Appeal granted for input service credit on telephone bills and staff canteen, penalties set aside

The Tribunal allowed the appeal, overturning the lower authority's disallowance of input service credit on telephone bills and Manpower Supply for the staff canteen. Citing a precedent case, the Tribunal ruled that services like housekeeping and canteen are integral to manufacturing activities, making them eligible for input service credit. The penalties imposed were set aside, and the appellant was granted relief with consequential benefits as per law.

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Issues: Availment of input service credit on telephone bills in the name of President, input service credit on Manpower Supply for staff canteen, disallowance of credit on canteen services, imposition of penalties.

Analysis:
1. The appellant, engaged in paper manufacturing, availed CENVAT Credit of duty paid on inputs, input services, and capital goods. The lower adjudicating authority disallowed input service tax credit on telephone bills in the name of their President and Manpower Supply for the staff canteen. Penalties and interest on wrongly availed credit were imposed.

2. An appeal was made to the Commissioner of G.S.T. & Central Excise (Appeals), who allowed input service credit of &8377; 4210 and modified the Order-in-Original partially. The appellant challenged the disallowance of credit on canteen services and penalties.

3. During the hearing, the appellant's advocate referred to a Tribunal decision in M/s. IP Rings Ltd. case, where Manpower Supply Services for housekeeping and canteen were considered eligible input services integral to manufacturing activities. The Revenue opposed this view.

4. The Tribunal, considering the M/s. IP Rings Ltd. case, ruled that services like housekeeping and canteen, essential for maintaining cleanliness and hygiene in factory premises, qualify as eligible input services. The impugned order disallowing credit was set aside, following the precedent.

5. As there were no distinguishing judgments presented by the Revenue, the Tribunal found the impugned order unsustainable and allowed the appeal with consequential benefits as per law. The decision was pronounced in open court, granting relief to the appellant.

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