CESTAT Chennai: Manpower Supply for Essential Services Linked to Manufacturing Deemed Creditworthy

The Appellate Tribunal CESTAT CHENNAI ruled in favor of the appellants, holding that Manpower Supply Services used for housekeeping, canteen, and cleaning of toilets were integrally connected to the manufacturing activity and essential for maintaining cleanliness and hygiene. The denial of credit on these services was deemed unjustified, leading to the setting aside of the impugned order and allowing the appeal with any consequential reliefs.

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Issues:
1. Eligibility of Cenvat Credit on Manpower Supply Services used for housekeeping, canteen, and cleaning of toilets.

Analysis:
The case involved the appellants, engaged in manufacturing Piston Rings, Piston Pins, and transmission components, availing Cenvat Credit of service tax paid on various input services, including Manpower Supply Services for housekeeping, canteen, and cleaning of toilets. The Department contended that these services were not eligible for credit, leading to a Show Cause Notice proposing to disallow the credit, recover the wrongly availed credit with interest, and impose penalties. The Original Authority disallowed the credit, confirmed the demand, and imposed penalties, which the Commissioner (Appeals) later set aside. The issue before the Tribunal was the eligibility of the appellants for credit on the mentioned services.

The Counsel for the appellants argued that the Manpower Supply Services for housekeeping, canteen, and toilet cleaning were essential and integrally connected to the manufacturing activity, citing the decision in the case of Wipro Ltd. Vs. Commissioner of C. Ex., Pondicherry [2018 (10) G.S.T.L. 172 (Mad.)]. On the other hand, the learned AR supported the findings in the impugned order. After hearing both sides, the Tribunal considered whether the services in question were essential for maintaining clean and hygienic factory premises and offices, concluding that denying credit on such services was unjustified. Therefore, the Tribunal set aside the impugned order, allowing the appeal with any consequential reliefs.

In conclusion, the Appellate Tribunal CESTAT CHENNAI, through Member (Judicial) Ms. Sulekha Beevi C.S., ruled in favor of the appellants, holding that Manpower Supply Services used for housekeeping, canteen, and cleaning of toilets were integrally connected to the manufacturing activity and essential for maintaining cleanliness and hygiene. The denial of credit on these services was deemed unjustified, leading to the setting aside of the impugned order and allowing the appeal with any consequential reliefs.

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