2010 (8) TMI 711 - AT - Service Tax

Input or input services - landscaping services cannot be treated as having been used in or in relation to the manufacture of final products, namely, the safety valves. After all, the term input or input services , are relative terms, landscaping services cannot be treated as an input services as the said activities cannot be considered as business activity in or in relation to the manufacture of the final products, namely, safety valves Pest/Rodent Control Services claimed to have been used in or in relation to final products exported by them - It is common knowledge that many foreign countries insist on such precautionary activities taken by the manufacturer. In fact, ships are not allowed to sail from India unless fumigation/de-ratification certificate are produced by the master or Agent of the vessel Held that - services of Pest/Rodent Control Services should be treated as input services and credit should be made available

Summary

Issues:
Eligibility of CENVAT credit on service tax paid for Landscaping Services and Pest/Rodent Control Services.

Analysis:

Landscaping Services:
The appellants argued that as per the certificate issued by the Tamil Nadu Pollution Control Board, they are required to plant and maintain trees, making landscaping essential for them. They contended that landscaping is directly or indirectly associated with the manufacturing process of safety valves and should be considered as input services. They cited precedents where garden maintenance services were treated as input services. However, the Departmental Representative disagreed, stating that landscaping is not essential for manufacturing safety valves and cited cases to support this argument. The judge noted that while a good garden may create a better environment, it may not be directly related to the manufacturing process unless consumers are involved. The judge concluded that landscaping services do not qualify as input services as they are not directly related to the manufacture of safety valves.

Pest/Rodent Control Services:
The appellants argued that Pest/Rodent Control Services were essential for exporting their final products, as foreign markets require such activities. They referenced cases where similar services were considered input services. The judge acknowledged that foreign countries often require such precautionary activities by manufacturers and held that Pest/Rodent Control Services should be treated as input services. Consequently, the appeals were rejected concerning CENVAT credit on landscaping services but allowed regarding credit on Pest/Rodent Control Services.

In conclusion, the judgment clarified that while Pest/Rodent Control Services qualify as input services, Landscaping Services do not meet the criteria for CENVAT credit eligibility.