Thermax Ltd. Vs Commissioner of Central Tax (CESTAT Mumbai)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, allowed the appeal filed by the appellant against the order of the Commissioner of Central Excise (Appeals), Pune, which had upheld the denial of CENVAT credit on Staff Health Insurance, Club Membership, Rent-a-Cab and Travel Agent services under the CENVAT Credit Rules, 2004.
The appellant is engaged in the manufacture and sale of boilers, heaters, pollution control equipment and other goods falling under Chapter 84 of the First Schedule to the Central Excise Tariff Act, 1985. During the period from 2005-06 to June 2015, it availed CENVAT credit of service tax paid on Staff Health Insurance, Club Membership, Rent-a-Cab and Travel Agent services. The Department disputed the availment of credit on the ground that these services did not satisfy the definition of “input service” under Rule 2(l) of the CENVAT Credit Rules, 2004. The original adjudicating authority rejected the credit, and the Commissioner (Appeals) upheld that decision.
The Tribunal examined the definition of “input service” both before and after its amendment with effect from 01.04.2011.
For the period prior to 01.04.2011, the Tribunal observed that the unamended definition specifically included the phrase “activity relating to business.” It noted that it was an admitted fact that the disputed services were availed in connection with the appellant’s business activities. The expenditure on these services was recorded in the books of account and formed part of the assessable value of the final products on which central excise duty was paid. The Tribunal held that services used for accomplishing the manufacturing business qualified as input services under the unamended definition and that the appellant was entitled to CENVAT credit.
