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TMI Blog2023 (5) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of the expression in the latter, by reason of intangibility and solely for manufacturing entities, is crucial enough to be the essence of the test for conformity to the definition - the principle of nexus of service should not, therefore, restrict itself to direct use but should encompass indirect deployment and, hence, should be examined also in relation to the main leg of the definition. The lack of finding in the impugned order on the applicability of the main leg of the definition and its nexus with the final output hinders the exercise of appellate determination. It would be appropriate to have that undertaken to enable which we set aside the impugned order and restore the proceedings before the original authority to take note of the submissions of the appellant herein on the direct/indirect use of the impugned services procured by the appellant and determine nexus or lack thereof. Accordingly, the appeals are allowed by way of remand. - EXCISE APPEAL NO : 1043 OF 2012 , EXCISE APPEAL NO : 1044 OF 2012, EXCISE APPEAL NO : 1045 OF 2012 , EXCISE APPEAL NO : 1046 OF 2012 - FINAL ORDER NO : A / 85039 - 85042 / 2023 - Dated:- 20-1-2023 - HON BLE MR C J MATHEW ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expands the scope of input service. I find that these services are not covered in the main definition. Further, I find that the extended definition specifically included services used for setting up of certain buildings, but such buildings are restricted to buildings to house factories and its offices and premises of provider of output services. A manufacturer may construct other types of buildings for its employees such as residential quarters, schools, hospitals etc. From the very nature of the buildings specifically included in the extended definition and the kind of services included in it, it is clear that constructions of only such buildings are covered as input service which are linked to manufacturer, storage and sale etc. of the final product. Thus, I find that construction service does not include the construction of townships and its repair and maintenance by the assessee for their employees. It may improve their quality of life and is a welfare measure but it has no nexus with the manufacture, storage or sale of the final products. I also find that services used for setting up/constructing certain buildings are treated as 'input service' in terms of Rule 2(l)(ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal; and output to be in conformity with rule 3 of CENVAT Credit Rules, 2004. 5. In the light of the rival contentions thus presented, it would be necessary to examine the several judgments that have been rendered and, more particularly, the context in which these disputes were carried before the Hon ble High Court of Bombay. 6. In re Manikgarh Cement on the very same issue of deployment of service in residential colonies and eligibility, thereby, to avail CENVAT credit, the Hon ble High Court of Bombay relied upon the decision of the Hon ble Supreme Court in Maruti Suzuki Ltd v. Commissioner of Central Excise, Delhi [2009 (240) ELT 641 (SC)] to hold that 8. In our opinion, establishing a residential colony for the employees and rendering taxable services in that residential colony may be a welfare activity undertaken while carrying on the business and such an expenditure may be allowable under the Income Tax Act. However, to qualify as an input service, the activity must have nexus with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax paid on the input service, which is advertisement and not on the contents of the advertisement. Thus it is not necessary that the contents of the advertisement must be that of the final product manufactured by the person advertising, as long as the manufacturer can demonstrate that the advertisement services availed have an effect of or impact on the manufacture of the final product and establish the relationship between the input service and the manufacture of the final product. The manufacturer thereby can avail the credit of the service tax paid by him. Once the cost incurred by the service has to be added to the cost, and is so assessed, it is a recognition by Revenue of the advertisement services having a connection with the manufacture of the final product. This test will also apply in the case of sales promotion. making it abundantly apparent that the includibility of the cost of impugned services in the assessable value of the finished products was perceived as a determinative factor, in the specific context and on the plea of the intervener about activities relating to business in rule 2(l) of CENVAT Credit Rules, 2004 being broad enough, for the finding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid on premium incurred for group insurance covering employees and families within the impugned definition. The context was a specifically crafted voluntary separation scheme for continuing non-salary benefits for a contracted period after ceasing to be employed. The response of the Larger Bench pertained not only to this peculiar circumstance but also deigned to examine the cost inclusion paradigm from an incidental reference in addition, owing to placement of the decision in re Coca Cola India Pvt Ltd before the referral bench and doubts about its relevance, to situations other than of captive consumption. 9. Our perusal of the cited judgments leads to the conclusion that these were relevant to the particular circumstances that justified, or did not justify, claim for eligibility. Consequently, it would be appropriate to hold that perception of nexus , with its unbounded connotations, is not an appropriate nomenclature for the touchstone intended by rule 3 of CENVAT Credit Rules, 2004; conformity must need be tested against the entirety of the definition of input service in rule 2(l) of CENVAT Credit Rules, 2004 including the principal and inclusive leg on every findin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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