2010 (1) TMI 288 - AT - Service Tax

Tribunal affirms credit for essential services in safeguarding goods

COMMR. OF C. EX. & CUS., GUNTUR Versus HINDUSTAN COCA-COLA BEVERAGES PVT. LTD.

The Tribunal rejected the Revenue's appeal and upheld the entitlement of the respondents to avail the credit of service tax on 'Security Agency Service' ... Cenvat Credit - ‘Security Agency Service’ and ‘pest control service’ – Input services – Held that: - security services are availed by the assessee for ensuring safety of its goods stored in its godown. The pest control service is availed in order to ensure clean and healthy environment in the factory premises by preventing pests entering the premises where its final products are manufactured and stored. – credit allowed Issues:1. Irregular availing of credit of service tax on 'Security Agency Service' and 'pest control service' during a specific period.2. Appeal against the vacation of the Order-in-Original by the Commissioner (Appeals) regarding the confirmation of demand and penalty imposed.Analysis:1. The original authority had confirmed the irregular availing of credit of service tax on 'Security Agency Service' and 'pest control service' during a particular period, amounting to Rs. 1,05,042/-, along with interest and a penalty under Rule 15(3) of Cenvat Credit Rules, 2004. The Commissioner (Appeals) vacated this order, leading to an appeal by the Revenue seeking to restore the original authority's decision.2. The Revenue contended that the 'security agency service' and 'pest control services' were not directly or indirectly related to the manufacturing process of the final products of the assessee, as they were utilized for the safety and cleanliness of the premises where the goods were stored. However, during the hearing, it was established that the security services were essential for safeguarding the goods in the godown, while pest control services were necessary to maintain a healthy environment in the factory premises where the final products were manufactured and stored.3. The Tribunal referred to a previous Final Order in the case of the same assessee, where it was held that the respondents were entitled to credit of service tax paid on these services. Citing the decision in CCE, Mumbai v. GTC Industries Ltd., the Tribunal emphasized that services like outdoor catering, when undertaken in relation to the business activities of the assessee, fall under the definition of 'input service.' Relying on this precedent, the appeal filed by the Revenue was rejected, upholding the entitlement of the respondents to avail the credit of service tax on the mentioned services.This detailed analysis of the judgment highlights the issues of irregular availing of service tax credit and the subsequent appeal against the vacation of the original order, providing a comprehensive understanding of the legal reasoning and precedent relied upon by the Tribunal in reaching its decision.