Case Law Details
Bhaurao Chavan Vs Commissioner of Central Excise (CESTAT Mumbai)
The appellant, a sugar and molasses manufacturer, had availed CENVAT Credit for various service taxes paid, including insurance of vehicles, consultancy services for a co-generation plant, insurance for plant and machinery, and subscription fees to the National Sugar Federation. The revenue department contended that the CENVAT Credit was not admissible. After a show-cause notice and subsequent confirmation of the demand, the appellant approached the tribunal. The appellant argued that the expenses were directly related to their manufacturing activity and should be eligible for CENVAT Credit. The tribunal agreed and allowed the CENVAT Credit, setting aside the previous orders.
FULL TEXT OF THE CESTAT MUMBAI ORDER
Appellant is manufacturer of sugar and molasses. They availed CENVAT Credit of Service Tax paid on insurance of vehicles of the manufacturing unit, Service Tax paid on consultancy services engaged for receiving consultancy in relation to cogeneration plant, Service Tax paid on insurance availed for plant, machinery, equipment and stock of the goods, Service Tax paid on insurance on gratuity for the employees and subscription fee paid to National Sugar Federation. In the opinion of Revenue, CENVAT Credit on account of above stated issues was not admissible to the appellant. Therefore, appellant were issued with a show-cause notice dated 23.6.2011 proposing to deny above stated CENVAT Credit and to recover said CENVAT Credit to the tune of Rs.1,56,584/-. On contest, Order-in-Original confirmed the demand. Learned Commissioner (Appeals) did no interfere with the confirmation of such demand. Therefore, the appellant is before this Tribunal.
2. Learned Counsel for the appellant has submitted that insurance of the vehicles belonging to the manufacturing unit is an integral part of the business activity and therefore, the Service Tax paid on insurance of vehicles is admissible as CENVAT Credit because vehicles are used in relation to manufacture. He further submitted that for manufacture of sugar, electricity was required and appellant decided to generate electricity within the factory. For said purpose, a co-generation plant was decided to be installed. The appellant engaged an agency for consultancy for installation of co-generation plant and paid consultancy charges. Therefore, Service Tax paid on said consultancy charges are admissible as CENVAT Credit. He further submitted that plant, machinery, equipment and stocks were insured and such insurance was the part of the smooth functioning of the manufacturing activity. Therefore, such expenses were in relation to manufacture. He has submitted that the subscription paid to National Sugar Federationis similar to having a corporate membership of a club and corporate membership of the club is considered and allowed as an input service in large number of decisions of this Tribunal.
3. Learned AR has submitted that co-generation plant was not installed during the period of dispute and therefore, Service Tax paid on the consultancy service is not admissible.
4. I have carefully gone through the records of the case and submissions made by both the sides. The co-generation plant though was not installed during the relevant period, consultancy was received during the said period and Service Tax paid on consultancy is claimed as CENVAT Credit and the same is I also find that manufacture is not possible without plant, machinery and equipment being in order. To keep the plant, machinery and equipment in order, one of the method is to insure the same. Therefore, I hold that Service Tax paid on insurance of plant, machinery and equipment required for manufacture is admissible as CENVAT Credit. I accept all the arguments submitted by the learned Counsel for the appellant and allow the CENVAT Credit of Rs.1,56,584/- involved in the present appeal by setting aside the impugned order.
5. In above terms, the appeal is allowed.
(Order pronounced in open court on 03.05.2023)
