The Chennai Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held Service rendered at an integral place of business is eligible to avail CENVAT Credit.
M/s. Indian Additives Limited, the appellant is engaged in the manufacture of “Lubricating Oil Additives” and is registered with the Department. They availed credit on a computer server, as capital goods, installed at their Mumbai office. 50% of the CENVAT Credit of Rs.19,463/- on duty paid on the computer server was availed in the month of October 2015 and the remaining 50% of the credit of Rs.19,463/- was availed by them in the month of May 2017. The total credit availed on the computer server, as capital goods, was Rs.38,926/-.
Further, for the period from 2014-15 and 2017-18 (up to June), the appellant availed CENVAT Credit of the Service Tax paid on Housekeeping Services amounting to Rs.16,068/-. 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 and confirmed the demand of Rs.54,994/- being the credit availed by the appellant on capital goods and Housekeeping Services. Further imposed equal penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. The Commissioner (Appeals), upheld the same.
On behalf of the appellant, Ms Sharanya Vijay K. appeared and argued that the computer server, though installed at their office in Mumbai, is integrally connected to the manufacturing process. The placement of orders, which forms a vital part of their business, is done through these computers; these servers form a mandatory and vital element for capturing the sale orders in SAP systems and thereby ensure the flow of data between the sales/marketing offices in Mumbai and the current office in Chennai.
Shri M. Ambe, Authorized Representative for the Respondent supported the impugned order passed by the Commissioner of Appeal.
A Coram of Mrs Sulekha Beevi C S, Member (Judicial) observed that the definition of “capital goods” after 01.04.2016 does not exclude ‘any equipment or appliance used in an office’ and held that the credit availed by the appellant on the said computer server after 01.04.2016 would be eligible.
Further, the CESTAT observed that the Mumbai office is an integral part of the business of the appellant and is doing administrative work in respect of the appellant’s factory. The CESTAT held the appellant eligible for the avail CENVAT Credit on Housekeeping Services at their Mumbai office.
The Tribunal set aside the penalty imposed on the appellant and Partly allowed the appeal.
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