2018 (5) TMI 1666 - AT - Central Excise

Tribunal allows CENVAT credit for security, mandap keeper, and PR services for paint manufacturer.

The Tribunal overturned the disallowance of CENVAT credit on security services, mandap keeper services, and public relations management services for a ... CENVAT credit - input services - security services - mandap keeper services - Public Relations Management Services - Held that:- When the appellant has to give security or safety to the image of its products, this also would fall within the security services as the appellant has engaged various agencies to conduct raid in the premises of manufacturers who are engaged in manufacture of duplicate products which are cleared using the brandname of the appellant - security services are eligible for credit - credit allowed. Mandap Keeper Services - Held that:- Mandap Keeper Services have been availed to conduct AGMs of the appellant-company. The said meetings being an indispensable programme of the company as laid down in the Companies Act, the disallowance of credit on this count is unjustified - credit allowed. Public Relations Management Services - Held that:- The intention of such market research and analyzing the potentiality of advertisement of each region so as to give region specific advertisement is necessary to augment manufacture - credit allowed. Appeal allowed - decided in favor of appellant. Issues:- Disallowance of CENVAT credit on various services- Allegation of disproportionate distribution of credit on ISD invoices- Disallowance of credit on security services, mandap keeper services, and public relations management servicesAnalysis:*Disallowance of CENVAT Credit on Various Services:*The appellants, engaged in manufacturing paints and varnishes, availed CENVAT credit on service tax paid on input services. The original authority confirmed the demand, interest, and penalty, but the Commissioner (Appeals) set aside the demand for all services except for security services, mandap keeper services, and public relations management services. The Tribunal was approached by the appellant against the disallowance of credit on these three services.*Security Services Disallowance:*The appellant argued that security services were crucial to safeguard their products from damage caused by substandard products in the market bearing the appellant's brand name. The services were utilized to conduct raids on manufacturers of duplicate products, essential to protect the company's image and product reputation. The Tribunal held that security services were directly connected to the manufacturing activity, making the disallowance unjustified.*Mandap Keeper Services Disallowance:*Mandap keeper services were availed for conducting the Annual General Body Meeting (AGM) of the company. The disallowance of credit on these services was deemed unjustified by the Tribunal as AGMs are mandatory under the Companies Act and directly linked to the manufacturing activity.*Public Relations Management Services Disallowance:*The appellant utilized public relations management services for analyzing advertisement potential across various regions to enhance product marketing. The Tribunal found that these services were integral to the manufacturing activity as they facilitated market research and region-specific advertising, leading to the conclusion that the disallowance of credit on these services was unwarranted.*Decision:*The Tribunal set aside the impugned order disallowing credit on security services, mandap keeper services, and public relations management services, allowing the appeal with any consequential relief. The judgment emphasized the eligibility of these services for CENVAT credit due to their direct connection with the manufacturing activity, overturning the Commissioner (Appeals)'s decision.