M/s. Alkraft Thermo Technologies Pvt. Ltd. Versus Commissioner of GST & Central Excise Chennai North Commissionerate
Central Excise
2018 (9) TMI 1120 – CESTAT CHENNAI – TMI
CESTAT CHENNAI – AT
Dated:- 13-7-2018
Appeal No. E/40401/2018 – Final Order No. 42013/2018
Central Excise
Ms. Sulekha Beevi C.S., Member (Judicial)
Shri G. Mani, Advocate for the Appellant
Shri K.P. Muralidharan, AC (AR) for the Respondent
ORDER
Brief facts are that the appellants who are engaged in manufacture of radiators and parts thereof were also availing the facility of CENVAT credit of service tax paid on various input services. During the course of audit, in the year 2012, it was noticed that the appellant had availed ineligible input service tax credit on various input services. Show cause notice was issued proposing to disallow the credit which after adjudication allowed credit on certain service. The appellant filed appeal before Commissioner (Appeals) against the disallowance
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e rejection of credit alleging that these are outward transportation service is incorrect.
2.1 The authorities below have rejected the claim under the heading auditor fee. The service tax paid on charges for auditor fee has been allowed. However, the conveyance charges incurred by the appellant for the auditor on which was service tax was paid has been disallowed stating that such services (Rent-a-cab) are not eligible for credit after 1.4.2011. He submitted that such rent-a-cab service availed for bringing the auditor to the factory was highly necessary for the appellant and therefore is eligible for credit.
2.2 The appellant has availed manpower supply service for the purpose of making TDS entries and the authorities below have rejected the credit of service tax paid on such service stating that these are not having nexus with the manufacturing activity. He prayed that the same may be allowed.
2.3 Under the heading, insurance service, appellant has availed credit on goods transit
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an manner. These are actually housekeeping service and the disallowance of credit observing that these are manpower supply service is incorrect. The persons who had come from the cleaning agencies had only cleaned the premises and had not rendered any assistance or work with regard to the manufacturing activity of the appellant. That therefore this service would not fall under manpower supply service.
2.5 The consultancy service has been rightly observed by the authorities below to be legal consultancy service. However, the same has been disallowed since the appellant has not produced the documents. He submitted that the appellant has traced out the documents and would be able to furnish the same. The ld. counsel requested a further chance to produce all the documents.
2.6 Under the heading book adjustment, the authorities have rejected the service tax paid on calibration services. He submitted that manpower was recruited for doing the calibration work of the machines and these servi
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lant have now reversed the same and is not contesting. In addition, he pleaded that the penalties imposed in respect of the said services may be set aside.
3. On behalf of Revenue, ld. AR Shri K.P. Muralidharan supported the findings in the impugned order.
3.1 With respect to outward transportation service, he submitted that the same is beyond the place of removal and therefore not eligible for credit. In respect of audit fee service, he submitted that the authorities below have allowed the credit in respect of service tax paid for charges towards auditors and have disallowed the credit only in respect of conveyance charges for the auditor. The said services are not eligible for the reason that the appellant has not produced sufficient documents to show that the vehicle used for providing conveyance is capital goods for the service provider. Thus, as per clause (B) of the definition of 'input service', the said services are not eligible for credit.
3.2 In respect of TDS entry, he su
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the orders as outward transportation, the appellant has produced invoices as discussed in the adjudication order to show that these service are availed by the appellant for sending the free samples to the buyer abroad. The documents show that the services of DHL courier service were availed by the appellant for sending the samples of medicines to buyers abroad. I am convinced that these are not outward transportation service as alleged in the show cause notice or in the adjudication order. The said services are indirectly related to the manufacturing activity as only if the appellant sends the samples to foreign buyers, they would be able to procure orders from such foreign buyers. However, the said invoices were not produced before the adjudicating authority. Therefore, I deem it fit to remand the said issue to the adjudicating authority who shall verify the invoices and consider the discussions made with regard to this issue.
5.2 With regard to audit fee, it is seen that the authori
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ligible for credit. With regard to employees insurance, which is in the nature of covering the risk of gratuity amount, I am of the view that the same would not fall within the exclusion clause. The manufacturer avails such insurance to cover the financial risk that he would have to face in case of payment of gratuity to employees and therefore is directly related to manufacture. I therefore allow the credit in respect of insurance service.
5.5 The authorities below have rejected the credit in respect of housekeeping service observing that these are manpower supply service. I have perused the invoices produced before me which shows that the appellant has availed cleaning services from various cleaning agencies. However, it is seen that the appellant has not produced the entire invoices regarding this issue. I therefore remand the matter to the adjudicating authority who shall consider the eligibility of credit on housekeeping service, who shall grant the appellant an opportunity of pe
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Under heading, other services, the appellant has availed manpower used for data entry. However, he has not produced any invoice before the adjudicating authority. Since the service is connected with accounting and falls within the inclusive part of input services, I am of the view that the said services would be eligible for credit if the appellant produces the invoices disclosing the payment of service tax. The said issue is also remanded to the adjudicating authority.
5.9 The credit in respect of manpower (shivtej) is not contested by the appellant and therefore upheld. The appellant is also not contesting the credit on works contract service used for repair and maintenance.
5.10 The ld. counsel has also argued that during the relevant period, the issue as to eligibility of rent-a-cab service as well as construction service in respect of maintenance and renovation (WCS) was under confusion being interpretational issue, the penalties may be set aside. I find that there were doubts
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