In a major relief to Maruti Suzuki, the Chandigarh Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the cenvat credit for Skill Competition between dealers and employees.
The appellant, M/s Maruti Suzuki India Ltd. is a manufacturer of motor vehicles and parts thereof and paying excise duty on all clearances. The appellant is availing of various kinds of input services as well as event management services. In this case, the dispute is with regard to availment of cenvat credit on two types of event management services, namely Skill Competition between dealers and employees and other business events services like Vishwakaram Puja, the inauguration of the production line, etc. The reason for denial of cenvat credit is that these services are not related to manufacturing activity or sales promotion of the appellant, therefore, they are not entitled to cenvat credit. A show-cause notice was also issued and the same was adjudicated by way of denial of cenvat credit for the said services, therefore, recoveries were proposed to be made along with interest, and a penalty was also imposed.
Advocate Krati Singh, appearing on behalf of the appellant submits that Skill Competition between dealers and employees is a big event with regard to sale promotion of the appellant’s product as by that competition, they award the best dealer who has done an effective sale of the appellant and to the employees who achieved the sale targets by this event, the other dealers/employees would also be motivated to promote the sale of the product of the appellant. Therefore, the said event is directly/indirectly related to the sales promotion activity of the appellant, therefore, they are entitled to cenvat credit for the same.
With regard to other business events services, it is her submission that Vishwakarma Puja organized by the appellant was attended by the worker’s related manufacturing activity. Vishwakarma Puja is a must because without worshiping the tools, the workers will not work. They worship the tools and pray for the good running of the factory. Further, when the new pipeline of the product starts, an event is being organized. That activity is directly related to the manufacturing of the new product through a new pipeline. In these circumstances, they are entitled to cenvat credit which formed an integral part of input service.
The Coram of Judicial Member Ashok Jindal ruled that the appellant has rightly taken the cenvat credit for the above-discussed services. Therefore, the tribunal did not find any merit in the impugned order qua denial of cenvat credit on the above services and the same was set aside.