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TMI Blog2019 (6) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... BOMBAY HIGH COURT] that these goods do not qualify either as Inputs or Capital Goods, we hold that credit is not admissible in respect of these goods. Admissibility of CENVAT Credit - various input services - club and association services - rent cab service - travel agent service - tour operator service - GTA Services - HELD THAT:- It s a common knowledge the perks and facilities to the employee even that of ferrying the employees from home to work place or on their relocation from one station to another on transfer etc., are provided not in term of the service contract with the client or a customer, but are provided in terms of the employment contract with the employee. These perks and facilities in terms of the employment contract are to be provided even if at particular period of time there is no output service to any client thus these are provided independent of any transaction in output services. In terms of the employment contract employees in lieu of salary, perk and facilities offered by the employer, provides his services to the employer. Thus all the facilities and perks as referred herein are specific to the employment contract and independent of the service contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Extended period of limitation - proviso to Section 73 (1) - HELD THAT:- In this case certain information which was available with the appellants was never disclosed to revenue, with the intention to evade payment of tax - extended period of limitation as provided for by proviso to Section 73(1) of Finance Act, 1994 is invokable in the present case. Demand for interest and penalty imposed under Section 78 of Finance Act, 1994 - HELD THAT:- Since the appellants have taken the inadmissible credit and utilized the same for payment of Service Tax, the demand of interest in respect of the inadmissible credit is justified in terms of provisions of Rule 14 of CENVAT Credit Rules, 2004 read with Section 75 of Finance Act, 1994. It is now settled law that interest under Finance Act, 1994 is statutory liability put on the person who has unduly withheld the amounts due to government - the demand of interest on the amounts that would be determined by the Commissioner in remand proceedings upheld. Penalty u/s 76 and 78 - HELD THAT:- The noticee has claimed inadmissible benefits, which remained privy to them, until unearthed by the audit officers of the service tax Commissionerate. The pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011-12 Total Furniture/ Fixtures 15648830 10970703 7375179 3084354 37079066 Rent a cab, Club and association, travel agent and transportation services. 0 3011321 5060058 2716211 10787590 Exempted Services 2936767 3699267 12185868 1312877 20134779 Total 18585597 17681291 24621105 7113442 68001435 2.2 A show cause notice dated 5th March 2013 has been issued to the appellants seeking to deny the inadmissible credit as above by invoking provisions of Rule 14 of CENVAT Credit Rules, 2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds [2009 (243) ELT 632 9T-Ahd)], Dell International Services India Pvt Limited [2009 TIOL 1957 CESTAST BANG], Ultratech Cement Ltd [2010 (260) ELT 369 (BOM)] vi. Forex Broker Services are not used exclusively for providing exempted interbank forex trading and hence the credit has been rightly availed by them. vii. Demand is barred by limitation as there is no case for invoking extended period as they have not suppressed or misdeclared anything from the department. They rely on decisions in case of Pahwa Chemicals Private Limited [2005 (189) ELT 257 (SC)], Anand Nishi Kawa Co Ltd [2005 (188) ELT 149 (SC)], Apex Electricals {1992 (61) ELT (Guj)]. Tamil Nadu Housing Board {1994 (74) ELT 9 (SC)] viii. Interest is not justified in the present case. ix. Penalty under Section 78 is not imposable in view of decisions in case of HMM Ltd [1995 (76) ELT 497 (SC), Coolade Beverages Ltd. [2004 (172) EL 451 (ALL)], Guru Instrument [1998 (104) ELT (ALL)], Smitha Shetty {2004 (174) ELT 313 (T)], Tamil Nadu Housing Board {1994 (74) ELT 9 (SC)], Port Officer [2010 (257) ELT 37 (Guj)], {2001 (138) ELT 811 (T-Kol)], Transpek Industries Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maruti Suzuki India Ltd [2017 49 STR 261 (P H)] Mangalam Cement [2017 11 TMI 483 (Raj HC)] Circular No 943/04/2011-CX dated 29.04.2011 C. Tour Operator Service and Travel Agent Service Wills Processing Services (India) Pvt Ltd [2016 (1) TMI 1130 CESTAT Mum] Barclays Wealth Trustees India Pvt Ltd. [2018 6 TMI 383 CESTAT MUM} Pidilite Industries [2018 TIOL 1007 CESTAT MUM] Reliance Industries Ltd [2016 TIOL 2392 CESTAT MUM] Savita Oil Technologies Ltd [2018 4 TMI 1385 CESTAT MUM] Semco Electrical Pvt Ltd [2009 12 TMI 143 CESTAT MUM] Vidyut Metallics (P) Ltd [2012 11 TMI 376 CESTT MUM] Indoswift Laboratories Ltd [2015 1 TMI 1147 CESTAT New Del] D. GTA Service Federal Mogul Goeteze (India) Ltd [2011 (9) TMI 120 (P H)] Drolia Electrosteels (P) Ltd [2011 (10) TMI 33 CESTAT DEL] vii. Forex Broker services have not been used for Interbank forex trading. These services are used for- Foreign exchange broking se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of inadmissible heads or counts. They themselves have been taking varying stands as evident from their letter dated 07.08.2012 and 08.04.2013. These issues would have never surfaced if not detected during the course of audit. Hence extended period of limitation is applicable in present case and demand not barred by limitation. v. Since appellants have evaded payment of tax by suppressing the relevant facts from the department penalty under Section 78 is justified. vi. Interest is statutory liability associated with delay in payment of sums due to Government; hence demand of interest to needs to be sustained. 5.1 We have considered the impugned order along with the submissions made in appeal and during course of arguments. 5.2 The issues that need to be addressed in the present appeal are as follows: I. Admissibility of CENVAT Credit on various items of Furniture and Fixture to the provider of Banking and Financial Services. II. Admissibility of CENVAT Credit on various services such as club and association services, rent cab service, travel agent service, tour operator service and GTA Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving absolutely no relationship with the manufacture of final product is not allowed. Goods such as furniture and stationary used in an office within the factory are goods used in the factory and are used in relation to the manufacturing business and hence the credit of same is allowed. 5.3.4 Following the Board Circular CENVAT Credit has been extended by the Tribunal in respect of Furniture and Fixtures used in factor of manufacture in case Agarwal Foundries [2015 (6) TMI 910 CESTAT Bangalore] and M/s Hyderabad Menzies Air Cargo Pvt Ltd [2017 (5) TMI 563 CESTAT Hyderabad)]. Alo in case of ICICI Lombard [2016 (2) TMI 316 CESTAT Mumbai] Credit has been extended in respect of Furniture items, stating- 6.2 As regards the Cenvat credit availed on the Furniture and Fittings, we find that the said furniture and fittings are nothing but tables and chairs which were procured by appellant during the relevant period. It is a common knowledge that any insurance company is required to have chairs and tables to render services to their clients. In our considered view, the said tables and chairs are used for rendering services of general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equipments. The definition of capital goods under Rule 2(a)(A) indicates that the capital goods used by a manufacturer of final product will not include any equipment or appliance used in an office. The learned counsel for the appellant has argued that this exclusion does not apply to a provider of output service and, therefore, the printers used by the appellant are liable to be treated as capital goods . The learned JCDR has argued that, though the item is covered by Chapter 84 specified in sub-clause (i) of Rule 2(a)(A), it will not fall within the ambit of the definition of capital goods as there is no direct nexus between this item and the output service provided by the appellant. The appellant has not established sufficient nexus between printers and their output service. There is substance in this submission. The appellant has not proved that the printers were used for the purpose of providing mobile telephone service. 44. In the absence of evidence that the chairs or printers were used for providing mobile telephone service, both these items would stay outside the ambit of the definition of input also. 45 .We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct; pollution control equipments; components, spares and accessories of the goods specified at sub-clauses (i) and (ii) which are used either in the factory for manufacture of final products but does not include any equipment or appliance used in the office and those used for providing output service. A combined reading of sub-clause (a)(A)(i) and (iii) and sub-rule (2) indicates that only the category of goods in Rule 2(a)(A) falling under clauses (i) and (iii) used for providing output services can qualify as capital goods and none other. 22. Further the definition of input as defined Rule 2(k) includes all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uipments, generator sets, feeder cables etc. and that these systems are to be treated as composite system classified under Chapter 85.25 of the Tariff Act and be treated as capital goods and credit be allowed, also is not acceptable. It is clear that each of the component had independent functions and hence, they cannot be treated and classified as single unit. It is clear that all capital goods are not eligible for credit and only those relatable to the output services would be eligible for credit. The goods in question in any case cannot be held to be capital goods for the purpose of Cenvat credit as they are neither components, spares and accessories of goods falling under any of the chapters or headings of the Central Excise Tariff Schedule as specified in sub-clause (i) of the definition of capital goods. Hence a combined reading of sub-clauses (a)(A) (i) and (iii) and sub-rule (2) indicates that only the category of goods in Rule 2(a)(A) falling under clause (i) and (iii) used for providing output services can only qualify as capital goods and none other. Admittedly the goods in question namely the tower and part thereof, the PFB and the printers do not fall within the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tennas cannot function and hence the tower should be treated as parts and components of the antenna. It is urged that antennas fall under Chapter 85 of the Schedule to the Central Excise Tariff Act and hence being capital goods used for providing cellular service falling under Rule 2(a)(A)(iii) as part of capital goods falling under Rule 2(a)(A)(i) towers become accessories of antenna and should be held as capital goods for availing of credit of duty paid. The argument at the first blush appeared to be attractive however a deeper scrutiny shows that the same is without substance. It would be misconceived and absurd to accept that tower is a part of antenna. An accessory or a part of any goods would necessarily mean such accessory or part which would be utilized to make the goods a finished product or such articles which would go into the composition of another article. The towers are structures fastened to the earth on which the antennas are installed and hence cannot be considered to be an accessory or part of the antenna. The position in this regard stands fortified from the decision of the Supreme Court in the case of Saraswati Sugar Mills v. CCE, Delhi [2011 (270) E.L.T. 465] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Capital Goods to inputs should not be permissible. However following the decision of Bombay High Court that these goods do not qualify either as Inputs or Capital Goods we hold that credit is not admissible in respect of these goods. 5.3.9 Now coming to the Board Circular. A five member bench of Hon ble Supreme Court has in case of Ratan Melting Wire Industries [2008 (321) ELT 22 (SC)] settled the issue with regards to applicability of circulars and has held as follows: 6. Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court to declare what the particular pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of these services claimed to be input services observing as follows: 19. The noticee has firstly claimed eligibility of club and association service as being eligible for CENVAT credit as being a input service to provide output service. The noticee has not indicated that these services have been availed in the name of its employee or in their own name. Even otherwise, they would not be eligible in view of prima facie view of CESTAT in Vikram Ispat 2009 (15) STR 71. 20. The noticee has next claimed eligibility for cenvat credit for transport of good by road services. These services, of their admittance, are for relocating of employees from one city to another on transfer. Such transfer has no nexus to providing of output services. This service is personal to the employee and is a part of his or her service facility. This service is used to shift the house hold goods of the employees from one location to another upon such transfer. These would be ineligible for cenvat credit. 21. The next is rent a cab and travel agent services. The notice seeks to disentitle the noticee from its claim from being admissible. The noticee says t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract with the client of Bank they cannot be considered to be used for providing the output services. In light of the above observation the definition of input services as it existed both prior to amendments in 2011 and after amendment in 2011 needs to be examined- Prior to 1st April 2011 (l) input service means any service, - (i) used by a provider of taxable service for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to setting up, modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating 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, security, inward transportation of input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior and post 1st April 2011, it is quite evident that the main body of the definition continues to remain the same, amendments have been made in the inclusion part of the definition to delete the phrase activities relating to business, such as and exclusion clause have been added. As per the exclusion clause-(B), services specified in sub-clauses (d), (o), (zo) and (zzzzj) of clause (105) of section 65 of the Finance Act have been in general put in exclusion category except for specified exceptions. (C), services such as membership of club and travel benefits extended to employees on vacation such as leave or home travel concession, when such services are used primarily for personal consumption of any employee have been put under the exclusion category. 5.4.7 It is the submission of the appellants that prior to 1st April 2011 they were covered by the inclusive clause of definition as the phrase used activities relating to business, such as is wide enough to cover all such services against which they have taken the credit. They have relied upon the decision of Bombay High Court in case of Coca Cola Private Limited [2009 (242) ELT 168 (Bom)]. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signify according to their natural import, but also those things which the interpretation clause declares that they shall include. But the word include is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to mean and include and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions. (emphasis supplied) The Supreme Court in the case of Bharat Coop. Bank (Mumbai) Ltd. v. Coop. Bank Employees Union - (2007) 4 SCC 685 observed as under : It is trite to say that when in the definition clause given in any statute the word means is used, what follows is intended to speak exhaustively. When the phrase means is used in the definition, to borrow the words of Lord Esher M.R. in Gough v. Gough - (1891) 2 Q.B. 665 it is a hard and fast definition and no meaning other than that which is put in the definition can be assign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness of assessee being an integrated activity comprising of manufacture of concentrate, entering into franchise agreement with bottlers permitting use of brand name by bottlers promotion of brand name, etc. the expression will have to be seen in that context See (i) Pepsi Foods Ltd. v. Collector - 1996 (82) E.L.T. 33, (ii) Pepsi Foods Ltd. v. Collector - 2003 (158) E.L.T. 552 (S.C.). The Hon ble Supreme Court in State of Karnataka v. Shreyas Paper Pvt. Ltd. 2006 SCC affirmed the view taken by the Hon ble Karnataka High Court reported at 2001 (121) STC 738, which, inter alia, held as under : Business comprises of the regular and systematic activity with an object of earning of profits. The machinery, plant, building and the land over which they have erected or constructed are only the tools of such business. Assets and liabilities including goodwill are the necessary ingredients to constitute a business, besides the stocks and other movable and immovable items connected with the said business. In Mazgaon Dock Ltd. v. Commissioner of Income tax and Excess Profits Tax - AIR 1958 SC 861 the Hon ble Supreme Court held as follows : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivities relating to business. The Rule making authority has not employed any qualifying words before the word activities, like main activities or essential activities etc. Therefore, it must follow that all and any activity relating to business falls within the definition of input service provided there is a relation between the manufacturer of concentrate and the activity. Therefore, the phrase activities relating to business are words of wide import. 28. In CIT v. Chandulal Keshavlal Co. - (1960) 38 ITR 601 (SC) the Apex Court held as under : The test laid down by this case therefore was that in the absence of fraud or an oblique motive and if a transaction is of a nature which is entered in the course of a business of the assessee and is commercially expedient that it does become a deductible allowance. If as a result of the transaction the assessee benefits is immaterial that a third party also benefits thereby. (Emphasis supplied) Similarly, in Eastern Investments Limited v. CIT - 1951 (20) ITR 1 the Hon ble Apex Court held as under : Most commercial transactions are entered into for the mut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en deleted from the inclusion part of the definition and hence the obligations on the part of appellants to their employees in terms of employment contract, cannot be termed to be covered by the said inclusion clause neither they have been provided in course of providing the output service. Since these facilities have been provided as part of the employment contract of the employee they are purely meant for the personal consumption of the employee and hence are covered by the exclusion clause. 5.4.10 In view of the discussions as above we hold in light of the decisions referred that for period prior to 1st April 2011 these services will fall within the category of input services. However for the period post 1st April 2011 we hold that these services when provided for by the appellant to its employee in terms of employment contract do not qualify as input services for providing the output taxable services to the client/ customer in terms of service contract, hence CENVAT Credit in respect of these will not be admissible post 1st April 2011, if any part of these services have been received by the employee after that date. 5.5 Admissibility of CENVAT C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly to make it zero rated to avoid hardships . In view of conflicting claims, it would be difficult to accept the noticee s claim that this input service is also used for taxable service. 5.5.3 Making such bald statements without substantiating the same with relevant documents showing actual transactions in Forex trading cannot be a reason for agreeing with said assertions. In our view appellants should have made such assertions and produced the relevant records and documents in support of their claim. The said documents/ records have not been even produced even before us along with the appeal or at the time arguments. 5.5.4 The reliance placed by the appellant on rule 6(3B) introduced with effect from 1st April 2011 and the Circular No 334/3/2011-CX dated 28.02.2011 is totally misplaced. Since the demand relates to period from 07.07.2009 to 31st March 2012, this rule can be applicable only in respect of the transactions pertaining to period 1st April 2011. Nothing has been produced showing that the this rule have been given retrospective effect by way of Validating provisions in Finance Act, 2011. Rule 6(3B) of The CENVAT Credit Rule, 2004 as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e credits were being taken on inadmissible counts or heads. Their afterthought or the varying stand is clear from their letters dated 27.08.2012 and 28.04.2013. The noticee were self assessors of payable tax and for this purpose they did also avail and utilize cenvat credit. In the process, they knowingly claimed inadmissible cenvat credit. Upon identification by the audit, they sought to defend the indefensible. The knowledge was gained by the jurisdictional service tax authorities only upon audit. The extended period of limitation, in these circumstances, has rightly been invoked. 5.6.2 On the contrary relying on various decisions specifically of Chhattisgarh High Court in case of Bharat Aluminium Company [2012 9 TMI 337 Chhattisgarh HC] they have submitted that extended period of limitation cannot be invoked in the present case. 5.6.3 The facts about the taking the credits in respect of the inputs and input services which do not qualify as inputs in terms of CENVAT Credit Rules, 2004 was never brought to the knowledge of the department. In the ST-3 return the appellants have indicated the quantum of credit availed but the fact of availing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitation. The facts and circumstances of the present case, which have already spelt out, indicate that the Mills deliberately suppressed material facts before the Department. In the relevant invoices, they declared the goods as handloom fabrics, even though they were aware of the fact that the goods were dutiable powerloom fabrics. In the case of G.T.C. Industries (supra), the Tribunal did not find any evidence of the job worker having suppressed any fact with intent to evade payment of duty on the goods manufactured by them and removed under the brand name of G.T.C. Industries Ltd. and, accordingly, it was held that the longer period of limitation was not invocable against the job worker. This decision of the Tribunal is not applicable to the present case of the Mills for reasons already noted by us. In the case of Karmayogi Dyeing Pvt. Ltd. (supra), it was found by the Tribunal that the wrong declaration of fabric by the processor (job worker) was based on the declaration given to them by the supplier of grey fabric, and, in the absence of anything to indicate that the processor had colluded with the other party for wrong declaration, it was held that the extended period of lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extended period has rightly been invoked and mandatory penalty is clearly imposable. iii. In case of Pasupati Spinning and Weaving Mills [2015 (318) ELT 623 (SC)] Hon ble Apex Court held 4. .Equally, we do not think that there is any ground for interference on the extended period of limitation being applicable inasmuch as CESTAT is again correct in saying that as the declaration and RT-12 returns being vital documents submitted by the respondent (appellant herein) did not mention the vital word hanks , they suppressed a material fact which, to their knowledge, would not bring their sewing thread within the exemption Notification. iv. Reliant Advertising [2013 (31) STR 166 (T)]- 5.6.4 17. Ld. Counsel for the respondent/assessee has contended that since no penalty as proposed in the Show Cause Notice was imposed in the adjudication order, invoking the provisions of Section 80, invocation of the extended period of limitation is also unsustainable. This contention does not commend acceptance by this Tribunal. The adjudicating authority clearly recorded a finding that failure of the assessee to disclose the position in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the inadmissible credit is justified in terms of provisions of Rule 14 of CENVAT Credit Rules, 2004 read with Section 75 of Finance Act, 1994. It is now settled law that interest under Finance Act, 1994 is statutory liability put on the person who has unduly withheld the amounts due to government. In case of Pratibha Processors [1996 (88) ELT 12 (SC)] Hon ble Apex Court has laid down: 13. In fiscal Statutes, the import of the words - tax , interest , penalty , etc. are well known. They are different concepts. Tax is the amount payable as a result of the charging provision. It is a compulsory exaction of money by a public authority for public purposes, the payment of which is enforce by law. Penalty is ordinarily levied on an assessee for some contumacious conduct or for a deliberate violation of the provisions of the particular statute. Interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable. The levy of interest is geared to actual amount of tax withheld and the extent of the delay in paying the tax on the due date. Essentially, it is compensatory and different from p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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