Manufacturer entitled to Cenvat Credit for garden maintenance services under "Manpower supply"

The Tribunal held that the appellant, a manufacturer of rubber seals and polymers, was entitled to avail Cenvat Credit on Service tax paid for garden maintenance services under "Manpower supply". This decision was based on the statutory requirement imposed by the Karnataka State Pollution Control Board (KSPCB) for environmental compliance, distinguishing it from previous cases. The Tribunal set aside the Revenue's demand and penalties, allowing the appeal in favor of the appellant with consequential relief. Judgment was pronounced on 22-1-2010.

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Issues:
1. Eligibility of Cenvat Credit on Service tax paid for garden maintenance services under "Manpower supply".

Analysis:
The appeal concerned the eligibility of Cenvat Credit on Service tax paid for garden maintenance services under the category of "Manpower supply". The appellant, a manufacturer of rubber seals and polymers, availed credit of Service tax paid on manpower supply services for garden maintenance. However, the Revenue disputed the eligibility of this credit, arguing that the services did not qualify as input services related to the manufacture of final products. The dispute arose from a show cause notice issued by the Revenue, leading to the adjudicating authority confirming the demand and imposing penalties. The appellant then appealed to the Commissioner (Appeals) who upheld the original order, prompting the current appeal.

The appellant's counsel argued that maintaining the garden was a statutory requirement imposed by the Karnataka State Pollution Control Board (KSPCB) under environmental laws. The appellant's factory had to adhere to pollution control norms, treat effluents, and use the treated water for irrigation within the factory premises. The counsel cited the appellant's ISO certifications emphasizing environmental management. The appellant relied on the decision of the Hon'ble High Court of Bombay in the case of Coca Cola India Pvt. Ltd. and a Tribunal decision in the case of Millipore India Ltd. to support their claim for Cenvat Credit.

In response, the Revenue's representative contended that garden maintenance services did not qualify as services used directly or indirectly in relation to the manufacture and clearance of excisable goods. They cited a Tribunal decision in the case of Kirloskar Oil Engines Ltd. to support their argument.

Upon considering the submissions and records, the Tribunal analyzed the statutory requirements imposed by the KSPCB on the appellant regarding garden maintenance and water usage. The Tribunal noted that the appellant was obligated to maintain the garden within the factory premises to comply with environmental regulations. Referring to the judgment of the Hon'ble High Court of Bombay in the Coca Cola India Pvt. Ltd. case, the Tribunal concluded that the appellant was eligible to avail Cenvat Credit on the Service tax paid for garden maintenance services falling under "Manpower supply". The Tribunal distinguished this case from the Kirloskar Oil Engines Ltd. decision, emphasizing the statutory requirement and environmental compliance in the current scenario.

In light of the statutory obligation and environmental considerations, the Tribunal held that the appellant was entitled to avail Cenvat Credit on the Service tax paid for garden maintenance services. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant with consequential relief, if any. The judgment was pronounced on 22-1-2010.

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