Rejection of refund in respect of certain input services

PJ/Case Law/2019-2020/3596

M/s. RR Donnelley India Outsource Pvt. Ltd. Final Order Nos. 41610-41622 / 2019 dated 02.12.2019
Brief Facts-The appellants are engaged in providing BPO services and are registered with the Department under various services. They filed refund claim under Rule 5 of CENVAT Credit Rules, 2004 for refund of the unutilized CENVAT credit. The authorities sanctioned part of the refund while they rejected refund claims in respect of certain services. Being aggrieved by the rejection of refund in respect of input services, the appellants have filed the present appeals.
Issue- Rejection of refund in respect of certain input services
Appellants Contention-The Appellants contended that the respective expenses were Services incurred by them towards various business supporting activities including renting of photocopy machines, photography of employees for ID cards etc. Clearing and Forwarding. These services are mainly in relation to Services movement of goods from port to office premises.
He submitted that the authorities have rejected the credit in respect of Business Support Service, Clearing and Forwarding Service, Management Consultant Service, Manpower Recruitment Service, Rent-a-Cab Service, Insurance Service, Business Auxiliary Service, Cleaning / Housekeeping Service, Event Management Service and Club or Association Service on the ground that these services do not have any nexus with the output service provided by them. In respect of renting of immovable property service, the authorities below have rejected the same alleging that those are welfare services to the employees. The ld. consultant submitted that the appellant is not disputing the claim in respect of rejection of refund in regard to rent-a-cab service. In regard to other services, they referred to the definition given in Rule 2(l) of CENVAT Credit Rules, 2004 to argue that the department does not have a case that these services were not used for providing output service. The services stated have been availed by the appellant for providing output services and therefore are eligible for credit / refund. In respect of renting of immovable property service, it is explained that the said services are availed for parking vehicles, generator sets, centralized air-conditioning sets etc. The authorities below have erred to hold that these are welfare services. The places occupied for placing generator set and air-condition set are necessary for carrying out output services. Similarly, the parking facility for vehicles is not only used by employees but also by customers, vendors, auditors etc. who visit the premises. Therefore, this cannot be considered as welfare service.
With regard to insurance service, it is explained that these are availed in respect of director's liability insurance so as to indemnify the risk involved in the decision taken by a director in the management of the company.

With respect to event management service, the consultant submitted that the said services are actually availed in the nature of commercial or training coaching services. Detailed classes were conducted for fire safety measures for which the designing and automatic sprinkler system was necessary. The training was conducted by using the facility of event management system. There were no expenses incurred by the company in the nature of food and beverages. The expenses paid to the event management company are only in the nature of training given to the employees. Thus, the said services would be eligible for credit / refund.
Reasoning by authority and decision-It is seen from the definition of input services that when the services have been used for providing output service, the same are eligible for credit. In the present case, the department does not allege that these services were not used by the appellant. All the services listed above have been covered by the following decisions:-
a. Sundaram Clayton Ltd. Vs. Commissioner of Central Excise, Hyderabad - 2017 (51) STR 55 (Tri. Chennai) b. M/s. R.R. Donnelley India Outsource Pvt. Ltd. Vs. Commissioner of GST and Central Excise, Chennai Outer - 2019 (1) TMI 1244 (CESTAT, Chennai) c. M/s. Capgemini Solutions Pvt. Ltd. Vs. Commissioner of Central Excise, Bangalore - 2019 (11) TMI 384 -CESTAT, Bangalore d. M/s. Integra Software Services Pvt. Ltd. Vs. Commissioner of Central Excise, Puducherry - 2017 (1) TMI 1317 - CESTAT, Chennai e. M/s. Zentech Offshore Engineering Pvt. Ltd. Vs. Commissioner of GST and Central Excise, Chennai South- 2019 (4) TMI 329 - CESTAT, Chennai f. BNY Mellon Technology Pvt. Ltd. Vs. Commissioner of GST and Central Excise, Chennai Outer vide Final Order No. 41152 to 41154/2019 dated 30.9.2019 g. Godrej & Boyce Mft. Co. Ltd. Vs. Commissioner of Central Excise, Chennai - 2017 (48) STR 88 (Tri Chennai) wherein it has been analysed by the Tribunal that except for rent-a- cab service, the other services are eligible for credit.
With respect to event management service, on perusal of invoices, it can be seen that the amount has been incurred only for the training for fire and safety measures and not for any outdoor catering service. Further, the club or association service have been availed for obtaining membership in NASSCOM, American Chamber of Commerce and International Market Assessment. In the appellant's own case, vide Final Order No.41592/2019 dated 28.11.2019, these services have been considered and relief has been granted.
After appreciating the facts and following the decisions cited above, Tribunal believed that the rejection of refund is unjustified. The impugned order is modified to the extent of allowing the credit /refund in respect of these services mentioned above except rent-a-cab service. The appeals are partly allowed in the above terms with consequential relief.

Prepared by- CA Preksha Jain

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PJ/Case Law/2019-2020/3596

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