'You can claim Cenvat credit on garden maintenance service'

Can Cenvat credit be availed on garden maintenance service and repair of deep freezer installed in canteen?
— Kiran Revale
As per Rule 2(l) of the Cenvat Credit Rules, “input service” means any service i). used by a provider of taxable service for providing an output service; or ii) used by the manufacturing, whether directly or indirectly, in or in relation to the manufacturing final products and clearance of final products, up to the place of removal; and includes services used in relation to setting up, modernisation, renovation or repairs of factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage up to place of the removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry and security, inward transportation of inputs or capital goods and outward transportation up to the place of the removal.

Based on the above definition of inputs and judicial pronouncements, you would be able to claim Cenvat credit on garden maintenance service and repair of deep freezer installed in the canteen since the value of the same got absorbed in the value of goods.

In the case of Reliance Industries Ltd V. Commissioner of C.Ex., Pune-III 2010 (19) STR 823 (Tri.-Mumbai) brief facts were as under:
The appellants cited certain cases wherein it was held that the service provider is entitled to Cenvat credit on garden maintenance service, which is used in or in relation to the manufacture of the final product or used in the business activity. In the present case, the appellants have used the garden maintenance service in relation to business activity.

The revenue authorities presented some contrary decisions and requested for referring the matter to a larger bench. The tribunal observed that the cases referred by the department were either not similar to the present case or were remanded back to the tribunal by the high court and therefore did not find it necessary to refer the matter to a larger bench. Following the Semco Electricals decision 2010 (18) STR 177 and ISMT Ltd’s decision 2010 TIOL 27 CESTAT-MUM, the appeal was allowed.

The writer is with M Sheth & Co a chartered accountancy firm in Mumbai, and can be reached at mshethco@yahoo.co.in