CESTAT allows CENVAT credit for research development centre services and garden maintenance as manufacturing essentials

The CESTAT Mumbai allowed the appeal regarding recovery of CENVAT credit with interest and penalty. The tribunal held that disallowance of credit for research and development centre establishment services was inappropriate as these services were essential for manufacturing, not merely construction. The authority's narrow interpretation based on 2008 CBEC circular was incorrect since the dispute involved input services for manufacturing, not output services. Regarding garden maintenance services, the tribunal found them essential for factory operations, making service tax credit admissible. Credit for canteen services was also allowed based on established tribunal precedents. The appellant had already reversed credit for bus transport services, resolving that dispute. The impugned order lacked merit on CENVAT credit entitlement.

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Issues Involved:
The appeal involves the disallowance of CENVAT credit and recovery under rule 14 of CENVAT Credit Rules, 2004, along with penalty, relating to the procurement of various services for the period from August 2005 to September 2011.

CENVAT Credit Eligibility:
The appeal concerns the availment of credit on services such as 'erection, installation and commissioning of research and development centre', 'garden maintenance service', 'canteen services', and 'bus transport service'. The appellant argued that these services qualify as 'input services' under the wide definition provided in rule 2(l) of the CENVAT Credit Rules, 2004. They relied on judicial decisions and circulars to support their contention that the services were used in or in relation to the manufacture of the final product and should not be disallowed.

'Erection, Installation and Commissioning of Research and Development Centre':
Regarding the 'erection, commissioning and installation of research and development centre', the appellant argued that the services were erroneously interpreted by the adjudicating authority based on a circular issued by CBEC in 2008. They contended that the establishment of the research and development centre within the factory premises was essential for manufacturing and should not be considered ineligible for credit. Various judicial decisions were cited to support this argument.

'Garden Maintenance Service' and 'Canteen Services':
The appellant also contested the disallowance of credit for 'garden maintenance services' and 'canteen services'. Judicial precedents and tribunal decisions were cited to argue for the eligibility of these services for CENVAT credit.

Final Decision:
The Tribunal found that the disallowance in the impugned order lacked merit. The eligibility of tax paid on the services for CENVAT credit was established, leading to the setting aside of the impugned order and allowing the appeal.

Separate Judgment:
No separate judgment was delivered by the judges.

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