9911796707
TMI Blog2015 (6) TMI 1091X X X X Extracts X X X X X X X X Extracts X X X X ..... the final products, within the meaning and comprehension of Rule 2 (1) of the CENVAT Credit Rules, 2004? 2. Whether the Cenvat Credit of the service tax, so paid for receiving the outdoor caterer's services by them for providing canteen services to their employees, was eligible for availemnt and utilisation in terms of Rule 3 read with Rule 2 (1) ? 3. Whether the second respondent Customs, Excise and Service Tax Appellate Tribunal, South Regional Bench, Chennai, was correct in relying in the impugned Final Order the ratio of the decision of the Larger Bench in CCE, Mumbai vs. GTC Industries Ltd. (2008 (12) STR 468) without recording any findings as to the applicability of the ratioo of the relied on case to the facts of the present case and allow the credit of service tax paid ont he outdoor catering services to M/s. Thiru Arooran Sugars Ltd. Thirumandangudi ? 4. Whether the service used by M/s. Thiru Arooran Sugars Ltd. Thirumandangudi for outward transportation of final products beyond the place of removal, that is, factory in this case was an input service used, whether directly or indirectly, in or in relationot manufacture or clearance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er (Appeals). The Commissioner (Appeals) disposed of the appeal in the following manner : " 07. In view of the above discussion, I pass the following order : ORDER (a) The cenvat credit of service tax paid on cell phones is allowed and the impugned order is modified to this extent. (b) The rest of the impugned order regarding recovery of cenvat credit taken on catering services and GTA services and interest thereon is upheld. (c) The penalty imposed in the impugned order is set aside. (d) The appeal and the stay petition are disposed of on the above terms." As against the said order of the Commissioner (Appeals), the assessee went before the Tribunal. 3. The Tribunal following the Larger Bench decision of the Tribunal in the case of Commissioner of Central Excise, Mumbai V. GTC Industries Ltd. reported in 2008 (12) STR 468 (Tri.-LB) and ABB Ltd., Vs. CCe Bangalore as reported in 2009 (15) STR 23 (Tri-LB) allowed the appeal by holding that Cenvat credit is admissible on 'outdoor catering service' as well as 'outward freig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, the substantive part of the definition "input service" covers services used directly or indirectly in or in relation to the manufacture of final products, whereas the inclusive part of the definition of "input service" covers various services used in relation to the business of manufacturing the final products. In other words, the definition of "input service" is very wide and covers not only services, which are directly or indirectly used in or in relation to the manufacture of final products but also includes various services used in relation to the business of manufacture of final products, be it prior to the manufacture of final products or after the manufacture of final products. To put it differently, the definition of input service is not restricted to services used in or in relation to manufacture of final products, but extends to all services used in relation to the business of manufacturing the final product. 29. The expression "activities in relation to business" in the definition of "input service" postulates activities which are integrally connected with the business of the assessee. If the activity is not integrally connected with the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch would constitute the relevant consideration. Unless and until the said input is used in or in relation to the manufacture of final product within the factory of production, the said item would not become an eligible input. The said expression "used in or in relation to the manufacture" have many shades and would cover various situations based on the purpose for which the input is used. However, the specified input would become eligible for credit only when used in or in relation to the manufacture of final product. Hydrogen gas used in the manufacture of sodium cyanide is an eligible input, since it has a significant role to play in the manufacturing process and since the final product cannot emerge without the use of gas. Similarly, Heat Transfer Oil used as a heating medium in the manufacture of LAB is an eligible input since it has a persuasive role in the manufacturing process and without its use it is impossible to manufacture the final product. Therefore, none of the categories in the inclusive part of the definition would constitute relevant consideration per se. They become relevant only when the above crucial requirement of being "used in or in relation to the manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be applied ipso facto to hold that the credit of service tax paid on outdoor catering services is allowable only if the said services are used in relation to the manufacture of final products. That argument cannot be accepted because unlike the definition of input, which is restricted to the inputs used directly or indirectly in or in relation to the manufacture of final products, the definition of 'input service' not only means services used directly or indirectly in or in relation to manufacture of final products, but also includes services used in relation to the business of manufacturing the final products. Therefore, while interpreting the words used in the definition of 'input service', the ratio laid down by the Apex Court in the context of the definition of 'input' alone would apply and not the judgment in its entirety. In other words, by applying the ratio laid down by the Apex Court in the case of Maruti Suzuki Ltd. (supra), it cannot be said that the definition of 'input service' is restricted to the services used in relation to the manufacture of final products, because the definition of 'input service' is wider than the definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit of service tax paid out on catering services has been rightly allowed by the Tribunal. 36........... 37........... 38. We concur with the above decision of this Court in the case of Coca Cola India (P.) Ltd. (supra). However, in that case, this Court has also held that the cost of any input service that forms part of value of final products would be eligible for CENVAT credit. That observation of the Division Bench is made in the context of a service which is held to be integrally connected with the business of manufacturing the final product. Therefore, the observation of the Division Bench in the case of Coca Cola India (P.) Ltd. (supra) has to be construed to mean that where the input service used is integrally connected with the business of manufacturing the final product and the cost of that input service forms part of the cost of the final product, then credit of service tax paid on such input service would be allowable. 39. The Larger Bench of CESTAT in the case of GTC Industries Ltd. (supra) has also observed that the credit of service tax would be allowable to a manufacturer even in cases where the cost of the food is borne by the worker. That part of the obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rer. Whether directly or indirectly, in or in relation to the manufacture of final products. It also includes clearance of final products from the place of removal. Therefore, services received or rendered by the manufacturer from the place of removal till it reached its destination falls within the definition of input service. What are the services that normally a manufacturer would render to a customer from the place of removal? They may be packing, loading, unloading, transportation, delivery etc,. Though the word transportation is not specifically used in the said section in the context in which the phrase clearance of final products from the place of removalis used. It includes the transportation charges. Because, after the final products has reached the place of removal, to clear the final products nothing more needs to be done, except transporting the said final products to the ultimate destination i.e. the customers/buyer of the said product, apart from attending to certain ancillary services as mentioned above which ensures proper delivery of the finished product upto the customer. Therefore, all such services rendered by the manufacturer and included in the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortation. Certain aspects. Having regard to the scheme of the Section, the way it is worded, it is not open to the Court to include something which the legislature deliberately did not include in the definition. If the Courts indulge in such interpretation, it amounts to rewriting the provision which is impermissible. Yet another reason for coming to such a conclusion is, in the first part of the restrictive definition clearance of final products from the place of removal is expressly stated. If transportation of final product from the place of removal is included in the phrase clearance of final products from the place of removal again the same cannot be read into the provision under the words activities relating to business. When a particular service was included within the definition, it is not necessary to interpret other provisions of the very same rule to include the said services over again. When a specific provision is made in the first part of the definition portion of the Cenvat Rules which refers to clearance of final products from the place of removal and in the second part (inclusive) of the definition when the phrase used is activities relating to business such as, me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts from the place of removal, the Central Government it fit to amend the provision from 1.4.2008 by substituting the word upto in place of from, in Clause (ii) of Rule 2(i) making the intention clear i.e whether it is an inward transportation of input of capital goods or clearance of final products upto the place of removal, any service rendered and service tax paid would fall within the definition of input service. Therefore, it is clear that till such amendment made effective from 1.4.2008 notwithstanding the clarification issued by the Central Government by way of their circular, transportation charges incurred by the manufacturer for clearance of final products from the place of removal was included in the definition of input service. Therefore, the interpretation placed by the tribunal on the words activities relating to businessas including clearance of final products from the place of removalwhich occurred already in the first part of Rule 2(i) (ii) prior to 1.4.2008, runs counter to the language employed in the second part of the definition of input serviceand is to that extent contrary to the legislative intention and therefore, the said finding is unsustainable in law. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
