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TMI Blog2018 (12) TMI 929X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for procuring the advertisement services - Held that:- The activity of hiring of print media agent for ultimate purpose of advertising is very much part of advertising service and since the advertisement charges forms the part of assessable value of the appellants finished product any cost incurred and services availed in this regard form the part of assessable value and thus the appellant is entitled for credit of such input services - the appellant are legally entitled to avail input service credit of the service tax paid by them on the commission charged by the print media agent for advertising their advertisement material into various newspapers. CENVAT Credit - input services - renting of infrastructural facilities from M/s Honda Siel Car Pvt. Ltd. - Held that:- Common facilities availed by the appellant on rent basis are in „relation to the manufacture of goods‟ and then on integral part of overall activity of manufacturing - also since the charges of rent/license fee paid by the appellant must have been included in the cost of the finished product manufactured by the appellant as per the provisions of Cenvat Credit Rules they are entitled for credit of service t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein the above-mentioned amount of the Cenvat credits have been confirmed under Rule 14 of Cenvat Credit Rules, a penalty of equal amount have also been imposed under Section 11AC (i) (c) of the Central Excise Act, 1944, personal penalty of ₹ 5,00,000/- and ₹ 10,00,000/- has also been imposed on Shri Sunil Kumar Gupta, Manager (Taxation) and Shri Naveen Kumar, Division Head (Finance and Account) of the appellant, respectively. The appellants are before us against the above-mentioned order-in-original. The learned Advocate appearing on behalf of the appellant has contended that repair and maintenance services received by the appellant from his authorized service stations cannot be denied to them as the scope of input service as mentioned under Rule 3 of the Cenvat Credit Rules and defined under Rule 2 (l) of the Cenvat Credit Rules has a specific mention that the appellant are entitled for credit on all input services used directly or indirectly, in or in relation to manufacture or clearance of final product. It can be seen from the scope of the definition of input service that it not only covers any services used directly or indirectly in relation to manufacture or cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services, the authorized service stations raise invoices on the appellant alongwith applicable service tax. (v) The appellant avails credit on the above mentioned services received from authorized service stations. The Revenue has sought to deny credit on the ground that these services were not received by the appellant . 2. The learned Counsel has relied on the decisions of this Tribunal which support his point of view with regard to the afore-mentioned issue. The case laws referred are as that of M/s Carrier Airconditioning Refrigeration Ltd. vs. CCE, Gurgaon 2016 (41) S.T.R. 1004 (Tri. Del.), CCE, Nashik vs. Mahindra Mahindra Ltd. 2012 (28) S.T.R. 382 (Tri. Mumbai), Samsung India Electronics Pvt. Ltd. vs. CCE ST, Noida 2017 TIOL 05 CESTAT ALL. and Leroy Somer India Pvt. Ltd. vs. CCE, Noida 2015 (39) S.T.R. 466 (Tri. Del.). The learned Counsel has further added that since the cost of after sale service as well as warranty charges are included in the assessable value of the goods for computation of the excise duty and the services provided by the authorized service stations are in fact on behalf of the appellant and, therefore, the service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or capital goods‟ and outward transportation‟. Similarly, the appellant is required to gain access to roads, street lighting, drainage ensuring unclogged roads etc. for outward transportation of the manufactured products. (iii) that these common infrastructure facilities clearly qualify as input service used in or in relation to the manufacture of final product and the appellant is entitled to credit of the service tax paid by Honda Cars on license fee charged for use of these common infrastructural facilities. (iv) It has further been argued that the Commissioner has erred in holding that the impugned services are excluded from the definition of input service‟ vide Rule 2 (l) (A) of the Cenvat Credit Rules. From a perusal of exclusion clause, it reveals that exclusion has been carved out with respect to works contract and construction services which are taxable under Section 66E (b) of the Finance Act. In the instant case, services are taxable under Section 66E (f) and not under Section 66E (b) of the Finance Act. (v) It is submitted that construction services imply that the activity of construction is undertaken for someone else. This requires that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost of their finished product and they have actually included such cost into the price of their finished product namely two wheelers motorcycle/scooters and thus they are very much entitle for taking credit of such cost. The learned Advocate had also tried to explain the entire exercise, as follows : that (i) As already submitted, these accredited agencies or agents receive various benefits, like higher credit period, incentives, discounts etc., which they generally pass on, wholly or partly, to the entities placing advertisements through these agents. This is evident from a reading of the copy of invoice of the print media agent. (ii) A perusal of the invoice would reveal that the basic cost of placing the advertisement is ₹ 42,174/-. From this an amount of ₹ 6326.10 has been reduced towards 15% commission received by the agent from the print media and passed on to the appellant. After allowing this deduction, the agent has charged 2% commission on the amount of ₹ 42,174/- from the appellant, for the service rendered by them to the appellant, for booking the advertisement. The service tax has thereafter been charged on this 2% commission charged by the age ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o namely suppression, fraud, collusion, mis-representation with intend to evade central excise duty are not present in their case. It can be seen that the issue at hand is purely of interpretation of the law and all the facts regarding availment of Cenvat credit on all the three counts have always been available with the Department. The learned Advocate has also relied upon various decisions of this Tribunal as well as High Courts. A summary of such decision is given here below :- Prolite Engineering Co. vs. Union of India 1995 (75) E.L.T. 257 (Guj.) Accurate Chemicals vs. Union of India 2015 (324) E.L.T. 453 (All.) BCH Electric Ltd. vs. CCE, Delhi IV 2013 (31) S.T.R. 68 Petropol India Ltd. vs. CCE, Jaipur 2016 (9) TMI 125 BSNL vs. CCE ST, Chandigarh I 2014 VIL 325 CESTAT DEL ST The learned Advocate has also argued that learned Commissioner has travelled beyond the provision of the law in imposing a personal penalty on the employees of the company under Rule 26 of the Central Excise Rules, 2002 and has submitted that since the demand itself is not sustainable the grounds of imposition of personal penalty under Rule 26 are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice on behalf of the appellant, received the payment from the appellant and on that amount, they paid the service tax. The point of dispute is as to whether the service provided by the dealers to the appellant is an input service and whether the appellant would be eligible for Cenvat credit in respect of the same. The service received by the appellants from their dealers is Business Auxiliary Service which has to be treated as an input service for the appellant used in or in relation to manufacture of their final products, as free warranty repair and maintenance during warranty period, has enriched the value of the goods. This issue stands decided in favour of the appellant by the Tribunal‟s judgment in the case of Danke Products (supra) and Gujarat Forgings (supra) and also in the case of Zinser Textile Systems Pvt. Ltd. (supra). In view of this, this Cenvat credit demand is also not sustainable and has to be set aside . 9. Accordingly, we hold that since the value of free after sale services and the warranty period repairs and maintenance are already included in the assessable value of the two wheelers, the service tax paid on availment of such input services by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neously assumed by the learned Commissioner, in the impugned order. 11. Thus, it is clear that for getting access to the agency who is actually going to undertake advertisement of the material provided by the appellant, services of a print media agent are being availed and a commission of 2% is being paid on which service tax is being charged by the print media agent. The appellant is taking credit of such service tax. We are of the view that the activity of hiring of print media agent for ultimate purpose of advertising is very much part of advertising service and since the advertisement charges forms the part of assessable value of the appellants finished product any cost incurred and services availed in this regard form the part of assessable value and thus the appellant is entitled for credit of such input services. The above view have also been taken by this Tribunal in its earlier decision in the case of Indian Oil Corporation Ltd. vs. CCE, Mumbai II 2014 (36) S.T.R. 833 (Tri. Mum.) . The relevant extract is reproduced here below :- 6. We have gone through the copies of sample invoices produced by the applicant, issued by Times Global Broadcasting Co. Ltd. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l relief, if any, in accordance with law . 12. Thus, we are of the view that appellant are legally entitled to avail input service credit of the service tax paid by them on the commission charged by the print media agent for advertising their advertisement material into various newspapers. 13. Now coming to the question whether the appellant are entitled for Cenvat credit of the service tax paid by them on renting of infrastructural facilities from M/s Honda Siel Car Pvt. Ltd. or not. We feel that the basic argument of the learned Advocate in this regard is that common infrastructural facilities are vital for undertaking manufacturing activity and without such infrastructural facilities, such as, road, supply of water, boundary wall for safety of the premises the appellant cannot undertake the manufacturing activity and therefore they are very much entitled for the Cenvat credit of service tax paid by them on the component of the rent paid by them for availing such infrastructural facilities. The learned Advocate has also held that the Adjudicating Authority has erred in saying that the inclusion clause under Section 66E (b) of the Finance Act, 1994 makes it mandatory that wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the road is located outside the factory premises but the service of renting of immoveable property is received and used by the respondent. The road is used for transportation of goods which is directly related to the manufacture of final product in their factory. As regard the input service, even though it is used outside the factory, but if it is used in or in relation to the manufacture of final product and overall business activity, the credit in respect of such service is admissible in terms of Rule 2(a) of Cenvat Credit Rules, 2004. On going through the judgment cited by the rivals, I conclude that the service of renting of road to the respondent is an input service and the credit is admissible. The impugned order is upheld. The Revenue‟s appeals are dismissed . 15. Accordingly, we hold that the appellant has rightly availed Cenvat credit of service tax paid on rent of infrastructural facilities. 16. We feel that since all the material facts have always been available with the Department and the appellant have been audited by the Department on the regular intervals during the period of demand we therefore feel that the necessary element for invoking the extended tim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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