2026-VIL-1638-CESTAT-MUM-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – Eligibility of CENVAT Credit availed CENVAT credit on various services including Brokerage and Commission, Detention Charges, Insurance Services, Membership Fees, Rent-a-Cab Service and Staff Welfare Expenses – Department alleged that these services were not categorized as input service under Rule 2(l) of CENVAT Credit Rules, 2004 and initiated proceedings leading to demand and penalty – Whether disputed services qualify as input service for purpose of availing CENVAT credit – HELD – Services relating to Brokerage and Commission, Detention Charges, Insurance and Membership Fees qualify as input services and appellant is entitled to avail CENVAT credit thereon - Brokerage and Commission services fall under sales promotion which is expressly included in definition of input service - Detention charges incurred in connection with imported goods and raw materials intended for manufacture of final products and included in value of goods for accounting purpose qualify as input service under main part of definition - Insurance premiums paid for insuring plant and machinery, stock and goods in transit at factory premises do not fall under exclusion and thus qualify as input service - Membership fees paid for participation in exhibitions and sales promotion activities have direct nexus with manufacture of goods and qualify as input service, more so after amendment w.e.f. 03.02.2016 providing that sales promotion includes services by way of sale of dutiable goods on commission basis - However, Rent-a-Cab service does not qualify as input service which appellant correctly reversed. Staff Welfare Expenses for canteen and transportation facilities do not qualify as input service - Wrong availment or utilization of CENVAT credit without involving fraud, collusion or misstatement attracts penalty of 10% of irregularly availed credit under Rule 15 read with Section 11AC of Central Excise Act, not 50%. Quantum of penalty should be confined to 10% only for irregularly availed credit on Rent-a-Cab service and Staff Welfare Expenses – The appeal is partly allowed
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