CESTAT | Can cenvat credit be availed on event management services? Tribunal explains

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ashok Jindal (Judicial Member) allowed an appeal which was filed against the impugned order wherein cenvat credit on event management service has been denied for the period June 2012 to June 2017 on the ground that the same does not cover under Rule 2(l) of the Cenvat Credit Rules, 2004 as input service.

The appellant was a manufacturer of motor vehicles and parts thereof and paying excise duty on all clearances. Appellant was availing various kinds of input services as well as event management service. In this case, the dispute was with regard to availment of cenvat credit on two types of event management services, namely Skill Competition between dealers and employees and other business events services like Vishwakaram Puja, inauguration of production line etc.

Ms Krati Singh, Advocate appearing on behalf of the appellant submitted that Skill Competition between dealers and employees was a big event with regard to sale promotion of the appellant’s product as by that competition, they award the best dealer who has done effective sale of the appellant and to the employees who achieved the sale targets by this event, the other dealers/employees would also be motivated to promote the sale of the product of the appellant. Therefore, the said event was directly/indirectly related to the sales promotion activity of the appellant; therefore, they were entitled to cenvat credit for the same.

The Tribunal noted that the facts of the case were not in dispute and that the cenvat credit was denied on two types of services – (a) Skill Competition between dealers and employees and (b) other business events services. The Tribunal further explained that,

• Skill Competition between dealers and employees – The said competition is an event which shows the sale skill of the employees as well as the dealers. The skills of the employees shows that how they participate in bringing more production of the product and the skills of the dealers shows that how they increased the sale of the product. Therefore, the said service is an integral part of manufacturing as well as sale activity, which is conducted by the appellant. In these circumstances, the said service do qualify as input service in terms of Rule 2(l) of the Cenvat Credit Rules, 2004. Accordingly, the appellant is entitled to cenvat credit for the said service.
• Other business events services – Vishwakarma Puja and inauguration of new pipe line are basically two others business events services for which cenvat credit was sought to be denied. In fact, Vishwakarma Puja is a big festival for the workers who work on machines and they pray to the God for good running of their machines by doing Vishwakarma Puja. Further, when a new pipe line starts, a puja is performed for good running of this pipe line. In these circumstances, these two pujas are also integral part of manufacturing activity. Therefore, for these services also, the appellant is entitled for cenvat credit.

The Tribunal while allowing the appeal held that appellant had rightly taken the cenvat credit for above discussed services.[Maruti Suzuki India Ltd. v. Commr. Of CE & ST, Excise Appeal No. 60189 of 2021, decided on 07-09-2021]

Suchita Shukla, Editorial Assistant has reported this brief.