Admissibility of Cenvat credit

PJ/Case Laws/2010-11/1054

Case: Larsen & Tourbo Ltd v/s CCE, Aurangabad

Citation: 2010-TIOL-85-CESTAT-MUM

Issue:- Credit is admissible on services which have nexus with the business of the manufacture of final product of the assessee.

Brief Facts:- Appellants are engaged in the manufacture of switches and relays. They are availing the cenvat credit on inputs, capital goods and input services. They had taken cenvat credit on garden maintenance services, which was denied to them. Aggrieved by the same they filed an appeal with the Commissioner (A). The Commissioner (A) also disallowed the Cenvat Credit on the said services.

Hence, this appeal is filed by the appellant before the Tribunal.

Appellant’s Contentions:- It was contended that as per the Pollution Control Board they are required to maintain 33% of the area of their factory under green grass plantation and this is required in relation to the manufacture of their final products and without which they cannot operate and manufacture their final products, therefore, it is covered in the definition of the input service.

In support of their contention, they have placed reliance on Tribunal’s decision in their own case reported in 2009-TIOL-497-CESTAT-MUM, wherein Cenvat credit availed on the said services have been allowed for the earlier period. Reliance is also placed on the Bombay High Court’s decision in the case of CCE, Nagpur v/s Ultratech Cement Ltd [2010-TIOL-686-HC-MUM-ST].

Respondent’s Contentions:- Revenue submitted that in case of garden maintenance service there is no nexus between the services and the manufacture of final products of the appellant. And they have relied upon the judgment given in CCE, Nagpur v/s Manigarh Cement Works [2010-TIOL-720-HC-MUM-ST].

Reasoning of the Judgment:- The Tribunal found that the issue has already been decided in the appellant’s favour by this Tribunal in their own case reported in 2009-TIOL-497-CESTAT-MUM. It was held that the decision in the case of Manigarh Cement Works was prior to the decision of the Tribunal in the appellant’s own case. The decision of the Tribunal delivered in appellant’s own case was also supported by the Bombay High Court’s decision in the case of Ultratech Cement Ltd wherein it was held that the services having nexus or integral connection with the manufacture of final products as well as the business of manufacture of final product would qualify to be input service under Rule 2 (1) of CCR, 2004.

Accordingly, it was held that order of the Commissioner (Appeal) was not maintainable and therefore set aside.

Decision:- Appeal allowed.

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