2009 (4) TMI 785 - Commissioner - Service Tax

Summary

Issues Involved:
1. Eligibility to avail Cenvat credit on various input services.
2. Eligibility to avail Cenvat credit on outward transportation services (GTA).

Summary:

Issue 1: Eligibility to Avail Cenvat Credit on Various Input Services

The appellant, M/s. Ultratech Cement Ltd., challenged the denial of Cenvat credit on several services including mobile phone bills, telephone services at employees' residences, tour operator services, gardening, plantation, horticulture services, grass cutting, security at jetty, and maintenance of clinker handling machines. The adjudicating authorities disallowed the credit, holding that these services were not input services under Rule 2(l) of the Cenvat Credit Rules, 2004.

The appellant contended:
- Mobile Phone and Landline Services: Cenvat credit is allowable based on precedents such as Indian Rayon and Industries Ltd. v. CCE and CCE v. Bank of Rajasthan Ltd.
- Tour Operator Services: Credit is allowable as held in CCE v. Cable Corporation of India Ltd.
- Security Services at Jetty: These services are indirectly related to manufacturing activities as the jetty is an extended part of the manufacturing process.
- Gardening and Plantation Services: These services are used to control pollution, thus related to manufacturing activities, supported by the Apex Court decision in Indian Farmers Fertiliser Co-operative Ltd. v. CCE.

The appellate authority agreed with the appellant, allowing Cenvat credit on these services as they are used in relation to the manufacture of the final product or business activities.

Issue 2: Eligibility to Avail Cenvat Credit on Outward Transportation Services (GTA)

The appellant also challenged the denial of Cenvat credit on outward transportation services (GTA) used for transporting finished goods from the factory to the customers' premises. The appellant argued that the goods were delivered on a FOR basis, and the freight charges were included in the invoice value, fulfilling the conditions set out in CBEC Circular No. 97/8/2007.

The appellate authority found that:
- The appellant delivered goods on a FOR basis, retaining ownership and responsibility until delivery.
- The appellant did not charge extra for freight, indicating that the freight was included in the invoice value.
- The conditions of the CBEC Circular were met, and the decision in Ambuja Cement Ltd. v. UOI supported the appellant's claim.

Thus, the appellate authority held that the appellant is eligible to avail Cenvat credit on GTA services as input services.

Conclusion:

The appellate authority allowed both appeals, setting aside the impugned orders, and held that the appellant is eligible to avail Cenvat credit on the disputed services and outward transportation services. Consequently, there is no recovery of interest or imposition of penalties.