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TMI Blog2015 (12) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994 covers any service rendered by a port in any manner in relation to a vessel or goods. Thus, jetty is used within the port for loading and unloading of the goods from the vessel. Port cannot function without jetty. So, CENVAT credit on the inputs and capital goods used in the construction of jetty is eligible for output service namely port service. It is noticed from the above decisions that the test of input and capital goods in respect of output service is whether it is used for providing output service. In the present case, it is clearly evident that the inputs and capital goods were used in construction of jetty for rendering port service. There is no reason to deny CENVAT credit on such input and capital goods. Notification No. 25/2007-ST (supra) exempts from payment of service tax on the Commercial or Industrial construction services. It would apply to a Commercial concern in relation to construction of Port or other Port provided service to any person exempted from the whole of service tax leviable thereon. In the present case, the Port was constructed by the contractor appointed by the Appellant for construction of Jetty, the exemption is applicable to the contractor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not warranted. - Substantially decided in favor of assessee. - Appeal No.ST/10386-10399,11301,11307,12537-12539/2014 - Order No .A/11830-11848/2015 - Dated:- 15-12-2015 - MR. P.K DAS, MEMBER (JUDICIAL) AND MR. P.M. SALEEM, MEMBER (TECHNICAL) For the Appellants: Shri V. S. Nankani, Sr.Advocate, Shri Aqueel Seerazi, Shri A.R. Choudhary And Shri Hardik Modh, Shri Amit Laddha - Advocates For the Respondent: Dr. J. Nagori, Authorised Representative ORDER Per: P.K. Das A common issue is involved in these appeals and therefore all are taken up together for disposal. 2. The Appellants M/s. Adani Port And Special Economic Zone Limited (formerly known as Mundra Port and Special Economic Zone Limited), Mundra Port, Mundra, are holding Service Tax Registration Certificate No.AR/GIM/PS-01/2003-04, and providing Port Services, amongst others. The other Appellant, M/s Adani Petronet (Dahej) Port Pvt. Ltd, started construction of Dahej Port during the year 2007-08 holding Service Tax Registration Certificate No. AAECA 5046RST001 for providing Port services and others. The Appellants are Port registered under Indian Port Act, 1908 and it has been providing services in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Notification No.16/2009-C.E. (NT), dt.07.07.2009 in Rule 2(k) of the CENVAT Credit Rules 2004 is not clarificatory in nature and is not applicable in the case of the service provider. It is applicable only to manufacturer and factory and not to the service provider and in the present case, the Appellants are the service provider. (b) This view is also followed by the Tribunal in the case of Grasim Industries Ltd Vs CCE 2015 (315) ELT 426 (Tri-Del) and in the case of Laxmi Enterprise Vs CCE 2014-TIOL-2042-CESTAT-AHM. (c) CBCE vide Circular No.120/01/2010-ST, dt.19.01.2010, clarified that the terms used in and used for have to be interpreted in harmonious manner and given a wider scope to input service for provider of output service. (d) The words for providing output service in Rule 2(l) are wide to cover all or any input without use of which, the output service cannot be rendered. The Honble Supreme Court in the case of State of Punjab Another Vs British India Corporation Ltd (1964) 2 SCR 114 = AIR-1963-SC-1459 observed that the words like directly or indirectly wide and liberal meaning can be given to the words used for, depending upon the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their favour as stated above. (c) The decision of the Tribunal in the case of Bharti Airtel Ltd Vs CCE - 2013 (29) STR 401 as upheld by the Hon ble Bombay High Court as reported in 2014 (35) STR 865, relied upon by the Adjudicating authority, had also considered by the Tribunal in the case of M/s Reliance Infratel Ltd Vs CST - 2015-TIOL-516-CESTAT-MUM. The Tribunal held that the CENVAT credit is available on Tower parts, without which the Business Support Service in the form of Passive Telecom Infrastructure could not have been provided. (C) Input services:- The Adjudicating authority denied the credit mainly on the ground that the Appellants had not provided documentary evidences to prove that the input services were used for providing output taxable services. In this context, the learned Advocate drew the attention of the Bench to the use of input service in detail, which was explained before the Adjudicating authority. The learned Advocate also demonstrated the Bench, some of the invoices of input service. The learned Advocate filed written submissions with statements and compilation of case laws. 6. The learned Authorised Representative on behalf of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity to qualify as an activity related to business has to be analogous to the illustrated activity mentioned in Rule 2(l) of CENVAT Credit Rules, 2004. In the present case, the Appellants failed to establish the nexus of the input service with the output service. 7. On the first issue, we find that the adjudicating authority observed that cement and steel are neither input nor capital goods as the same were used in construction of jetty and not used for providing output taxable service. The Tribunal in the Appellants own case vide Order No. A/2122/WZB/AHD/08 dated 08.05.2008/ 13.09.2008 in appeal No. ST/160/2007 (reported in 2008-TIOL-1891-CESTAT-AHM) disallowed the CENVAT credit on cement and steel. The Appellants filed appeal before the Hon'ble Gujarat High Court. By the judgment dated 29.04.2015 in Tax Appeal No. 15 of 2009 as reported in 2015-TIOL-1288-HC-AHM-ST (Mundra Port Special Economic Zone Limited vs. CCE, Rajkot), the Hon'ble High Court allowed the appeal of the Appellant. The Appellant would be entitled to avail input credit on Cement and Steel. The relevant portions of the decision of the Hon'ble Gujarat High Court (2015-1288-HC-AHM-ST) are repro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are eligible for CENVAT credit. It is not in dispute that the Appellant is a taxable service provider on port under the category of port services. Therefore, the Appellant was entitled for input credit and the decision of the Division Bench of the Andhra Pradesh High Court squarely applies to the facts of the case and answered the question on which the appeal has been admitted. 8. Mr. Y.N. Ravani, learned counsel for the revenue has placed reliance on the decision of the Larger Bench of the Tribunal in Vandana Global Limited Vs Commissioner of Central Excise, Raipur, 2010 (253) E.L.T. 440 - [2010-TIOL-624-CESTAT-DEL-LB]. We have carefully gone through the decision of the Larger Bench of the Tribunal. We do not find that amendment made in CENVAT Credit Rules 2004 which come into force on 7.7.2009 was clarificatory amendment as there is nothing to suggest in the Amending Act that amendment made in Explanation 2 was clarificatory in nature. Wherever the legislature wants to clarify the provision, it clearly mentions intention in the notification itself and seeks to clarify existing provision. Even, if the new provision is added then it will be new amendment and cannot be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer [but shall not include cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated bars (TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods. On plain reading of Explanation-2 of the definition of Input, as amended on 07.07.2009, we find that the said explanation would apply in respect of the goods used in the manufacture of capital goods, which are further used in the factory of the manufacturer. Thus, it is clear that input Cement and Steel used in the factory of manufacturer shall not be eligible input credit. This explanation is applicable only to the manufacturer and not the service provider. It is to be read strictly as per plain meaning of the statute. There is no indication in the Explanation that it would apply to the service provider. The Hon'ble Gujarat High Court in the appellants own case held that amendment in Explanation-2 in Notification No. 16/2009-CE (NT) (supra) was not clarificatory in nature and the amended de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nown as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting-oils, coolants, accessories of the final products cleared along with the final product; goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production; (ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service; Explanation 1. - The light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever. Explanation 2. - Input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer; (I) input service means any service, - (i) used by a provider of taxable service for providing an output service, or (ii) used by the manufacturer, whether directly or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods, except as specified, used in or in relation to the manufacture of final product. On the other hand, Clause (ii) in Rule 2(k) covers all goods except specified therein, used for providing any output service. In short, Clause (i) and (ii) are applicable for manufacturer and output service provider respectively. The present case relates to output service provider. There is no dispute that the appellants herein are not manufacturer and covered under Clause (ii) of input definition. The words all goods, if read with used for providing any output service in Clause (ii) of Rule 2(k) of Rules 2004, make it clear that any goods other than specified in the said Clause, used for providing any output service, would be treated as input and covered under the said definition. Further, the particular expression used for providing any output service in the said Clause (ii) in Rule 2(k) have widened the scope of definition of input in respect of output service. The definition of capital goods under Rule 2(a) of the Rules provides the goods, specified in sub-Clause (i) to (vii) of Clause (A) used for providing output service, would be treated as capital goods. Similarly, the definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of the word input in Rule 2(g) in the CENVAT Credit Rules, 2002, it may be noted that the said definition of the word input can be divided into three parts, namely: (i) specific part (ii) inclusive part (iii) place of use 10. Coming to the specific part, one finds that the word input is defined to mean all goods, except light diesel oil, high speed diesel oil and petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not. The crucial requirement, therefore, is that all goods used in or in relation to the manufacture of final products qualify as input. This presupposes that the clement of manufacture must be present. 8. Yet again considering the inclusive part of the definition of input, it was held as follows. All these considerations become relevant only when they are read with the expression used in or in relation to the manufacture of final product in the substantive/specific part of the definition. In each case it has to be established that inputs mentioned in the inclusive part is used in or in relation to the manufacture of final product. It is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital goods used in erection/fabrication of telecom tower fixed to earth and become an immovable property which are neither chargeable to excise duty nor payment of service tax. The Assessee paid service tax under the category of Business Support Service for providing passive telecom infrastructure by way of telecom tower to various cellular telecom operators. The Revenue strongly relied upon the decision of the Hon ble Bombay High Court in the case of Bharti Airtel Limited vs. CCE - 2014-TIOL-1452-HC-MUM-ST. The Tribunal observed that the Hon ble Bombay High Court was examining the issue on a different platform of facts. Hon ble High Court was concerned with admissibility of Cenvat credit of duty paid on tower and parts for providing telecom services. The towers and parts were held to be immovable, hence not goods and not excisable and therefore, not considered as input for providing telecom service. But in the present case the question of nexus between tower parts and output service of telecommunication is not under consideration. In the case of Bharti Airtel Ltd. (supra), Cenvat credit was denied on inputs and capital goods used for providing the output service namely Telecommun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 2(k)(ii) there is no restriction on the coverage of inputs except for oil and petrol. In the present case the inputs namely tower parts are cleared as goods from the supplier. Therefore, credit on them is admissible under Rule 2(k)(ii) for providing output service i.e. Business Support Service. The inputs are not immovable when they are purchased and then brought to the site for creation of towers. Merely because the tower parts, etc., are assembled together, it would be totally unreasonable to suggest that Cenvat credit on them is not admissible despite Rule 2(k)(ii). This Rule has to be interpreted as it stands. Reliance is placed on the High Court of H.P. judgment in case of Gujarat Ambuja Cement - 2008-TIOL-683-H.C.-H.P. = 2010 (256) E.L.T. 356 (H.P.) and the Tribunal decision in the case of Commissioner of Central Excise, Raigad v. JSW Ispat Steel Ltd. - 2013-TIOL-1758-CESTAT-MUM, in which it was held that Excise duty paid on parts of components would be admissible even if they are assembled into goods which are immovable or exempted. By analogy in the present case Cenvat credit would be admissible under Rule 2(k)(ii) ibid. Ld. AR contended that the appellant had claimed C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (xxvi) Design Service Agency Service 3.1 The Revenue has relied upon the definition of input services as given in Rule 2(l)(i) of CENVAT Credit Rules, 2004 which reads as under: Input services means any service used by a provider of taxable service for providing an output service. According to the Revenue in this case the services listed above have not been used for providing the service for the construction of the mall. Since mall is not an excisable product or is a service, credit is not admissible. As submitted by the learned counsel, the issue which was before the Honble High Court of Andhra Pradesh was similar to the present one. The Honble High Court of Andhra Pradesh considered the definition of the input and input service and took a view that using cement and TMT bars for construction of warehouse, the CENVAT credit on cement and TMT bars would be admissible. The Honble High Court observed as follows : 6. The only allegation against the assessee is that they claimed CENVAT credit irregularly with reference to cement and TMT bars used in the construction of warehouses through which the storage and warehousing services are provided by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal. 7. A plain reading of both the above definitions would show that, unless excluded, all goods used in relation to manufacture of final product or for any other purpose used by a provider of taxable service for providing an output service are eligible for CENVAT credit. In Maruti Suzuki Ltd. v. Commissioner of Central Excise, Delhi-III, (2009) 9 SCC 193 = 2009 (240) E.L.T. 641 (S.C.) the Supreme Court laid down as follows : 9. Coming to the statutory definition of the word input in Rule 2(g) in the CENVAT Credit Rules, 2002, it may be noted that the said definition of the word input can be divided into three parts namely : (i) specific part (ii) inclusive par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any taxable service shall be the gross amount charged by the service provider for such service provided or to be provided by him. 17. The dictionary meaning of port is :- Port. A harbour where ships load and unload cargo; any place where persons and cargo are allowed to enter a country and where customs officials are stationed. [Blacks Law Dictionary, 7th 8th Eds.]. A place for the loading and unloading of the cargoes of vessels, and the collection of duties or customs upon imports and exports. [Blacks Law Dictionary, 5th Ed.]. A port is a place intended for loading or unloading goods; hence includes the natural shelter surrounding water, as also sheltered water produced by artificial jetties, etc. [The Baldhill CCANY, 42 F 2d 123, 125]. A port is a place where a vessel can lie in a position of more or less shelter from the elements, with a view to the loading or discharge of cargo. [Hunter v Northern Marine Insurance Co. Ltd. (1888)13 App Cas 717, 726, per Lord Herschell]. The word port must be construed in its usual and limited popular or commercial sense as a place where ships are in the habit of coming for the purpose of loading or unloading, emb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel has filed a list/statement of various inputs and capital goods used for providing port services vide Annexure B to the initial written submissions. The same is reproduced below, a perusal of which shows that these inputs and capital goods are necessary for providing the output service, and hence CENVAT Credit would be eligible on them. Annexure B Adani Ports And Special Economic Zone Limited Statement of various Inputs Capital goods used for providing Port services SN Input Items Uses of Inputs 1. Air Compressor Used as machinery in liquid processing plant. 2. ALIPHATIC ACRYLIC POLYURETHANE Conveyour belt system for fertilise cargo 3. Bitumen Used for open godown facility (cargo storage in open godown) and internal Road in port area. 4. BRG ROLL MTR, 22314 E,70 MM, 150 MM Material used for maintenance of RTGC Cranes at CT2 5. BRG ROLL MTRS, 2309/E, 45MM, 100MM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24. GREASE, MULTIS-EP2,ELF For lubrication purpose in cranes for cargo handling 25. GREASE, SERVO GEM EP2 Operation Maintenance in Mechanical Handling services dept. 26. GREASE, SERVO GEM EP2 Operation Maintenance in Mechanical Handling services dept. 27. GSKT FLR, OIL PAPER, CL150, 3 MM, BIN For Hose connection at jetty as well as Liquid Tank Farm site 28. HDPE Pipes Used for covering electrical cables at jetty area and used for internal water supply 29. HOSE FIRE, 63 MM, 15M At Liquid Terminal and Terminal 01 for fire fighting 30. HOSE FLX W/O CONN, PTFE, 8IN, 6M Liquid Terminal Maint.Pipeline, valve assembly, pump assembly fitting use 31. HOSE UTIL, BIN, 6M Liquid Terminal Maint.Pipeline, valve assembly, pump assembly fitting use 32. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SHT PLT N-MET, LDPE, 20MX 1.8 MM For bottom spread in wagons 50. STAIR TREAD, 730 MM, SPAN X 250 MM WIDTH Conveyor structure for cargo handling 51. Steel pole Lighting in open area of port 52. TARPAULIN, HDPE, 60 X 60 FT, 200 GSM For Covering of cargo lying in Open and Close Godowns 53. TARPAULIN, HDPE, 60 X 60 FT, 200 GSM For cargo covering in open stake yard 54. THREAD CONE, PROPYLENE, 5000M, 2 PLY For bagging of fertilizer cargo 55. Transformer Transformer used in Tank farms, Container Terminal electrical supply 56. UPS, 120 KVA, MM:IP20 HIPLUSE, MFR:EMERSON UPS for Server 57. WEIGHBRIDGE, MOBILE, CAP:80-100MT, SZ:18 X M For weighment of cargo for handling operations 58. Wire Rope Used i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by various Courts and this Tribunal in number of cases, by way of interpreting the definition of input services. The definition of input service has already been reproduced in Para 10 in this order. As per Clause (i) of Rule 2(l) of CENVAT Credit Rules, 2004, input service means any service used by a provider of taxable service for providing output service. The words any service and used for providing an output service in the input service definition, make it clear that the use of input service is depending on the scope of an output service . So, it is required to examine the scope of an output service for deciding the input service. In the present case, the main output service is Port service . The term Port Service has been defined to mean, any service rendered by a Port or other Port or any person authorized by such Port or other Port in any manner, in relation to a vessel or goods. In the case of Kandla Shipchandlers and Ship Repairers Association Vs UoI - 2013 (29) STR 233 (Guj.), the Hon'ble Gujarat High Court observed that the term Port has been defined in an extensive manner. It includes within its sweep any service rendered in any manner in relation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for construction of Jetty used for providing Port services are eligible for credit. In another case of the present appellant - 2011 (21) STR 361 (Guj.), the Hon'ble High Court of Gujarat upheld the decision of the Tribunal holding that they are entitled for CENVAT Credit of Service Tax paid on various services namely Mobile Phones, CHA Services, Rent-a-Cab Service, Surveyor Charges, Other input services (such as profession fees, construction, soil testing, labour charges etc), and duty paid on Air Conditioners. From an analysis of the statutory provisions, definitions, and the decisions of the Hon'ble High Courts and the Tribunal, it is evident that any service used by a service provider for providing Port Service in any manner, is eligible for credit. The definition of Input service by way of means and includes also amplify the scope of the same. Further, the definition also mentions certain specific services. The definition also includes services used in relation to activities relating to business . These further enlarge the scope of the input services. The net result of such a wide definition as rightly held by the High Courts and Tribunal, is that any input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em and air traffic management to facilitate air operation smoothly. CENVAT Credit availed for the Airport service should also be allowed following the same logic as that of Rent a Cab Service which was allowed by the Hon ble Tribunals decision in the Appellants own case on the ground that transport of various personnel and other officials is necessary to provide authorized operation efficiently. 3 Air Travel Agency The Appellant availed the services of air travel agencies for booking of air tickets for various executives, officers and directors for attending various business meetings and conferences related to port business operation and development purpose. 4 Architect The Appellant availed the services of various architects for architectural, mechanical electrical engineering related projects required fro port offices, building, sub-stations warehouses. 5 Banking Financial Services The Appellant availed CENVAT Credit on service tax paid for various bank charges and finance charges related to day to day operations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort operation. 11 Clearing Forwarding Agents Services The Appellant availed the services of various clearing and forwarding agencies for custom clearance of various dry cargo and liquid cargo on behalf of various customers. 12 Commercial Coaching Training Services The Appellant availed the service from various service providers who organized various types of trainings to train mechanical and engineering technicians for better handling of tools, equipments, convey our belts, cranes used in the port and port systems. Further training were provided to non-technical staff for smooth functioning of port. Such training are needed to provide the port service efficiently. Service relating to coaching and training is specifically included in third part of the definition of Input Service defined under Rule 2(1) of the CENVAT Credit Rules 2004. 13 Commercial or Industrial Construction Services The Appellant availed services of various service providers for civil construction of marine structures, port building, control room and wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany in National Stock Exchange (NSE) Bombay Stock Exchange (BSE). The Company is required to tax depository services of NSE BSE for securities related information and data required from time to time for publication to public and bankers. 19 Cosmestic / International Journey by Air The Appellant availed Air travel services for travelling by air for various executives and directors for attending various business meeting and conferences related to port business operation and development purpose. 20 Dredging Services Dredging is the prime activities needs to be carried out for construction operation of Port. For keeping minimum draft level near jetty area, dredging in the sea is required to be carried out from time to time to keep minimum draft level. 21 Erection, Commission-ing or Installation Services The Appellant availed services for erection, commissioning Installation of various plants machinery, equipment, tugs and cranes which enable the port to provide smooth and efficient movement and handling of cargo withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in third part of the definition of Input Service defined under Rule 2(1) of the CENVAT Credit Rules 2004. 27 Maintenance Repair Services The Appellant entered into contracts with various service provider agencies fro proving scheduled maintenance (i.e. yearly or monthly maintains as the case may be) as well as breakdown maintenance (maintenance/repair on breakdown of any machine) services to be carried out on various plant machinery equipment used for providing the port service, tugs and cranes used for providing port service. Further repair and maintenance is also required of jetty, port offices and warehouses which are needed for the day to day operation to provide port service. 28 Management Consultants Services The Appellant availed management consultantancy service from various service providers in the field of business management and project management for effective and efficient management of port operations and developments. The scope of services included within business management the services of consultancy services to define the desired process model for capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, port visitors at Mundra port offices. 33 Passengers Embarking On Domestic Journey by Air The Appellant availed services for air travel of various executives and directors of the company for port business operation and development purpose. 34 Pilotage Services The Appellant hired various professional pilot-ages for operations of vessels for berthing and de-berthing of vessels at Mundra port. Such services required for timely movement of vessels coming to Mundra port for import or export of cargo and thus required for providing port service. 35 Port Services The Appellant hired services from various port services providers for providing port services at Mundra port for its own customers. The scope of the port services consisting of port and dock/jetty services, berthing, mooring, towage and anchorage in relation to vessels and goods in-loaded in the port area. In availing such port service, the service provider raises invoice to The Appellant and in turn The Appellant raises bill to its customer. 36 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company on National Stock Exchange (NSE) Bombay Stock Exchange (BSE), needs to comply with various regulatory agencies like SEBI, ROC Stock Exchange rules regulations as well as Companies Act and for compliances of all such acts, rules regulations. For compliances, The Appellant has hired services of share registry services provider. Service relating to share registry is specifically included in third part of the definition of Input Service defined under Rule 2(1) of CENVAT Credit Rules 2004. 42 Ship Management Services Being port services provider, the Appellant hired the services from various ship management services provider for operations of tug boats for vessel operations and movements. The service provider provided tug pilot to The Appellant who operates the tug for berthing and de-berthing o vessels after loading and unloading of cargo from the vessels. 43 Site Formation Services The Appellant availed services for clearance and site formation of open yard godown required for storage of cargo like fertilisers, steel pipes plates and minerals and therefore essen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 51 Works Contract Services The Appellant availed work contract services in relation to repair and maintenance of equipment and machineries like tug boats and cairns and other plant machinery parts required for providing port services 24. The learned Advocate, by random sampling method, demonstrated from the Paper Book Volume 3 4 in respect of OIO dt.11.11.2013 and Show Cause Notice dt.14.10.2008 issued to APSEZ Ltd, to substantiate the relationship/nexus of input service and output service. In the case of APSEZ Ltd, the learned Advocate submitted a chart, listing all the input services under various categories. The first category includes Cargo Handling Service, Custom House Agents, Dredging Service, Manpower Recruitment and Supply Agency Services, Pilotage Services, Port Services, Port Services (Marine Consultancy), Storage and Warehousing Services, Supply of Tangible Goods and Surveyors Services which are all input services used directly for providing the output taxable service (direct nexus). It is observed that since all these input services have direct nexus to the output service, the appellants are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Cab Services, Renting of Immovable Property, Site Formation Services, Sponsorship Services, Stock Exchange Services, Survey Map Making, Telephone Services, Work Contract Services. It is observed that except for Air Travel Agency, Airport Services, Mandap Keeper Services, Membership of Clubs, Passenger Embarking for Foreign Travel, and Sponsorship Services, all the other services will be eligible to be treated as input services used in relation to business activities. As regards, Air Travel Agency, Air Port Services, Mandap Keepr Services, Membership of Clubs, Passenger Embarking for Foreign Travel, Sponsorship Service, it is not clear from data to what extent they are in relation to the business activities / output service viz. Port service. Hence, it needs to be examined by the lower Adjudicating authority whether these services are eligible to be treated as input services for providing the output services viz. Port Service. However, all other services in this category would be clearly in relation to business activities , and hence would be eligible for CENVAT Credit. Further, the Appellants have claimed under Category V, Architect Service, Company Secretary Service, Consul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Bombay, in the said decision, discusses the terms such as and in relation to business activities in the definition of input services and has held that the definition of input service is very wide, and it seek to cover every conceivable service used in business of manufacture (or output service), and categories enunciated after expression such as in the definition of input service is not relating to particular class or category of services but to variety of services used in business of manufacturing final products (or output services), and such as in the said definition is only illustrative and not exhaustive. The learned Authorised Representative also relied upon the decision of the Hon'ble Gujarat High Court in the case of Commissioner of Central Excise, Ahmedabad-II Vs Cadila Healthcare Ltd - 2013 (30) ELT STR 3 (Guj.). The question of law proposed before the Hon'ble High Court was whether the CESTAT was right in considering the services namely Technical Testing and Analysis Service, Technical Testing and Certification Service, Business Auxiliary Service (Service rendered by the Commission agent), Service rendered by clearing and Forwarding Agent, Courier Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... List of Input Services fall under Third category of definition of Input Service defined under Rule 2(l) of the Rules (Inclusive Port) 8,03,69,472.00 6.92 d) Input Service used in relation to Business activities. 4,32,51,045.00 3.73 e) Professional Services used for providing Output Taxable Services. 77,94,706.00 0.67 f) Construction Services (Commercial or Industrial Construction Services) 11,95,733.00 0.10 TOTAL 1,16,05,99,139.00 The break-up of denial of Cenvat Credit as mentioned above in respect of Input Service used directly for providing Output Taxable Services would be 61.72% of the total demand. The nature of such services would clearly indicate that the said services must be used for providing Output Services, viz. Port Services. Further, services fall under Rule 6(5) of Cenvat Credit Rules 2004 (prior to 1.4.2011) would be 26.86% of the total dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the definition of input service contained in Rule 2(l) of the said Rules. In that case, the Hon ble High Court answered the question in favour of the Assessee. The Revenue contended that the Advertisement and Marketing in that case is not connected with the manufacturer of concentrate but with the sale of aerated water manufactured out of the concentrate by the Bottlers and not by Appellant. As such, this will not be covered by the definition of input service whether directly or indirectly in or in relation to manufacture of final product. The Hon ble High Court, after discussing the definition of input and input service had observed as under:- 25. The expression Business is an integrated/continuous activity and is not confined restricted to mere manufacture of the product. Therefore, activities in relation to business can cover all the activities that are related to the functioning of a business. The term business therefore, in our opinion cannot be given a restricted definition to say that business of a manufacturer is to manufacture final products only. In a case like the present, business of assessee being an integrated activity comprising of manufacture of concentrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N. 767), Shyam Lal v. M. Shayamlal (AIR 1933 All. 649) and 76 Corpus Juris Secundum 621. Assuming that the investments in shares and in lands do not form part of the undertakings but are different subject matters, even then these would be brought within the purview of the vesting by reason of the above expressions. In this connection reference may be made to 76 Corpus Juris Secundum at pages 620 and 621 where it is stated that the term relate is also defined as meaning to bring into association or connection with. It has been clearly mentioned that relating to has been held to be equivalent to or synonymous with as to concerning with and pertaining to. The expression pertaining to is an expression of expansion and not of contraction. The expression relating to thus widens the scope of the definition. xxx xxx xxx 38. Service tax therefore, paid on expenditure incurred by the assessee on advertisements sales promotion, market research will have to be allowed as input stage credit more particularly if the same forms a part of the price of final product of the assessee on which excise duty is paid. In other words, credit of input service must be allowed on expenditure in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Output Service. In the present case, it is evident that the Central Excise Officers raised the demand after scrutiny of the records on the above Input Services. The various services as detailed mentioned in reply to the show cause notice are also placed before the Tribunal. The nexus between the Input and Output services is clearly evident from the records except for items namely Air Travel Agency, Airport Service, Mandap Keeper Service, Membership of Clubs, Passenger Embarking for Foreigner and Sponsorship Service which requires to be examined by the Adjudicating authority. So, there is no reason to deny CENVAT Credit on the input services except the items mentioned above. It is a case of eligibility of CENVAT Credit on input, input service and capital goods and most of the items are admissible and therefore, imposition of penalty is not warranted. 30. In view of the above discussions, the impugned orders are modified to the extent, denial of CENVAT Credit, except the input service credit as mentioned in Para 29 of this order, are set aside. The eligibility of the CENVAT Credit of the input services as mentioned at Para 29 of this order would be examined by the Adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X
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