2018 (2) TMI 996 - AT - Central Excise

Appellant wins appeal on CENVAT credit denial for specific services, court emphasizes direct connection to manufacturing activities.

The appellant successfully appealed the denial of input service credit on Octroi service, Commercial or Industrial Construction Services, Erection, ... CENVAT credit - input services - Octroi - Commercial & Industrial construction services - Erection, Commissioning and Installation Services - Rent-a-Cab Service - interior Decorator Services - denial on the premises that these services are not used in or in relation to the manufacture of final product as per Rule 2(l) of CCR 2004. Octroi service - Held that: - the said services were in connection with the procurement of inputs, it is to be held as part of business and the payment to these agencies was a business expenditure in connection with manufacture of goods - credit allowed. Commercial or Industrial Construction Services - Erection, Commissioning or Installation Services - Held that: - any services availed by appellant for repair and maintenance or erection, commissioning or installation services, appellant is entitled for CENVAT Credit - credit allowed. Rent-a-Cab Service - Held that: - there is an assumption and presumption of learned adjudicating authority that the service has been used for personal use - without specific allegation, CENVAT credit cannot be denied to the appellant - credit allowed. Appeal allowed - decided in favor of appellant. Issues:1. Denial of input service credit on various services under Cenvat Credit Rules, 2004.Analysis:1. Octroi Service:- The appellant appealed against the denial of input service credit on Octroi service. The appellant argued that these services were essential for the procurement of inputs for further processing and job work to their factory. The appellant provided invoices showing payment of service tax and claimed CENVAT credit. The adjudicating authority denied credit due to lack of specific documents. However, as the authority did not specify the required documents, it was held that the appellant correctly availed CENVAT credit on Octroi services.2. Commercial or Industrial Construction Services, Erection, Commissioning or Installation Services:- The Revenue contended that these services were not connected to the appellant and were excluded from the definition of input service. The appellant explained that these services were used for repair, maintenance, and plant operations. Despite the appellant's explanation, the Commissioner denied credit based solely on invoice descriptions. As the actual usage of services was not examined or disputed, it was held that the appellant was entitled to CENVAT credit on these services.3. Rent-a-Cab Service:- The Commissioner (Appeals) previously allowed CENVAT credit on Rent-a-Cab service for official purposes, ensuring timely arrival of workers at the factory to avoid delays in manufacturing activities. The denial of credit in the impugned order was based on an assumption of personal use without specific evidence. As no direct or indirect connection to manufacturing was proven, it was held that the appellant correctly availed CENVAT credit on Rent-a-Cab service.In conclusion, the impugned order was set aside, and the appeal was allowed with any consequential relief. The judgment emphasized the importance of establishing a direct connection between the services and manufacturing activities to determine eligibility for CENVAT credit.