2019 (7) TMI 559 - AT - Central Excise

Tribunal Allows Cenvat Credit on Services, Invalidates Penalty Due to Time-Barred Demand and Lack of Malafide Intent.

The Tribunal set aside the impugned order, allowing the appellant's claim for cenvat credit on services such as housekeeping and member facilitation, ... CENVAT Credit - input services or not - house-keeping services - services for member facilitation charges - Services received for representing anti dumping duty etc., - denial on account of nexus - period April, 2013 to September, 2015 - Extended period of limitation - HELD THAT:- Various precedent decisions have held the involved services as cenvatable - Reference can be made to Tribunal decision in the case of M/S. UNIWORTH TEXTILES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE. RAIPUR [2013 (1) TMI 616 - SUPREME COURT] laying down that cleaning services as well as legal services and management services are cenvatable - in the case of Commissioner of C. Ex., Delhi-III vs. Maruti Suzuki India Limited [2015 (10) TMI 113 - CESTAT NEW DELHI] housekeeping services have been held to be cenvatable inasmuch as cleanliness is to be maintained for ensuring health surrounding and working condition of the employees. Hon’ble Bombay High Court in the case of Commissioner of C. Ex., Nagpur vs. Ultratech Cement Ltd., [2010 (10) TMI 13 - BOMBAY HIGH COURT] has observed that the scope of definition of input services is very wide and the same covers not only services used directly or indirectly in or in relation to manufacture of final product - Inasmuch as the involved services have been utilised by the appellant for conducting their business, they are required to be held as cenvatable. Extended period of limitation - HELD THAT:- The demand for the period April, 2013 to September, 2015 stands raised by the show cause notice dated 28.01.2016 and major part of the same is barred by limitation. The issue being a bonafide issue of interpretation and the credit having been availed by reflecting the same in the RG-23-A Part-I & Part-II, no malafide can be attributed to the appellant, in the absence of any evidence to the contrary - demand is barred by limitation. Appeal allowed on merits as well as on limitation. Issues: Denial of cenvat credit for various services; Nexus with business activities; Imposition of penalty; Invocation of longer period of limitationAnalysis:1. The appellant, engaged in manufacturing electrical insulators, was denied cenvat credit of service tax amounting to Rs. 4,01,662 for services like house-keeping, member facilitation charges, and representing anti-dumping duty from April 2013 to September 2015. The denial was based on the argument that these services lacked nexus with the appellant's business activities, leading to the confirmation of demand and imposition of penalty through a show cause notice dated 28.01.2016, invoking the longer period of limitation.2. Upon reviewing the submissions and the impugned order, it was noted that precedent decisions have considered similar services as cenvatable. Referring to cases like Uniworth Textiles Ltd. Vs. Commissioner of Central Excise, Raipur, it was established that services such as cleaning, legal, and management services are eligible for cenvat credit. Additionally, judgments from the Hon'ble Gujarat High Court and the Bombay High Court emphasized the broad scope of input services, covering services used directly or indirectly in business operations. Notably, housekeeping services were deemed cenvatable for maintaining cleanliness and ensuring a healthy work environment for employees. Furthermore, it was highlighted that the demand raised for the period in question was mostly time-barred, indicating a genuine issue of interpretation without any evidence of malafide intentions on the appellant's part.3. Consequently, the impugned order was set aside both on merits and limitation grounds, recognizing the legitimacy of the appellant's claim for cenvat credit on the services utilized during their business operations.