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TMI Blog2023 (6) TMI 1392X X X X Extracts X X X X X X X X Extracts X X X X ..... wal, Advocate for the appellant Shri P K Acharya, Superintendent (AR) for the respondent PER: C J MATHEW We dispose off two appeals in the common order as the issue involved, viz., entitlement to CENVAT credit of tax paid on specified services procured by them, is identical in both differing only for the period from April 2007 to October 2011 and from November 2011 to September 2012 respectively for which two separate notices, of 1st May 2012 and 29th November 2012, had proposed recovery of ₹ 1,03,29,526 [order-in-original no. 14/ANS-14/Nitin Castings/Th-1/2012 dated 24th January 2013] and ₹ 14,06,234 [order-in-original no. 15/ANS-15/Nitin Castings/Th-1/2012 dated 24th January 2013] respectively. Commissioner of Central Excise, Thane I confirmed the two demands in the notices, amounting to ₹1,17,35,760, under rule 14 of CENVAT Credit Rules, 2004 read with section 11A of Central Excise Act, 1944, along with interest as applicable, and imposed penalty of like amount under rule 15 of CENVAT Credit Rules, 2004 read with section 11AC of Central Excise Act, 1944. 2. The appellant is a manufacturer of tubes , pipes and other articles of stainless steel and parts of indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of this Court : Section 2 is, beyond all question, an interpretation clauses, and must have been intended by the Legislature to be taken into account in construing the expression charitable device or bequest, as it occurs in Section 3. It is not said in terms that charitable bequest shall mean one or other of the things which are enumerated, but that it shall include them. The word include is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as they 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 invaria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The expression Business is an integrated/continuous activity and is not confined restricted to mere manufacture of the product. Therefore, activities in relation to business can cover all the activities that are related to the functioning of a business. The term business therefore, in our opinion cannot be given a restricted definition to say that business of a manufacturer is to manufacture final products only. In a case like the present, business of assessee being an integrated activity comprising of manufacture of concentrate, entering in to 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to activities relating to business and outward transportation upto the place of removal. Each limb of the definition of input service can be considered as an independent benefit or concession exemption. If an assessee can satisfy any one of the limbs of the above benefit, exemption or concession, then credit of the input service would be available. This would be so even if the assessee does not satisfy other limb/limbs of the above definition. To illustrate, input services used in relation to setting up, modernization, renovation or repairs of a factory will be allowed as credit, even if they are assumed as not an activity relating to business as long as they are associated directly or indirectly in relation to manufacture of final products and transportation of final products upto the place of removal. This would follow from the observation of the Supreme Court in Kerala State Co-operative Marketing Federation Ltd. and Ors. v. Commissioner of Income-tax - 1998 (5) SCC 48, which is as under : 7. We may notice that the provision is introduced with a view to encouraging and promoting growth of co-operative sector in the economic life of the country and in pursuance of the declare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 of the manufacture of final product, the service would not qualify to be a input service under Rule 2(l) of the 2004 Rules. xxxxx 34. Therefore, the definition of input service read as a whole makes it clear that the said definition not only covers services, which are used directly or indirectly in or in relation to the manufacture of final product, but also includes other services, which have direct nexus or which are integrally connected with the business of manufacturing the final product. In the facts of the present case, use of the outdoor catering services is integrally connected with the business of manufacturing cement and therefore, credit of service tax paid on outdoor catering services would be allowable. 35. The argument of the Revenue, that the expression such as in the definition of input service is exhaustive and is restricted to the services named therein, is also devoid of any merit, because, the substantive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d mainly based on only one argument, that is, that the definition of the input services under scrutiny now is not a restrictive definition and that the word such as' used at the end of the category, 'activities relating to business, expands its scope and so, not only those services given as example but other services of activities of business are also covered by the definition. It is also contended that by use of words, 'directly or indirectly and in or in relation to' the/manufacture of the final products the scope is further widened. All the contentions of the assesee are emphasizing this basic argument The case laws cited by the assesee in this regard are also related to the same issue that the words such as , expand the scope of definition, and not restrict it. The dictionary meanings of the: word given by them also highlight the same. On examining this contention against the allegation in the notice and analysis of the definition done above, it is seen that the notice does not delve on the restrictive meaning of the term such as, as mis-conceived by the assessee, and does not allege that only the services as actually mentioned in the definition are covered, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avail of the credit merely looking at the broad aim of controlling the cascading effect does not serve the purpose. Similarly even if the services are essential and- important for the smooth running or the functioning of the business, or even if they cater to the welfare of the employees, indirectly promoting the business, or even if the expense 1 on that account forms part of the cost of the product, if the service does not fall in the ambit of the definition for qualification, the credit can not be allowed. On the same lines, even if the Income Tax Act treats the expenses towards these services as expenditure for the purpose of income tax calculations, they can not automatically qualify as input service without answering to the definition given under the Cenvat Credit Rules. 26. A few case laws have been cited by the assesee in support of their case which hold that particular services such as Telephone and mobile phone, courier services, repairs / maintenance, labour etc. are input services. However, the case laws are subjective and naturally cover particular circumstances of the appellants of those cases, and can not be said to have, hard and fast universal applicability withou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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