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TMI Blog2024 (3) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... ant is entitled to Cenvat Credit of the same. Rent a cab Service - Credit denied only on the ground that this service is not used in relation to the manufacture of the product and the cost of the same has been recovered from the employees - HELD THAT:- Rent a cab service has been mainly used for official purposes and the same relates to the business of the appellant. Here it is noted that a part of the cost of this service is recovered from the employees and as per the appellant, only 20% of it, is recovered from the employees and the same has been reversed along with interest and 80% is absorbed in the manufacturing cost. Accordingly, the appellant is entitled to avail 80% of the cost of this service and the Original Authority is directed to verify the quantum of Cenvat Credit reversed by the appellant as claimed by them. On principle, the appellant is entitled to avail Cenvat Credit on this service. Outdoor Catering (Canteen) Service - credit denied on account of the fact that it is not related to the manufacture of the product and the same is recovered from the employees - HELD THAT:- It is a statutory requirement to provide this facility to the employees as required under the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was subjected to regular audit and the Department was aware of the fact that the appellant is availing Cenvat Credit of tax paid on input service and therefore, substantial demand in this case is barred by limitation. The impugned order is not sustainable in law and therefore, the same is set aside - with regard to the services of Rent a cab service and Outdoor catering service the Original Authority will verify the quantum of reversal made by the appellant; and for this limited purpose, the matter is remanded back to the Original Authority - appeal allowed in part and part matter on remand. - SH. S. S. GARG, MEMBER (JUDICIAL) AND SH. P. ANJANI KUMAR, MEMBER (TECHNICAL) Present for the Appellant: Ms. Krati Singh, Advocate Ms. Shreya Khunteta, Advocate Present for the Respondent: Sh. Pawan Kumar (Asst. Commr.), AR ORDER The present appeal is directed against the impugned order dated 20.11.2012 passed by the Commissioner of Central Excise, Delhi-III, Gurgaon, whereby the learned Commissioner has denied the Cenvat Credit on various input services to the appellant under Rule 14 of the Cenvat Credit Rules, 2004 (hereinafter referred to as the CCR ) and also demanded the interest und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he head office of the appellant which is an ISD and not by the appellant s plant. The details of various input services on which the demand has been confirmed by the learned Commissioner are as follows: Demand Amount (Rs) Period C F (H.O.) 1,11,95,172 January 2006 to March 2010 220102010 Taxi, rent a cab 8,59,281 January 2006 to February 2011 Courier (H.O) 4,21,900 January 2006 to March 2010 Catering 3,58,550 April 2009 to November 2010 Construction Service 2,74,759 January 2006 to February 2011 Event Management (H.O.) 1,01,133 January 2006 to March 2010 Cargo Handling (H.O.) 1,56,568 January 2006 to March 2010 Mandap Keeper 73,130 January 2006 to March 2010 Aggrieved by the said impugned order, the appellant has preferred the present appeal. 3. Heard both the parties and perused the records. 4.1 The learned Counsel for the appellant submits that the impugned order is bad in law and is liable to be set aside, as the same has been passed without properly appreciating the facts and the law and binding judicial precedents on the identical issue. 4.2 She further submits that the impugned services received by the appellant are input services and the same have been used in relation to ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f premises is directly or indirectly related in manufacture of final products. She also submits that there is no condition that credit for input services which result in the creation of an immovable property are not available. She also refers to the inclusive part of the definition of input service which contains a list of services which specifically provides for the services used in relation to setting up, modernization, renovation of premises of provider of output service or any office relating to such premises. She also submits that the services used by the appellant in setting up of the factory are specifically included in the definition of input service and thus, the credit is allowable. She also submits that construction services were excluded from the definition of input service w.e.f. 01.04.2011, whereas in the present case, the credit in dispute is for the period from January 2006 to February 2011 and the credit in respect of construction services is allowable for the said period. In support of her submission, she relies on the following case laws: a) M/s Rico Auto Industries Ltd. vs. Commissioner of CE, Delhi-III - 2023 (5) TMI 601 - CESTAT Chandigarh b) Commissioner of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comply with the statutory requirement under Section 46 of the Factories Act, 1948 and without complying the same, the appellant cannot get permission to operate the factory. Therefore, outdoor catering services qualify as input services as the same are connected with manufacturing activity and used indirectly in manufacture of final products by way of enhancing the productivity of the appellant and these services are integral for carrying out the business of the appellant and same qualify as an activity relating to business of the appellant. In this regard, reliance is placed on the following judgments: a) Commissioner of CE vs. Ultratech Cement - 2010 (20) STR 577 (Bom.) affirmed by the Supreme Court in Commissioner vs. Ultratech Cement Ltd. 2014 (36) S.T.R. J70 (S.C.). b) Microsoft India (R D) Pvt. Ltd. vs. Commissioner of CE ST, Bangalore - 2022 (56) G.S.T.L. 29 (Tri.- Bang) c) Commissioner of Central Excise, Bangalore-III vs. Stanzen Toyotetsu India (P) Ltd. - 2011 (23) S.T.R. 444 (Kar.) d) Commr. of C.Ex. S.T., LTU, Bangalore vs. Ace Designers Ltd. - 2012 (26) S.T.R. 193 (Kar.) She also submits that the appellant had merely recovered 30% of the bill amount paid to outdoor cate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laces reliance on the following case-laws: a) Commissioner of Central Excise, Customs Service Tax, Vapi vs. M/s Apar Industries Ltd. - 2011 (23) S.T.R. J194 (Guj.) b) RMZ Infotech Pvt. Ltd. vs. Commr. of Central Tax, Bengaluru East - 2022 (64) G.S.T.L. 599 (Tri. - Bang.) c) Raymond UCO Denim Pvt Ltd. vs. Commissioner of C.Ex., Nagpur - 2020 (33) G.S.T.L. 207 (Tri. - Mumbai) Mandap Keeper Services 4.13 As regards mandap keeper services, the learned Counsel submits that the service of mandap keeper was availed during the Annual General Meeting, new product launch, press meet etc and the said service is used for activities relating to business and thus qualifies as input service . Further, she submits that conducting an Annual General Meeting is a statutory requirement and holding press meeting and launching new products are integral to the business of the appellant. Hence, the said activities are directly/indirectly connected to the manufacturing of the final products. In support of her submission, she places reliance on the following case-laws: a) Commissioner of Central Excise, Delhi-III vs. Maruti Suzuki India Ltd. - 2017 (49) S.T.R. 261 (P H) b) Microsoft India (R D) Pvt. Ltd. vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved transporters as per direction of the company. She further submits that ultimate risk with respect to the damage of the goods in transit lies with the appellant and the appellant is only responsible to get the goods insured, which is clearly evident from purchase orders raised by various customers on the appellant. Copies of some of the purchase orders are annexed with the appeal paper-book. She also submits that the invoices of the transporters are directly settled by the company as per the agreed terms upon production of records and acknowledged invoices by C F. Therefore, the services of C F are limited till the godowns only, for which the service tax is charged by the C F agent by raising the invoices on the company in accordance with the terms of the agreement. 4.16 The learned Counsel relies upon the Circular No. 97/8/2007-S.T. dated 23-08-2007 which further clarified that following conditions to be satisfied in situations where manufacturer can avail credit in respect of expenses incurred in relation to the sale of the excisable goods upto place of removal: (i) The ownership of the goods and the property in the goods remained with the seller of the goods till the deliver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order. 6. We have considered the submissions made by both the parties and also perused the various decisions relied upon by the appellant as well as the DR in support of their submissions. We find that in the present case, the demand has been confirmed on the ground that the appellant has wrongly availed the Cenvat Credit in respect of various input services, which do not fall within the definition of input service as defined in Rule 2(l) of the CCR and further, the said services have no nexus with the manufacture of final products. 7. Before we consider the nature of each service, we think, it would be appropriate to reproduce the definition of input service during the relevant period, which is reproduced herein below: Before 01.04.2008 input service means any service, - (i) used by a provider of output 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 from 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overs under the inclusive part of the definition of input service . Moreover, during the relevant period, construction service was included in the definition of input service and it is only after 01.04.2011 that it has been specifically excluded from it. It has been squarely covered by the ratio of the decisions relied upon by the appellant cited supra. Hence, by following the ratio of the said decisions, we hold that the construction service, during the relevant time, was within the definition of input service and therefore, the appellant is entitled to Cenvat Credit of the same. 8.2 Rent a cab Service : In this regard, we find that Cenvat Credit has been denied only on the ground that this service is not used in relation to the manufacture of the product and the cost of the same has been recovered from the employees. Rent a cab service has been mainly used for official purposes and the same relates to the business of the appellant and is covered by the ratio of decisions cited supra. Here, we may note that a part of the cost of this service is recovered from the employees and as per the appellant, only 20% of it, is recovered from the employees and the same has been reversed alon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturer or producer of a final product or provider of output service which receives invoices issued under Rule 4A of the Service Tax Rules, 1994 towards purchases of input services and issues invoice, bill or, as the case may be, challan for the purposes of distributing the credit of service tax paid on the said services to such manufacturer or producer or provider, as the case may be. Therefore, the law mandates that the manufacturer who wants to avail the benefit of this service tax if he has more than one unit he should also get registered himself as a service provider and then, he would be able to collect all the input service tax paid in all its units and accumulate them at its head office and distribute the said credit to its various units. At the time of distribution, the manner of distribution is provided in Rule 7 which reads as under :- Manner of Rule 7. distribution of credit by input service distributor. The input service distributor may distribute the CENVAT credit in respect of the service tax paid on the input service to its manufacturing units or units providing output service, subject to the following conditions, namely :- (a) the credit distributed agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rference and therefore it is dismissed. Similarly, the Tribunal in the case of ITC Limited vs CCE, Bangalore-II (supra) after following the decision of the Hon ble Karnataka High Court in Ecof Industries Pvt Ltd (supra) s case, has held that the assessee is entitled to Cenvat Credit of service tax as distributed by the ISD. Therefore, this issue is also held in the favour of the appellant. Similarly, courier service, mandap keeper service and event management service have also been held to be input service and rightly distributed by the ISD in the cases relied upon by the appellant cited supra. Hence, we hold that the appellant is entitled to Cenvat Credit with regard to these services. 8.5 C F and Cargo Handling Service : As regards C F and Cargo Handling Service, we find that the learned Commissioner in the impugned order has denied the Cenvat Credit on the main ground that said services were used by the head office beyond the place of removal i.e. the factory gate of the appellant s unit and secondly, the said services pertain to post manufacture activities and therefore, Cenvat Credit is not permissible. In this regard, we may note that the definition of place of removal as pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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