2016 (11) TMI 1448 - AT - Service Tax

CENVAT credit - inputs - inputs services - Exposy Coating Floor coating or Floor Material - Wall panel Ceiling panel - Gauges rack - Tools rack - Trolley - Held that - as regards Exposy Coating Floor coating or Floor Material and Wall panel Ceiling panel the services availed was to make the environment dust-free which is one of the requirement of the Factories Act 1948. Therefore denial of the Cenvat credit of the tax paid is uncalled for. Gauges rack - Tools rack - Trolley - Held that - it is probably considered by the adjudicating authority as not capital goods. These Gauges Racks are purchased for the purpose of storage and need not be considered as capital goods and being integraly connected with the manufacturing activity these are recurring expenditures to hold such goods as input on the facts of the present case and that is not unreasonable - same reasoning applies for Tools rack and Trolley. The word include is used in the statutory definition generally to enlarge the scope and meaning of the words used in law without restriction - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of Cenvat credit for various services and goods used in the course of manufacture.

Analysis:
1. The appellant claimed Cenvat credit for services and goods used in manufacturing, which the Revenue opposed, arguing lack of justification for considering them as input services and inputs for manufacturing.

2. The Tribunal examined the services and goods in question. For the service of floor coating to reduce dirt levels, it was noted that this was essential for maintaining conducive room conditions for quality production, complying with the Factories Act, 1948. Similarly, wall and ceiling panels were deemed necessary for maintaining temperature levels in air-conditioned rooms where machines operated.

3. Regarding the gauges rack, tools rack, and trolley, the Tribunal considered them as integral to the manufacturing process, essential for hassle-free production of final goods. These items were seen as recurring expenditures rather than capital goods, thus justifying their classification as input for manufacturing purposes.

4. The Tribunal justified its decision to grant Cenvat credit by referencing the statutory definition, emphasizing that the term "include" is meant to broaden the scope of words used in law without restrictions. This interpretation was supported by a Supreme Court ruling in the case of Ramala Sahkari Chini Mills Ltd. v. Commissioner of Central Excise, Meerut-I.

5. Consequently, the Tribunal allowed the appeal, ruling in favor of the appellant and granting the Cenvat credit for the services and goods used in the manufacturing process.