Services having indirect nexus with business are Input services

Inputs services also include services having some sort of indirect nexus with the assessee’s business activities

Brief of the case:

The CESTAT Mumbai in the case of Sudarshan Chemical Industries Ltd. vs. CCE (A) held that input services not only cover services of falling in the substantial part of Rule 2(l) of the Cenvat Credit Rules, 2004 but also cover services which are covered under the inclusive part as the same having some sort of nexus with the business activity of the assesses.

 Facts of the case:

• The assesses is engaged in the manufacture of organic and inorganic pigments/chemicals, intermediates, pesticides etc. It is availing Cenvat credit of duty paid on inputs, capital goods and input services in accordance with the Cenvat Credit Rules, 2004.
• During the course of audit, the department observed that assesses was availing the credit of service tax paid on courier service, rent-a-cab service, tour and travel service and architecture consultancy service. Cenvat credit in respect of the same was disputed by the department.
• A show cause notice denying the credit was issued and thereafter the Deputy Commissioner of Central Excise vide his order-in-original confirmed the demand of Rs.1,71,317/-.
• Commissioner (Appeals) upheld the denial of credit along with interest and equal penalty. Aggrieved assesses is in appeal before the tribunal.

Contention of the Assesses: