that the issue of whether the appellant fell under the Shops and Establishments Act had not been adequately examined by the lower authorities, suggesting a need for remand.Considering the arguments presented, the Tribunal referred to a previous decision in the appellant's case where a similar issue was remanded for further examination. In line with this precedent, the Tribunal decided to remand the matter to the original authority. The original authority was directed to verify whether the appellants fell within the purview of the Shops and Establishments Act and then dispose of the issue accordingly. Consequently, the impugned orders were set aside, and the appeals were allowed for remand to the original authority, ensuring a fair hearing for both parties before a reasoned decision is made.