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2023 (3) TMI 1435 - AT - Central ExciseCENVAT Credit - input services - denial of credit on the ground that input service was not used in or in relation to manufacture of finished goods - HELD THAT - Interpreting the definition of Input Services as per Rule 2 (l) of CENVAT Credit Rules 2004 for the period prior to 01.04.2011 a larger bench of Tribunal has in case of M/S. RELIANCE INDUSTRIES LTD. VADODRA VERSUS COMMISSIONER CENTRAL EXCISE SERVICE TAX (LTU) MUMBAI 2022 (4) TMI 1357 - CESTAT MUMBAI (LB) held that The definition of input service is of wide import and covers not only input services which have a nexus with the manufacture of the final product (covered by the first limb) but also other input services which do not have such a nexus and are covered by the other limbs of the definition. Each limb of the definition is independent and therefore if an assessee can satisfy any one of the limbs the benefit of Cenvat credit would be available even if the assessee does not satisfy the other limbs of the definition. For the period prior to amendments made in the definition of input services the outdoor catering services availed by the appellant for providing canteen services to their employees are input services - In view of the Circular No 943/4/2011-CX dated 29.04.2011 the CENVAT Credit availed on these two invoices cannot be denied. There are no merits in the impugned order and same is set aside - appeal allowed.
Issues Involved:
1. Denial of CENVAT credit on Outdoor Catering services for the period prior to 01.04.2011. 2. Interpretation of "input service" under Rule 2(l) of the CENVAT Credit Rules, 2004. 3. Applicability of CBEC Circular No 943/4/2011-CX dated 29.04.2011. Detailed Analysis: 1. Denial of CENVAT Credit on Outdoor Catering Services: The appellant, engaged in the manufacturing of steel products, entered into an agreement with an outdoor caterer to provide food and beverages at their factory canteen. The appellant availed CENVAT credit on the service tax paid for these services. The Revenue denied this credit, arguing that the catering services did not qualify as "input service" under Rule 2(l) of the CENVAT Credit Rules, 2004, as they were not used in or in relation to the manufacture of finished goods. The Additional Commissioner confirmed the demand of Rs. 39,57,179/- along with interest and imposed an equivalent penalty. The Commissioner (Appeals) upheld this decision, leading to the present appeals. 2. Interpretation of "Input Service" Under Rule 2(l) of the CENVAT Credit Rules, 2004: The Tribunal referenced the larger bench decision in Reliance Industries [2022 (60) G.S.T.L. 442 (Tri. - LB)], which interpreted the definition of "input service" under Rule 2(l) of the CENVAT Credit Rules, 2004, for the period before 01.04.2011. The definition includes services used directly or indirectly in relation to the manufacture of final products, clearance of final products, and various business-related activities. The Bombay High Court in Coca Cola India and Ultratech Cement Ltd. cases emphasized that the definition is broad and inclusive, covering services that form part of the value of the final product. The Karnataka High Court in Stanzen Toyotetsu India (P) Ltd [2011 (23) S.T.R. 444 (Kar.)] reiterated that services utilized directly or indirectly in relation to the manufacture of final products or business activities qualify as "input services." 3. Applicability of CBEC Circular No 943/4/2011-CX dated 29.04.2011: The Tribunal noted the CBEC Circular, which clarified that credit on services received before 01.04.2011, on which credit is not allowed post-01.04.2011, would still be available if the provision of the service was completed before 01.04.2011. The Tribunal examined invoices indicating that the services were provided before 01.04.2011, thus supporting the appellant's claim for CENVAT credit. Conclusion: The Tribunal concluded that the outdoor catering services availed by the appellant for providing canteen facilities to their employees qualify as "input services" for the period before the amendment of the definition on 01.04.2011. The CBEC Circular further supports the appellant's claim for CENVAT credit on services provided before 01.04.2011. Consequently, the Tribunal set aside the impugned order and allowed the appeals. Order: The appeals are allowed, and the impugned order is set aside. The Tribunal pronounced the order in the open court.
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