2018 (4) TMI 948 - AT - Central Excise

Manufacturer entitled to Cenvat credit for essential services, except civil works.

M/s. Uni Abex Alloys Products Ltd. Versus Commissioner of Central Excise, Mumbai-II

The tribunal held that the appellant, a manufacturer of excisable goods, was entitled to Cenvat credit for various services including corporate services, ... CENVAT credit - input services - Corporate service - Human resource - Legal and secretarial services - professional fees paid for conducting e-auction - ambulance service - medical treatment - health check up of the employees - civil works - Held that: - As per the details of corporate service, it includes the services related to finance, human resource, information technology services and legal and secretarial services, all these services are essential for running manufacturing unit - credit allowed. Human resource - Held that: - without this service manufacturing activity cannot be carried out and IT service in the present trade scenario has become backbone for running industry and commerce therefore it is essential service - credit allowed. Legal and secretarial services - Held that: - these are must for carrying out industrial unit for the reason that industry has to deal with the various acts therefore legal services and secretarial services is required invariably for running overall manufacturing of the final product. Therefore there is no doubt that all these service are essential services for running a factory - credit allowed. E-auction service - Held that: - as per the fact, e-auction services was used for purchase of raw material - As per the definition of input service in the inclusion clause ‘procurement of input’ is one of the service mentioned therein - e-auction service which is used for procurement of the input is clearly covered under the definition of input service - credit allowed. The services namely, ambulance, health check up, medical treatment for employees - Held that: - these services are under statutory obligations under the factory and industry act to provide such medical facility to the employees in order to run the factory therefore these services used in relation to the manufacturing of final product even though indirectly - credit allowed. Civil work - Held that: - no documents were provided by the appellant in regard to the nature of the service and use thereof therefore denial of cenvat credit in respect of civil work is upheld - credit on civil works denied. Appeal allowed in part. Issues involved: Whether the appellant, a manufacturer of excisable goods, is entitled to Cenvat credit for various services including corporate service, professional fees for e-auction, ambulance service, medical treatment, health check-up of employees, and civil works.Analysis:1. Corporate Service: The appellant argued that corporate services encompassing finance, human resources, IT, legal, and secretarial services are directly related to the manufacturing process and thus eligible for Cenvat credit. The tribunal acknowledged the essential nature of these services for factory operations, highlighting finance as crucial for any industry, HR as vital for manufacturing activities, IT as a backbone for industry operations, and legal services as necessary for compliance with various laws. Therefore, the tribunal deemed these corporate services eligible for Cenvat credit.2. Professional Fees for E-Auction: The appellant contended that fees paid for conducting e-auctions were for procuring raw materials, falling under the inclusive clause of 'procurement of input' in the definition of input service. The tribunal agreed that e-auction services used for procuring inputs are covered under the definition of input service, making them eligible for Cenvat credit.3. Ambulance Service, Medical Treatment, Health Check-up: These services were argued to be statutory obligations under factory and industry acts to ensure employee well-being and factory operations. The tribunal recognized the necessity of providing these services to employees for factory functioning, even though indirectly related to the manufacturing process. Hence, these services were considered eligible for Cenvat credit.4. Civil Works: The appellant failed to provide sufficient documentation regarding the nature and use of civil works services. Consequently, the denial of Cenvat credit for civil works was upheld by the tribunal.In conclusion, the tribunal found that all services, except civil works, were essential input services for the manufacturing process of the appellant. The orders denying Cenvat credit on these services were deemed unsustainable, leading to the setting aside of the impugned orders and allowing the appeals. The denial of Cenvat credit for civil works was upheld. The judgment was pronounced on 22/03/2018.