NGK Spark Plugs India Private Limited Vs Commissioner of Central Excise (CESTAT Chandigarh)
CESTAT Chandigarh held that in view of the wider scope given in the definition under Section 2(l) of CENVAT Credit Rules, 2004, cenvat credit of all the Input Services used in or in relation to the manufacture and sale of final products or in relation to the business activity cannot be denied.
Facts- The appellants are engaged in the manufacture of auto parts; the appellants have availed CENVAT credit on certain input services i.e. “Commercial and Industrial Construction Service”, “Rent-a-Cab Service”, “Outdoor Catering Services” and “Real Estate Agent Service”. Revenue was of the opinion that the credit is not admissible to them as there was no nexus between the services and the output products cleared on payment of duty.
Show-cause notices were issued to the appellants seeking CENVAT credit of Rs.66,76,056/- along with interest while also seeking to impose penalty u/s. 11AC of the Central Excise Act, 1944. The show-cause notices were adjudicated vide OIO No. 124-127/SA/CCE/2012 dated 26.11.2012. The appellants are before us against this order.
Conclusion- Held that in view of the wider scope given in the definition under Section 2(l) of CENVAT Credit Rules, 2004, the services of which the credit was availed by the appellants, merit to be classified as Input Services used in or in relation to the manufacture and sale of final products or in relation to the business activity of the appellants. In view of the same, credit cannot be denied and accordingly, the impugned order is not legally sustainable. Therefore, we set aside the impugned order and allow the appeal.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
The appellants, M/s Niterra India Private Limited [formerly known as NGK Spark Plugs (India) Pvt. Ltd.], are engaged in the manufacture of auto parts; the appellants have availed CENVAT credit on certain input services i.e. “Commercial and Industrial Construction Service”, “Rent-a-Cab Service”, “Outdoor Catering Services” and “Real Estate Agent Service”. Revenue was of the opinion that the credit is not admissible to them as there was no nexus between the services and the output products cleared on payment of duty. Show-cause notices dated 05.03.2009, 29.12.2009, 15.12.2010 and 02.10.2011 were issued to the appellants seeking CENVAT credit of Rs.66,76,056/- along with interest while also seeking to impose penalty under Section 11AC of the Central Excise Act, 1944. The show-cause notices were adjudicated vide OIO No. 124-127/SA/CCE/2012 dated 26.11.2012. The appellants are before us against this order.
2. Ms. Krati Singh, learned Counsel for the appellants, submits that the definition of Input Services during the relevant period allowed credit of services which are used by the manufacturer whether directly or indirectly, in relation to the manufacture and clearance of final products up to the place of removal; the definition also included services used in relation to business activity till 01.04.2011; the only exception was to the Outdoor Catering Service used for personal consumption of any employee w.e.f 01.04.2011. She submits that there is no exclusion for allowing credit of input services used for construction; in fact, the services used in setting up of the factory is specifically included in the definition of Input Service; Construction Services were excluded only w.e.f 01.04.2011 whereas the issue pertains to the period February 2008 to December 2008. She further submits that the Service of Rent-a-Cab was used to facilitate the movement of employees between the factory and home or for the visitors coming from abroad; Circular No. 943/4/20-11-CX dated 29.04.2011 merely provides clarifications for amendments w.e.f. 01.04.2011 and it cannot be a basis for denying credit. Learned Counsel further submits that the appellants provided food to its employees so that they do not go out of the factory for having food and as per the requirement under Section 46 of the Factories Act, 1948. She submits that credit of Rs.6,044/-, related to the amount which was collected from the employees, has been reversed by the appellants. Lastly, she submits that the Service of Real Estate Agent were utilised by them for procuring residential accommodation for the Managing Director of the appellant; therefore, it is in relation to business activity and hence, credit is admissible. For all the above submissions, he relies on the following:
