CESTAT Chennai: CENVAT Credit Allowed for Gardening Services

The Appellate Tribunal CESTAT CHENNAI allowed the appeal, setting aside the demand for recovery of wrongly availed CENVAT Credit on gardening services. The Tribunal held that gardening expenses were essential for maintaining factory premises in an eco-friendly manner, forming part of the final product's cost. Relying on the principle of stare decisis, the Tribunal aligned with a High Court judgment supporting the availability of CENVAT Credit for similar services. The decision emphasized the importance of eco-friendly practices and the inclusion of such expenses in the manufacturing process without imposing any costs on the appellant.

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Issues:
Recovery of wrongly availed CENVAT Credit on gardening services, Time-barred demand, Validity of service tax credit, Interpretation of Rule 2(l)(ii) of CENVAT Credit Rules, 2004.

Analysis:
1. The appellant, engaged in manufacturing UPVC Doors & Windows, availed CENVAT Credit on inputs, capital goods, and input services. A Show Cause Notice was issued for recovering wrongly availed credit on gardening services, alleging non-compliance with Rule 2(l)(ii) of CENVAT Credit Rules, 2004.

2. The appellant contended that maintaining gardening was essential for obtaining consent from TNPCB, citing case laws. They argued the demand was time-barred as the SCN was issued after two years from the Department's knowledge.

3. The Assistant Commissioner confirmed the demand and interest, leading to an appeal before the Commissioner (Appeals-II), who partially allowed the appeal. The appellant then appealed to the Appellate Tribunal CESTAT CHENNAI.

4. The appellant's consultant argued that gardening expenses, including service tax paid, were part of the final product's value, thus used in manufacturing excisable goods. They relied on various judgments supporting their stance.

5. The Department Representative supported the lower authorities' findings. The Tribunal analyzed the contentions, pleadings, and referred judgments. It highlighted a High Court judgment supporting the availability of CENVAT Credit for housekeeping and landscaping services.

6. The Tribunal found the issue in the present case aligned with the High Court's ruling, allowing the appeal based on the principle of stare decisis. The judgment emphasized the relevance of maintaining factory premises in an eco-friendly manner and the tax paid on such services forming part of the final product's cost.

7. The Tribunal set aside the impugned order, allowing the appeal with no costs. The decision was pronounced in open court, providing consequential reliefs if any.

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