2018 (2) TMI 776 - AT - Central Excise

Tribunal Allows CENVAT Credit on Essential Services for Export Unit

Vinati Organics Ltd Versus Commissioner of Central Excise & Customs, Kolhapur

The Tribunal allowed the appeal, overturning the original authority's decision to disallow CENVAT credit on services like outdoor catering and accident ... 100% EOU - CENVAT credit - outdoor catering service - rent-a-cab service - accident insurance - Held that: - any activity that has some connection with the business, whether directly or indirectly, would be entitled to availment of CENVAT credit - ‘outdoor catering service’ is a statutory requirement in factories, while ‘rent-a-cab service’ is utilized for picking up and dropping of employees, and ‘accident insurance’ is for coverage of contingencies at the workplace - credit allowed on all services - appeal allowed - decided in favor of appellant. Issues: Disallowance of CENVAT credit on various services, penalty imposition under CENVAT Credit Rules, 2004 and Central Excise Act, 1944.Analysis:The original authority disallowed CENVAT credit availed by an export-oriented unit on construction service, personal accident insurance, outdoor catering services, and rent-a-cab service, along with imposing interest and penalty under CENVAT Credit Rules, 2004 and Central Excise Act, 1944. The first appellate authority limited the demand for the disputed period and set aside the penalty, resulting in an appeal against the reduced amount. The Tribunal considered the definitions of 'input service' and 'input' in relation to the business of manufacturing final products. It relied on precedents to establish that services directly or indirectly connected to the business, like outdoor catering and accident insurance, are eligible for CENVAT credit. The Tribunal emphasized that any activity related to the business, whether directly or indirectly, qualifies for credit. Therefore, it set aside the impugned order and allowed the appeal, aligning with the decisions in similar cases.The Tribunal's decision was based on the interpretation of the definitions of 'input service' and 'input' in the context of manufacturing final products. It highlighted that services integral to the business, such as outdoor catering and accident insurance, are eligible for CENVAT credit. The Tribunal emphasized that any activity connected to the business, whether directly or indirectly, is entitled to availment of CENVAT credit. This broad interpretation aligned with previous decisions and established that statutory requirements like outdoor catering and services for employee well-being, such as accident insurance, are integral to the manufacturing process and thus eligible for credit.The Tribunal's decision was guided by the interpretation of the definitions of 'input service' and 'input' to determine the eligibility for CENVAT credit. It cited precedents to support the view that services like outdoor catering and accident insurance, which are integrally connected to the business, qualify for credit. The Tribunal emphasized that any activity related to the business, whether directly or indirectly, is entitled to CENVAT credit. It recognized the importance of services like outdoor catering for statutory compliance and accident insurance for workplace safety, establishing their eligibility for credit. Consequently, the Tribunal set aside the original authority's decision and allowed the appeal, aligning with established principles and precedents in similar cases.