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CX - Fact that guesthouse is located right next to factory implies that it is used in relation to manufacturing activity - credit of repair and maintenance services of guesthouse is admissible: CESTAT

By TIOL News Service

MUMBAI, AUG 16, 2016: THE appellants were issued show-cause notices demanding reversal of credit availed on the following services namely, shipping fees, insurance, technical testing and certification and cleaning services for Vessels and Barges and repair and maintenance of guesthouse.

Since the lower authorities upheld the demand and imposed penalties, interest, the appellant is before the CESTAT.

The appellant submitted that credit of tax paid on maintenance of Barges and Tugs, Port Services and Shipping fees and insurance services has been allowed in their own case by the Tribunal vide Orders dated 8.3.2013& 11.3.2014. Reliance is also placed on the decision in DSCL Sugar – 2012-TIOL-963-CESTAT-DEL. As regards credit of tax taken on repair and maintenance of guest house, it is submitted that the same is admissible in view of the decision in Reliance Industries Ltd. – 2015-TIOL-2343-CESTAT-MUM.

The AR inter alia relied on the decisions in Mahindra & Mahindra Ltd., Navabharat Ventures Ltd. - 2012-TIOL-1342-CESTAT-BANG & Hindustan Zinc Ltd. wherein services received in respect of guesthouse like maintenance etc. has been denied.

The Bench observed -

+ I find that the Service Tax credit in respect of shipping fees and services availed in respect of vessels and barges is covered by the order of Tribunal in the appellant's own case vide order dated 11.3.2014 and 08.03.2013. In view of the above, credit of these services is available and is allowed.

+ In this case, the insurance is in respect of vehicles and other assets owned by the appellant. Relying on the decision of Hon'ble High Court of Delhi in the case of DSCL Sugar (supra), the credit of the insurance services is allowed.

+ The guesthouse is located right next to the factory premises. It is not the case of the Revenue that these services are used for personal consumption of the employees. The fact that the guesthouse is located right next to the factory implies that it is used in relation to the manufacturing activity. In view of the above, credit of repair and maintenance services of the guesthouse is allowed.

The appeals were allowed.

(See 2016-TIOL-2078-CESTAT-MUM)


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