Relief to NGK Spark plugs: CESTAT allows Cenvat Credit on Input Services used in Manufacture and sale of Auto Parts [Read Order]

The Chandigarh bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the appeal by Niterra India Private Limited, formerly known as NGK Spark Plugs Pvt. Ltd (the Appellant) against the order by The Commissioner of Central Excise, Delhi (the respondent) demanding the Cenvat Credit availed by NGK Sparkplugs Pvt Ltd with interest and penalty under section 11AC of the Central Excise Act, 1944.

Niterra India Pvt Ltd availed Cenvat Credit on input services namely, Commercial and Industrial Construction Service, Rent-a-Cab Service, Outdoor Catering Services, and Real Estate Agent Service. But the CCE held that the credit was not available to them as there was no nexus between the services and the output products cleared on payment of duty and issued show-cause notices demanding the Cenvat Credit availed by the company with interest and penalty under section 11AC of the Central Excise Act, 1944.

Karti Singh appeared on behalf of the company and submitted that credit of input services used for construction; the services used in setting up of the factory was specifically included in the definition of Input Service but was excluded with effect from 01.04.2011 but the issue pertains to the period February 2008 to December 2008 and the Rent-a-Cab was used to facilitate the movement of employees between the factory and home or for the visitors coming from abroad

She further submitted that Circular dated 29.04.2011 merely provides clarifications for amendments with effect from 01.04.2011 and it cannot be a basis for denying credit. The catering service they provided was for their employees so that they would not go out of the factory for having food as required under Section 46 of the Factories Act, 1948 and the Real Estate Agent was used for procuring residential accommodation for the Managing Director of the company.

Aneesh Dewan appeared on behalf of the revenue and reiterated the findings of the impugned order.

The two member bench consisting of S.S Garg (Judicial Member) and P. Anjani Kumar (Technical Member) heard both sides and supported the submissions made on behalf of the company and held that the credit availed by the company could not be denied as their activities can be classified as Input Services in relation to the business activity of the company and the appeal was allowed.

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