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2022 (3) TMI 912 - AT - Central ExciseCENVAT Credit - input services - maintenance and repair work of the residential colony - denial on the ground that the said service has no nexus with the manufacture of final product - HELD THAT:- Admittedly, the residential colony was constructed adjacent to the factory because of the reason that the factory manufacturing cement, which runs round the clock, is located at a remote place which is away from the city. Unless the residential colony is constructed near the factory, the appellant will not be in a position to get the proper/ adequate manpower for running its plant/ activities. Considering the aforementioned activities and the legistature intent behind the cenvat scheme, the Hon’ble Andhra Pradesh High Court in the case of COMMISSIONER OF CUS. & C. EX., HYDERABAD-III VERSUS ITC LIMITED [2011 (11) TMI 516 - ANDHRA PRADESH HIGH COURT] has held that cenvat credit of service tax paid on the taxable services used in the residential complex shall be available to the manufacturer. In the Ruling in the case of CCE VERSUS MANIKGARH CEMENT [2010 (10) TMI 10 - BOMBAY HIGH COURT] the Hon’ble Bombay High Court have considered the eligibility of Cenvat credit of Service Tax on account of repairs, maintenance, civil construction etc. used in the residential colony, was disallowed on the ground that such service is not covered under the definition of input service. The Hon’ble High Court also observed that the extension of residential colony may be a welfare activity while carrying on business. Such explanation may be available under the Income Tax Act, however to qualify as an input service, it should have nexus with the business of the assessee. With respect to Hon’ble Bombay High Court, it is found that the aforementioned observations are not in tune with the language and spirit of Rule 2(l) of Cenvat Credit Rules. The rules specifically provides for allowing Cenvat credit of any service used by manufacturer, whether directly or indirectly in or in relation to the manufacturer of final products, and clearance of the final product up to the place of removal. In facts and circumstances hereunder, the assessee provides and maintains the facility of residential colony adjacent to the factory. It cannot get the service of competent staff and personnel for running the factory, which is run round the clock, and the employees have to work in shifts. Appeal allowed - decided in favor of appellant.
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