2021 (3) TMI 1116 - AT - Central Excise

Tribunal allows CENVAT credit for various services but disallows credit for Outdoor Catering Services

The Tribunal allowed CENVAT credit for Erection, Commissioning, and Installation Services (Crane Services), Event Management Services, Management, ... CENVAT Credit - input services - Erection, Commissioning and installation (crane Services) - Event Management Services - Management, Maintenance and Repair service - Auctioneer Service - Outdoor Catering service. Erection, Commissioning and installation (crane Services) - denial on the ground that the Credit availment does not relate to Erection, Commissioning and Installation of any specific capital goods - February 2013 – December 2015 - HELD THAT:- The appellants have availed the impugned services and use it in relation to manufacture and the appellant has been able to establish sufficient nexus with the manufacturing activity as far as cranes services are concerned which the Department has misunderstood as erection, commissioning and installation service - this service of hiring of crane has been held to be Input Service in a manufacturing unit in various decisions like M/S ULTRATECH CEMENT LTD. VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, NAGPUR [2018 (2) TMI 6 - CESTAT MUMBAI] - credit allowed. Event Management Services - denial on the ground of no nexus with output service or manufacture - February 2013 – December 2015 - HELD THAT:- These services have been used for conducting the inaugural ceremony of the newly set up manufacturing unit where the management team travel to the factory premises and it also involved advertisement, designing, promotional video and pandal services wherein not only the employees of the company but its customers also attended and this service has also been held to be Input Service - Credit allowed. Management, Maintenance and Repair services - denial on the ground that Since diesel is a consumable, credit on the same cannot be allowed - February 2013 – December 2015 and January 2016 – June 2017 - HELD THAT:- This pertains to the management, maintenance and repair of DG sets which is required for generation of electricity for carrying out the manufacturing activity and once the hiring of DG sets has been allowed by the Department then it is necessary to allow the credit of service tax paid on running expenses and maintenance charges as diesel is an input which is essential for the functioning of the DG sets hence this service also falls within the definition of Input Service - Credit allowed. Auctioneer Service - denial on the ground that such services are availed for auction of scrap which is not final product of appellant - February 2013 – December 2015 and January 2016 – June 2017 - HELD THAT:- This service was availed for auctioning the scrap generated in the process of manufacture which is necessary and the Division Bench of the Chennai Tribunal in the case of M/S SUNDARAM CLAYTON LTD. VERSUS CCE, CHENNAI - II [2016 (6) TMI 161 - CESTAT CHENNAI] has held that “auction service is also integral part of the manufacturing activity since, clearance of the dumped goods having no utility is necessary to be removed in order to store raw materials or finished goods”. Hence, this service is an Input Service - credit allowed. Outdoor Catering service - denial on the ground that such service is excluded from the definition of “input service‟ - February 2013 – December 2015 and January 2016 – June 2017 - HELD THAT:- The appellants says that they have engaged contractors who provide food for the guest and the dealers but this outdoor catering service has been subsequently excluded from the definition of Input Service w.e.f 01.04.2011 and the Larger Bench decision of the Tribunal in the case of M/S. WIPRO LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE BANGALORE-III. [2018 (4) TMI 149 - CESTAT BANGALORE] wherein it has been exclusively held that CENVAT credit of outdoor catering service in view of the amended definition of Input Service w.e.f. 01.04.2011 is not available and by following the decision of the Larger Bench, it is held that the appellant is not entitled to CENVAT credit on Outdoor Catering Service - credit not allowed. Appeal allowed in part. Issues Involved:1. Entitlement to avail CENVAT credit on Erection, Commissioning, and Installation Services (Crane Services).2. Entitlement to avail CENVAT credit on Event Management Services.3. Entitlement to avail CENVAT credit on Management, Maintenance, and Repair Services.4. Entitlement to avail CENVAT credit on Auctioneering Services.5. Entitlement to avail CENVAT credit on Outdoor Catering Services.Detailed Analysis:1. Erection, Commissioning, and Installation Services (Crane Services):The appellant contended that crane services were used for loading, unloading, and shifting of dies, molds, and machines within the factory, which is essential for the manufacturing process. The Department misunderstood these services as erection, commissioning, and installation services unrelated to specific capital goods. The Tribunal found that the services related to cranes are indispensable to the manufacturing activity, thus qualifying as input services under Rule 2(l) of CCR, 2004. The Tribunal referred to previous decisions, including M/s Ultratech Cement Ltd. Vs Commissioner of CGST and Sarvana Global Energy Ltd. Vs CCE, Pondicherry, supporting this view.2. Event Management Services:The appellant used event management services for the inauguration ceremony of a new manufacturing unit, which included travel, boarding, lodging, advertisement, and promotional activities aimed at enhancing business and sales. The Department argued there was no nexus with the manufacturing process. However, the Tribunal recognized that these services fall under the inclusive portion of the input service definition, covering advertisement and sales promotion activities. The Tribunal cited previous decisions, including IBM India Pvt. Ltd. Vs CCE, Bangalore- LTU, and Monarch Catalyst Pvt. Ltd. Vs CCE, which supported the appellant's claim.3. Management, Maintenance, and Repair Services:The appellant availed services for the management, maintenance, and repair of DG sets used for generating electricity necessary for manufacturing. The Department disallowed credit on diesel expenses, considering it a consumable. The Tribunal found that since the hiring of DG sets was allowed, the associated running expenses and maintenance charges should also be allowed as input services. Diesel, being essential for DG sets' functioning, qualifies as an input service.4. Auctioneering Services:The appellant used auctioneering services for disposing of scrap generated during manufacturing. The Department denied credit, stating that scrap is not a final product. The Tribunal held that auctioning scrap is integral to the manufacturing process, as clearing scrap is necessary for storage and operational efficiency. The Tribunal referred to the Division Bench of the Chennai Tribunal's decision in Sundaram Clayton Vs CCE, Chennai-II, which supported the inclusion of auctioneering services as input services.5. Outdoor Catering Services:The appellant engaged contractors for providing food and beverages to visiting guests, vendors, and dealers, not employees. The Department disallowed credit, citing the exclusion of outdoor catering services from the input service definition w.e.f. 01.04.2011. The Tribunal upheld this exclusion, referencing the Larger Bench decision in Wipro Ltd. Vs CCE, which explicitly held that CENVAT credit for outdoor catering services is not available post-amendment.Conclusion:The Tribunal allowed CENVAT credit for Erection, Commissioning, and Installation Services (Crane Services), Event Management Services, Management, Maintenance, and Repair Services, and Auctioneering Services. However, it disallowed credit for Outdoor Catering Services, confirming the recovery of the said credit with interest. The appeal was partially allowed to this extent.