By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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CENVAT credit on repairs/maintenance services of staff colony, security services, gardening services etc. not eligible for CENVAT credit in absence of nexus with ‘manufacture’ – Ratio of Maruti Suzuki followed.
Facts: CENVAT credit on repairs and maintenance services received for staff colony, gardening services, security services in the wind farms, swimming pool maintenance and civil work for auditorium, shopping complex etc. were denied since the services received did not have any nexus with the manufacture of final product. The lower authorities allowed it on the basis of judgment in the case of CCE, Nagpur vs. Manikgarh Cement (2009) (16 STR 171). The Department preferred an appeal and claimed that the said judgment was reversed by the Bombay High Court vide CCE, Nagpur vs. Manikgarh Cement (2010) (20 STR 456). The respondent defended that since the factory was located in remote area, these services were essential to run the factory.
Held:
The Bombay High Court in Manikgarh Cement (supra) had applied the ratio of Maruti Suzuki Ltd. vs. CCE 2009 (240 ELT 641) (SC) and held that nexus needs to be established between the services received and the business of the assessee. Moreover, the Tribunal, in case of Sundaram Break Linings 2010 (19 STR 172) had examined the identical issue in light of Maruti Suzuki case (supra). Therefore, in absence of nexus with the business activity, CENVAT credit was denied.
