Input Service Covers Services used in Relation to Business of Manufacture: CESTAT Refers to Rule 2(k) of Cenvat Credit Rules [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Hyderabad Bench, referred to Rule 2(k) of the Cenvat Credit Rules and held that input service covers services used in relation to business of manufacture.

The facts are that the appellant, M/s. Hindustan Unilever Ltd., was denied credit of service tax paid on ‘Business Support Services’ (BSS) and ‘Management of Business Consultant Services’ (MBCS) by the order dated 12.01.2018 of the Commissioner of Central Excise.

The main issue that needs to be decided is whether the denial of credit of service tax paid on ‘BSS’ and ‘MBCS’ is in accordance with law.

The tribunal observed that the same issue has been addressed in the appellant's own case for earlier periods where denial of credit has been set aside following judicial precedents such as Coca Cola India Pvt. Ltd. v. CCE Pune, Daypack Systems (P) Limited v. Union of India and M/s. Rane TRW Steering System Ltd, Guduvancherry v. The Commissioner of Central Excise and Central Tax, Chennai.

Reference was also made to National Co-operative Sugar Mills v. Commissioner of Central Excise, Madurai where it was held that:

“…with reference to the definition to Rule 2 (k) of the Cenvat Credit Rules, 2004, dealing with goods used in relation to the manufacture of the final product, whether directly or indirectly or in relation to the manufacture of final products and clearance of final products, upto the place of removal. Contention of the learned counsel for the revenue that input services should be restricted only to the manufacture of final product, either directly or indirectly cannot be countenanced. At this juncture, this Court deems it fit to consider a decision of the Hon'ble Supreme Court in Ramala Sahkari Chini Mills Ltd., Vs. CCE, reported in {2010 (14) SCC 744}, wherein the Hon'ble Supreme Court held that the definition of input services, cannot be restricted…”

The two member bench of Vasa Seshagiri Rao (Technical Member) and P. Dinesha (Judicial Member) set aside the previous order in the present case and allowed the appeal with consequential benefits.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates