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Customs Appellate Tribunal ruling on CENVAT credit towards input services

CLR Editorial Notes: This case is related to the CENVAT credit claimed by Dhampur Sugar Mills Ltd towards construction work of guest house in the mill complex, which has been claimed as input services. The CESTAT has ruled based on the case in which the Hon’ ble High Court of Andhra Pradesh in the case of Commissioner CE, Hyderabad vs. ITC Ltd. [2012-TIOL-199-HC-AP-ST] had held that staff colony meant for the employee and maintenance of the same as an input services. By applying the same analogy to guest house being constructed by Dhampur Sugar Mills Ltd, which is located in the factory, it has to be held as having nexus with the business activity of the assessee. Hence the CENVAT credit claimed has been made applicable. The Case was partly allowed and partly remanded based on other facts. 


2013-ITS-76-CESTAT-M/s. Dhampur Sugar Mills Ltd -Vs- CCE, Meerut II , Date of decision: 24 /01/2013

IN THE CUSTOMS, EXCISE AND SERVICE TAX

APPELLATE TRIBUNAL, NEW DELHI

PRINCIPAL BENCH, COURT NO. III

Excise Appeal No. 3631 of 2010-SM

Date of Hearing : 19/11/2012

Date of decision: 24 /01/2013

[Arising out of Order-in-Appeal No. 250/CE/MRT-II/2010 dated 30.7.2010 passed by the Commissioner (Appeals), Central Excise, Meerut ]

For approval and signature: Hon’ble Ms. Archana Wadhwa, Member (Judicial)

M/s. Dhampur Sugar Mills Ltd.  Appellant

Vs

CCE, Meerut II  Respondent

Present for the Appellant : Ms. Sukriti Das, Advocate

Present for the Respondent : Shri Rakesh Mathur, DR

ORDER No.A/FO/55373/2013-SM(Br)

Per Archana Wadhwa :

The appellants are engaged in the manufacture of sugar, molasses and chemicals. The dispute in the present appeals relates to availment of Cenvat credit of service tax of Rs.2,73,920/- and availed by the appellants.

2. After hearing both sides, I find that the credit of Rs.76,264/- stand denied on the ground that bill in question does not mention the services supplied by the supplier whereas the lower authorities have observed that the relevant bill does not mention the services as control room of Co-Gen plant of sugar mill . Appellant contention is that such invoices clearly mention control room of Co-Gen plant of sugar mill . Inasmuch as the construction of said Gen plant was essential for supply of power to various parts of factory, services utilization are input services.

3. I find that the dispute relates to the factual position which can be solved at the lower level. As such, I set aside the said part of the confirmation and remand the matter to the lower authorities for examination of the bill.

4. An amount of Rs.14,056/- stand disallowed on the ground that the service of construction work at guest house which is located inside the factory premises, cannot be held to be input service. I find that the issue is no more res integra. The Hon ble High Court of Andhra Pradesh in the case of CCE, Hyderabad vs. ITC Ltd. [2012-TIOL-199-HC-AP-ST] has held that staff colony meant for the employee and maintenance of the same as an input services. By applying the same analogy to guest house, which is located in the factory it has to be held as having nexus with the business activity of the assessee. Accordingly, I allow the Cenvat credit. Further credit of Rs.1,83,600/- stand denied on the ground that bill raised for the financial service was in the name of head office. I find that the Tribunal in the case of Commissioner of Customs & C. Ex. Vapi vs. DNH Spinners [2009 (16) STR 418 (Tr-Ahmd)] has held that denial of credit on such ground is not justified and even if the invoice was in the name of head office, the credit would be available in the absence of any dispute to the contrary. By following the said decision, I set aside the confirmation of demand on the said count.

5. The appeal is partly allowed and partly remanded.

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