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TMI Blog2024 (12) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... AJA ELECTRONICS LTD. VERSUS THE COMMISSIONER C C. E, TIRUPATHI [ 2015 (12) TMI 1558 - CESTAT HYDERABAD] has decided in the favour of the assessee and held that ' The said issue, whether the transactions are services or not, should be agitated by the department against service providers viz. ARBL and MPPL, from whom the service tax has been collected. Credit cannot be denied at the service recipient s end, alleging that no service has been provided.' When ARBL and MPPL have paid service tax under the category of BAS/BSS, the strong inference that can be drawn is that they have provided services as per the invoices raised by them. Revenue has not been able to adduce any evidence that there is no service rendered. The said issue, whether the transactions are services or not, should be agitated by the department against service providers viz. ARBL and MPPL, from whom the service tax has been collected. Credit cannot be denied at the service recipient s end, alleging that no service has been provided - thus, it is now settled law irrespective of the fact whether or not the impugned service was eligible to Cenvat Credit in any matter where the question involved is whether or not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such as Leave or Home Travel Concession, when such services are used primarily, for personal use or consumption of any employee. Accordingly, if the guest houses were utilized by the Assessee for extending benefit to the employees, for the personal use or consumption, the Assessee was not entitled to avail Cenvat credit thereof. This, even Assessee does not dispute. The case of the Assessee, however, is that, none of the guest houses were used for the personal use or consumption of the employees. In order to test this premise, Tribunal itself formulated the test that those guest houses which are situated next to the manufacturing unit of the Assessee, would qualify for the benefits - even the coordinate bench of this Tribunal has held the Cenvat credit on Guest House service eligible in the case law MAFATLAL INDUSTRIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, AHMEDABAD [ 2020 (6) TMI 61 - CESTAT AHMEDABAD] cited by the appellant. Accordingly, Cenvat credit on this ground is allowed and impugned order is set aside. Credit on Event Management Service - HELD THAT:- Revenue has no locus-standi to deny the Cenvat credit in de-novo proceedings. Accordingly, Impugned order is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The impugned order-in-original is modified to the above extent and the appeals are disposed of. - HON BLE MR. RAMESH NAIR , MEMBER ( JUDICIAL ) And HON BLE MR. C. L. MAHAR , MEMBER ( TECHNICAL ) Shri Archit Agarwal , Advocate for the Appellants Shri Rajesh K Agarwal , Superintendent ( AR ) , for the Respondent ORDER C. L. MAHAR : Present nine appeals have been filed against the impugned combined Order-in-Original dated 09.12.2019 arising out of nine show cause notices pertaining to the period April 2008 to September 2013. The demands have been confirmed on various counts and the amount of demand confirmed against each count cumulatively is as below: (a) Credit on Business Support Service - Rs. 1,63.49,705/- (b) Credit on Management Consultancy Service -Rs. 91,43,339/- (c) Credit claimed on photocopy of invoices and invoices issued on Bangalore address, but credit claimed at Ahmedabad - Rs. 47,85,079/- (d) Credit availed without valid documents - Rs. 5,41,188/- (e) Credit on Guest House Service - Rs. 2,30,757/- (f) Credit on Event Management Service - Rs. 1,97,306/- (g) Credit availed on invoices with different address - Rs. 1,01,671/- (h) Credit on Outdoor Catering Service - R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are otherwise being incurred independently: g) SKF Tech has approached SKF India to avail various types of semces from SKF India through its resource as described in annexure in order to reduce cost and achieve maximum synergic benefit, 2.3 The common personnel shall at all times remain the employees of the respective parties, The Party employing the manpower and /or the managerial personnel, shall have the sole liability, statutory or otherwise towards such personnel for the purpose including but not limited to payments of salary, perquisites, benefits, amenities or other compensation or otherwise and the other Party shall not be liable in any manner whatsoever. 3.1 The fee payable by each party for services received shall be the as follows: c) Each party will bear the expenses, charges and all other related cost incurred by other party against the service received which shall be determined in accordance with generally accepted accounting principles. These charges shall also include cost of resources, salary costs and travel expenses of the personnel engaged in the performance of the work described jn the Agreement. d) The fees payable by each party will be determined on pro rata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng judgements (i) M/s. Amara Raja Electronics Limited - 2016 (43) STR 601 (ii) M/s. Nahar Granities Limited 2014-TIOL-582-HC-AHM-CX (iii) M/s. Creative Enterprises - 2009 (243) E.L.T. A120 (S.C.) (iv) M/s. Manikgarh Cement - 2011 (22) S.T.R. 471 (Tri. - Mum.) (v) M/s. Hindustan Coca Cola Beverages Pvt. Limited - 2010 (19) S.T.R. 280 (Tri. - Del.) 2.2 On the contrary the Ld. Authorized Representative appearing for the Revenue has re-iterated the findings of the Impugned Order. 2.3 We find that the issue is not res-integra in as much as the Tribunal in the case law relied upon by the appellant in the matter of AMARA RAJA ELECTRONICS LTD. v. COMMISSIONER OF C. EX., TIRUPATHI - 2016 (43) S.T.R. 601 (Tri. - Hyd.) has decided in the favour of the assessee and held as under :- 5. I have heard the rival submissions and perused the appeal records. The main allegation for denying credit is that there is no service rendered by ARBL and MPPL to the appellants. That the arrangement is merely sharing of common expenses. Undisputedly, the department was collecting service tax for all these years, from ARBL and MPPL who are registered with the Service Tax Department. The department was very well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses recovered to compensate the cost of sourcing the services, would be taxable under BSS/BAS. There is no evidence to establish that there is no intention to provide service and it was mere understanding with the sister companies for sharing of common expenses. In CCE, Bangalore v. Stanzen Toyotetsu India (P) Ltd. - 2011 (23) S.T.R. 444 (Kar.) the Hon ble High Court while considering the eligibility of credit on input service observed as under : the services mentioned in the section are only illustrative and it is not exhaustive. Therefore, when a particular service not mentioned in the definition clause is utilised by assessee/manufacturer and service tax paid on such service is claimed as Cenvat credit, the question is what are the ingredients that are to be satisfied for availing such credit. If the credit is availed by the manufacturer, then the said service should have been utilised by the manufacturer directly or indirectly in or in relation to the manufacture of final products or used in relation to activities relating to business. If any one of the tests is satisfied, then such a service falls within the definition of input service and the manufacturer is eligible to avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as input services . The department proposes to deny the credit only on the ground that the arrangement is of expense sharing. In our opinion, this cannot be the ground for denying the credit. The ground should be the one that neither service has not been provided or services received are not input services. Therefore, we find that appellant has been able to make a prima facie case on merits for waiver of pre-deposit and stay against recovery during the pendency of appeal. Accordingly, the requirement of pre-deposit of adjudged dues is waived and stay against recovery granted during the pendency of appeals. 2.5. Further this Tribunal vide Order dated 17.12.2015 in Appeal Nos. E/22611 and 22613 of 2014 has answered the issue in favour of the appellants. When the department has accepted the tax on the services provided by sister concern to appellants, then they cannot deny credit alleging that no services were rendered. It is submitted by the learned Counsel that ARBL and MPPL are separate legal entities incorporated under the Companies Act, 1956 and they are separately assessed to Income Tax. M/s. ARBL and M/s. MPPL being independent legal entities, such money collected from appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported at 2009 (235) E.L.T. 785 (Guj.) (Commissioner v. Creative Enterprises) which was upheld by the Hon ble Supreme court (M/S Creative Enterprises - 2009 (243) E.L.T. A120 (S.C.)). Accordingly, we allow the Cenvat Credit amounting to Rs. 1,63,49,705/- and the impugned order is set aside on this issue. (b). Credit on Management Consultancy Service Rs. 91,43,339/- 3. The impugned credit pertains to tax paid under reverse charge on import of services. In the show cause notice, It has been alleged that the services are not used in or in relation to manufacture of final product or for clearance of final product. It has also been alleged that the services are also not related in relation to activity specified in inclusive part of the definition of the input service. However, the impugned order acknowledges the eligibility of the services for Cenvat Credit and grants partial relief. However, it disallows Cenvat Credit on the grounds that the appellant availed it based on photocopies of invoices addressed to their Bangalore unit and on a proportionate basis for services provided by foreign companies, M/s. AKTElBOLAGET SKF and M/s. Mphasis Limited. The Bangalore unit did not issue invoic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irregularity in taking credit in one factory based on duty paying documents addressed to the main office of the company there is no sufficient reason to deny credit when proviso to Rule 9(2) of Cenvat Credit Rules also is considered. Applying the ratio of the above judgment in the present case, it is submitted that the credit shall not be denied to the appellant in absence of ISD registration obtained by Bangalore unit. Without prejudice to anything mentioned above, the original copy of invoices is now available with the appellant at their factory premises. The original copy of the invoice was not available at the time of audit as they were lying at our Bangalore factory. The copy of all these invoices was attached along with additional submissions dated 14.03.2014 during adjudication proceedings and it was requested that any Central Excise officer may be deputed to verify these original invoices. However, without verifying the same, the Learned Commissioner has observed that original invoices are not available. Further, with respect to observations of the Learned Commissioner that possibility of credit being availed at Bangalore unit cannot be ruled out. A Certificate dated 30.06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant unit has been separately mentioned. We have also seen the challans produced by the appellant which are in the name of Ahmedabad unit only. The assessee has claimed to have produced original invoices, where only photocopies were produced to the audit party, subsequently during the adjudication proceedings, which fact has not been challenged by the Learned AR during the course of arguments. Further, it is already a settled law that the credit cannot be denied merely on the ground that the assessee had taken credit on photo-copies, where the veracity of credit itself was not disputed. Thus, we are of the considered opinion that the credit of Rs. Rs. 91,43,339/- impugned in the appeal has been correctly availed by the appellant and the impugned order is set aside on this count. (c) Credit claimed on photocopy of invoices and invoices issued at different address- Rs. 47,85,079/- The issue involved is that the impugned credit has been claimed on the basis of photocopy of invoices and invoices issued on HO address. The grounds are the same as at Sr. No. 2 above. It has already been held that the Cenvat credit cannot be disallowed on these grounds. Accordingly, the demand on thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it, which is also their head office. (e) Credit on Guest House Service Rs. 2,30,757/- 5. The credit has been taken by the appellant on the guest house services availed by them on the ground that no proper accommodation was available at Village Bavla, where the factory situated is 35 km away from the nearby city Ahmedabad. Hence the engineers, consultants and experts were provided accommodation at Ahmedabad by the service provider M/s Prefer Corporate Services Limited, which also provided facility to warehouse materials used for production and plant machinery. The Guest House service was provided by a third party and it was not appellant s own guest house. The credit has been denied in the impugned order holding that accommodation facility provided to the engineers etc., is only a welfare activity and has no nexus with the manufacture of goods; that input credit of services provided to a residential colony was denied as the same was considered to be a welfare activity in the case of Cement-2010 (20) S.T.R. 456 (Bom.), holding that to qualify as an input service, the activity must have nexus with the business of the assessee. The expression 'relating to business' in Rule 2(l) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring activity and the Assessee, therefore, could not have availed input credit in relation to such services. A show cause notice, therefore, came to be issued on 27th April, 2016, calling upon the Assessee to show cause why the Cenvat credit availed should not be reversed with interest. 4. Assessee replied to the said show cause notice and opposed the demand, inter alia, on the ground of limitation. The Assessing Officer, however, confirmed the demand upon which the issue reached the Tribunal. The Tribunal, by the impugned judgment, remanded the proceeding before the Assessing Officer, after holding that some of the guest houses were intended for personal use of the employees while others which were located next to the factory premises, may be for the use other than personal use of the employees. Tribunal, therefore, in the concluding portion passed following order :- Relying on the said decision, the credit of guest houses located next to the factory premises is allowed and the credit in respect of guest houses located away from the factory premises is allowed. The matter is remanded to the original adjudicating authority to determine the guest house which are located next to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily, for personal use or consumption of any employee. Accordingly, if the guest houses were utilized by the Assessee for extending benefit to the employees, for the personal use or consumption, the Assessee was not entitled to avail Cenvat credit thereof. This, even Assessee does not dispute. The case of the Assessee, however, is that, none of the guest houses were used for the personal use or consumption of the employees. In order to test this premise, Tribunal itself formulated the test that those guest houses which are situated next to the manufacturing unit of the Assessee, would qualify for the benefits. The rest would not. This, may appear to provide a rough and ready formula, in our opinion, the same is not entirely satisfactorily. 5.4 Even in relation to a guest house which may not have been situated close to the manufacturing unit of the Assessee, if it is pointed out that the use thereof was not for the personal use or consumption of the employees, exclusion clause in the definition of input service, may not apply. In the circumstances, while the Tribunal ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered to be bonafide and accordingly, the appellant will also pay the applicable interest and equal penalty under Section 78 of the Finance Act, 1994. (h) Outdoor catering Rs. 58,278/- 8. The appellant has engaged services of outdoor catering to their employees and submitted that as their factory is located 35 km away from the city. that there are no eating arrangements around factory area and hence they availed the service of outdoor catering to provide food to the employees. However, the Cenvat credit on these services was denied on the ground that the services provided was only a welfare activity and no nexus to the manufacturing activity. We find that the appellant s own case at Bangalore, the matter has been decided in their favour vide decision in SKF Technologies India Pvt. Ltd. 2014-TIOL-576-CESTAT-Bang. The impugned order is accordingly, set aside on this ground. (i) Credit on Commercial or Industrial Construction Service Rs. 22, 590/-. 9. The appellant has submitted that they have already reversed the demand of Rs. 22,590/- confirmed in the order. However, the appellant will be required to pay the interest applicable under Section 75 and penalty under Section 78 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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