Kansal Nerolac Paints Ltd Vs Commissioner of Central Excise (CESTAT Chandigarh)
The CESTAT Chandigarh allowed the appeal filed by Kansal Nerolac Paints Ltd. against the order dated 20.11.2012 of the Commissioner of Central Excise, Delhi-III, Gurgaon, which had denied Cenvat Credit on various input services under Rule 14 of the Cenvat Credit Rules, 2004 (CCR), along with interest under Section 11AA of the Central Excise Act, 1944 and penalty under Rule 15 of the CCR read with Section 11AC of the Act.
The appellant manufactured paints, emulsions and varnishes. During January 2006 to February 2011, its Mumbai head office, registered as an Input Service Distributor (ISD), distributed credit relating to courier, clearing and forwarding (C&F), mandap keeper, event management and cargo handling services. The appellant also availed credit on rent-a-cab, construction, pest control, drinking water, testing and other services.
Following an audit, the Department proposed denial of Rs.1,36,15,142 of credit on the ground that the services did not qualify as input services under Rule 2(l) of the CCR. The Commissioner dropped part of the demand relating to water testing, telephone repairs and maintenance, courier services at the Bawal plant and pest control, but confirmed Rs.1,34,40,493 with interest and penalty.
The Tribunal examined the definition of “input service” applicable during the relevant period. It noted that the definition before 01.04.2008 and from 01.04.2008 to 31.03.2011 was wide and covered services used directly or indirectly in or in relation to manufacture and, in the applicable formulation, activities relating to business. The definition was subsequently amended by Notification No. 3/2011-CE dated 01.03.2011 by introducing exclusion clauses, whereas the disputed period preceded the relevant exclusions.
