CESTAT allows Credit on Computer Server and Housekeeping Services: Deletes Penalty [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), allowed credit on Computer Server and Housekeeping Services and thereby deleting the penalty.

The appellant, M/s. Indian Additives Limited is engaged in the manufacture of “Lubricating Oil Additives” and availed credit on computer server, as capital goods, installed at their office. The appellant availed CENVAT Credit of the Service Tax paid on Housekeeping Services. The said services were received and utilized by the appellant at their office premises in Mumbai. The Department was of the view that the credit availed on capital goods and Housekeeping Services is not eligible.

The Original Authority confirmed the demand being the credit availed by the appellant on capital goods and Housekeeping Services and imposed equal penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. Against such order, the appellant filed appeal before the Commissioner (Appeals), who upheld the same. Hence, the appeal has been preferred.

The Counsel for the appellant submitted that with effect from 01.04.2016, the definition of “capital goods” in the CENVAT Credit Rules, 2004 has been amended and the restriction to avail credit on office equipment has been deleted and hence the appellant would be eligible for the credit which has been availed after 01.04.2016.

The Counsel further submitted that the credit availed on Housekeeping Services, which are used for cleaning and maintaining the office in a hygienic manner, ought to have been allowed; that it is not necessary that the input services should be availed in the factory itself.

A Bench consisting of Sulekha Beevi CS, Judicial Member observed that “The definition of “capital goods” after 01.04.2016 does not exclude ‘any equipment or appliance used in an office’. For this reason, I hold that the credit availed by the appellant on the said computer server after 01.04.2016 would be eligible.”

“In regard to Housekeeping Services, the credit availed by the appellant has been disallowed alleging that these services are consumed in the Mumbai office. It is not in dispute that the Mumbai office is an integral part of the business of the appellant and is doing the administrative work in respect of the appellant’s factory. For this reason, I hold that the credit availed by the appellant on Housekeeping Services at their Mumbai office is eligible” the Tribunal said.

To Read the full text of the Order CLICK HERE

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