CESTAT allows Cenvat credit for skill competition between dealers and employees

The CESTAT has ruled that M/s Maruti Suzuki India Ltd. is entitled to Cenvat credit for event management services, specifically skill competitions involving dealers and employees. The tribunal found these competitions integral to both manufacturing and sales activities. Additionally, Cenvat credit was allowed for business events such as Vishwakarma Puja and production line inaugurations, as these are considered part of the manufacturing process.

In M/S MARUTI SUZUKI INDIA LTD. v. COMMISSIONER OF CE & ST, GURUGRAM [FINAL ORDER NO. 60893/2021 dated September 07, 2021], M/s Maruti Suzuki India Ltd.("the Appellant") is in appeal against the impugned order wherein cenvat credit on event management service has been denied on the ground that the same does not cover under Rule 2(l) of the Cenvat Credit Rules, 2004 as input service.

The Appellant is a manufacturer of motor vehicles and parts thereof and paying excise duty on all clearances. The Appellant is availing various kinds of input services including event management service. In this case, the dispute is 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.

The reason for denial of Cenvat credit is that these services are not related to manufacturing activity or sales promotion of the Appellant therefore they are not entitled to cenvat credit.

The Hon’ble CESTAT, Chandigarh held that that the Appellant has rightly taken the Cenvat credit for the above-discussed services and 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 show 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 does 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.

Therefore, CESTAT do not find any merit in the impugned order qua denial of cenvat credit on the above services and the same is set aside.

The appeal is allowed.