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TMI Blog2025 (2) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... has constantly been taking view in respect of admissibility of CENVAT credit in on warranty services provided through third party - authorized service centres.' Extended period of limitation - HELD THAT:- The present case involves interpretational issues involving complex legal provisions to determine the correct admissibility of Cenvat credit. It is a settled position that a case involving interpretation of the statutory provisions cannot be construed to be a case of wilful misstatement or suppression of facts, with intent to evade payment of tax or avail Cenvat credit in a fraudulent manner. Levy of penalty - HELD THAT:- As per Section 11AC of the Act read with Rule 15 of Cenvat Credit Rules, 2004 the penalty can be imposed only in cases of fraud, collusion, wilful misstatement or suppression of facts or contravention of provisions of Excise Act with an intention to evade payment of duty. The Appellant has already stated that they have not contravened any provisions of law as they did not avail any credit in contravention of any provisions of law. Levy of interest - HELD THAT:- According to Rule 14 read with Section 11AA, interest is chargeable only when any duty of excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customers. 4. The Appellant has provided a Toll-Free Telephone Number to its customers, in case they face any problem or defect with the product. These calls received by such call centres are transferred to DSC (owned by the Appellant), whereas if the customers are located in an area where no service centres are available then the calls are transferred to Authorized Service Centres. An agreement was entered between the call centres and the Appellant. 5. An audit of the Appellant's record was carried out for the period from April 2013 to March 2014. In audit report dated 13.05.2015 it was objected that ASCs were providing service to the Appellant, but the same were not 'input services' and the Appellant cannot avail input credit on the same. 6. The Appellant vide letter dated 31.10.2014 clarified that call centre services qualified as 'input services' within the definition envisaged under Rule 2(l) of the Credit Rules. Rule 3 does not bar the assessees from taking Cenvat Credit on the input services. Moreover, since call centre services were used 'in or in relation to' the manufacture of dutiable final products and for providing taxable service, Cenvat credit was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (15) S.T.R. 657 (Bom.) c. Reliance Industries Ltd. v. CCE, 2014 (36) STR 467 (Tri.-Mum.) and d. BCH Electric Ltd. v. CCE, Delhi-IV, 2013 (31) S.T.R. 68 (Tri. - Del.) 12. The scope of the expression "in or in relation to" is very wide in nature and it will cover within its ambit all those services which are used in or in relation to the manufacturing activity. Admittedly, in the present case, the call centre services have an indirect nexus with the manufacturing activity of the Appellant, therefore the same would get covered under the 'means clause' of the definition of input service. 13. The phrase "in or in relation to" used in the definition of 'input service' widens the scope of the said definition. In this regard, reliance is placed on the following Judgement: a. CCE v. Rajasthan State Chemical Works 1991 (55) E.L.T. 444 (S.C.) b. UOI v. Ahmedabad Electricity Co. Ltd., 2003 (158) E.L.T. 3 (S.C.) c. Coca Cola India Pvt. Ltd. v. CCE, 2009 (15) STR 657 d. Comr. of C.EX., Visakhapatnam vs. Dr. Reddy's Laboratories Ltd. 2011 (21) STR 283 (Tri-Bang.) 14. He also submitted that the service received from Call Centres are used for sales promotion as such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the definition of 'Input Service', as defined under Rule 2(l) of the Cenvat Credit Rules, 2004, it is clear that, the definition is divided into two parts, i.e. (i) Means- Clause and (ii) Inclusive- Clause. Further, vide Notification No. 3/2011-CE (NT) an Exclusion-Clause was included in the definition. The services excluded were construction service, rent-a-cab service, general insurance service for motor vehicles and repair service. The Cenvat credit in relation to these services is allowable either to certain service providers only or on the satisfaction of certain conditions. Furthermore, the services that are used primarily for personal use or consumption of any employee like outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club etc. are also excluded from the definition of the input services. 21. The conclusion on the basis of which Order-in-Original is passed indicates that the Commissioner has read only the 'means' part of the definition and not the 'inclusive' part of definition under Rule 2(l) of the Credit Rules. This reasoning is legally flawed and is against the principle of statutory interpretation. One of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inoor Biscuits Products v. CCE, Noida, 2015 (37) STR 567 (Tri-Del.) which was later affirmed by the Hon'ble Allahabad High Court is not applicable to the present case since the 'includes' clause of the definition of input service extends to all those services which are related to post manufacturing activities. If the interpretation of the Commissioner in the impugned order is accepted, then the legislative intention on inclusion of services like accounting, auditing, legal services, business exhibition and market research will be frustrated and all of them will be susceptible to challenge as input service, as they are all related to post-manufacturing activities. Furthermore, the phrase "upto the place of removal" in the definition of input service is only to be read with" outward transportation" and not all parts of the inclusive clause. It is therefore submitted that the above decision cited by the Commissioner is not applicable to the present case. 26. The Commissioner has followed the following judgements to hold that there is no nexus between input services and the manufacture of final product: * Vikram Cement v. CCE, Indore, 2009 (242) ELT 545 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be considered. However, since the provisions pertaining to the time limit are same during both the periods, there won't be any impact. 31. The demand raised in the present case by the SCN dated 05.09.2016 relates to the period from July 2011 to March 2016. Therefore, the demand amounting to Rs. 3,85,86,821/-, for the period upto July 2015, is barred by limitation as the SCN was issued after one year from the relevant date. 32. The Impugned Order does not disclose any evidence of any positive act of fraud, suppression, or wilful misstatement with the intention to evade payment of duty on the part of the Appellant. The SCN read with the Impugned Order, only emphasised the fact that the alleged inadmissible Cenvat Credit, was detected by the Department during the audit of the records. 33. Reliance is placed on the following decisions: * Anand Nishikawa Co. Ltd. Vs. Commissioner of Central Excise, Meerut 2005 (188) E.L.T. 149 (S.C.) * Ajay Mishra vs. Commissioner of Service Tax, Delhi -III 2023 (386) E.L.T. 310 (Tri- Del.) * Arya Logistics vs. Commissioner of C. EX. &S.T., Rajkot 2024 (80) G.S.T.L. 108 (Tri- Ahmd.) 34. We observe that there is no provision in the format ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons. 20. To examine this issue, it would be necessary to reproduce the relevant portion of the definition of 'input service', as defined in rule 2(l) of the Credit Rules. Rule 2(l) was substituted by Notification dated 01.03.2011 w.e.f 01.04.2011 and it is reproduced below : w.e.f 01.04.2011 "2(l) "input service" means any service,- (i) used by a provider of output service for providing an output service; or (ii) used by the 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 modernization, 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, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; but ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Equipment (I) Pvt. Ltd. cited (supra) involving identical issues wherein all earlier decisions of the Tribunal were considered and thereafter, the demands were dropped. 26. Further, we are of the opinion that the decisions relied upon by the Revenue are not directly on the issue and does not reflect the controversy involved in the present case. 27. In view of our discussion above, we hold that the appellant has correctly availed cenvat credit on the amount of service tax paid for the services provided by the dealers to the customers on behalf of the appellant for fulfilling the warranty obligations of the appellant. 28. The ratio of the decisions relied upon by the appellant is squarely applicable to the instant case and relying upon the aforesaid decision, we find that the credit on warranty service provided free of cost during the warranty period through third parties cannot be denied. 29. As regards, the invocation of extended period of limitation, we hold that there does not exists any reason for invoking the extended period of limitation as the issue involved in the present case has already been decided in favour of the appellant. Moreover, the department did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of Bombay will not help the case of the Revenue because in both the cases only appeal has been admitted and no stay granted. 6.4 Further, we find that this Tribunal in various decisions relied upon by the appellant on identical issues has consistently held that the assessee is entitled to cenvat credit of service tax paid on Repair and Maintenance during the warranty period as the same fall within the ambit of "Input Service' as provided in Rule 2(l) of CCR, 2004." In view of the above we find that CESTAT has constantly been taking view in respect of admissibility of CENVAT credit in on warranty services provided through third party - authorized service centres. Thus we do not find any merits in this demand and set aside the same 36. We find that the impugned notice does not disclose any evidence of any positive act of fraud, suppression, wilful misstatement, with intention to evade payment of duty on the part of the Appellant. It is submitted that the mere fact of detection by the Department, does not by itself prove that the Appellant deliberately and fraudulently availed Cenvat credit on the service in question with intention to avail and utilize inadmissible credit. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has not been levied or paid or has been short levied or short paid or erroneously refunded or Cenvat credit has been erroneously taken and utilized. The situations contemplated under Rule 14 as well as under Section 11AA are absent in this case. Therefore, where the demand of Cenvat credit is itself liable to be set aside, as a necessary consequence, interest is also not payable. Therefore, the impugned order confirming recovery thereof, is liable to be set aside and we do so. 42. In view of the above discussions, the impugned order cannot be sustained and is accordingly, set aside. The appeal filed by the Appellant is allowed with consequential relief, as per law. (Pronounced in open court on………) (P. K. CHOUDHARY) MEMBER (JUDICIAL) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) SANJIV SRIVASTAVA: 43. I have gone through the order prepared by Learned Member (Judicial). However, I intent to record my findings in the matter as follows:- 44. The issue involve in the present case is that Cenvat credit has been sought to be denied by observing as follows:- "Moreover, perusal of the records and returns submitted by the party shows that they had never declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.7 Having regard to the submissions advanced by the party on this score, it is seen that the inclusion clause of Rule 2 of CC Rules 2004 stipulates that "and includes services used in relation to setting up, modernization, renovation or repairs of factory, premises of output service or an office relating to such factory or premises, advertisement or sales promotion, market research,, storage up to 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, and security, Inward transportation on inputs, or capital goods and outward transportation of up to the place of removal." 5.8 Here, it is worthwhile to observe that the provisions, as cited above, evince that impugned services are for activities rendered by the service providers or those consumed by the manufacturers of final product up to the place of removal. Such services were eligible either for an office relating to such factory or for the premises of a service provider. Undisputedly, the party has not contended that the place of removal in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be adopted for the purpose of Cenvat Credit Rules, 2004 and accordingly the place of removal would be the factory gate, ie. the place on removal from which the duty is liable to paid. 8. ……………………………………"since in this case the assessable value of the goods was being Watermined not under Sec. 4 but under Sec.4A of the Central Excise Act, 1944, the definition of "place of Removal" as given in Section 4(3) (c) cannot be adopted for the purpose of Cenvat credit rules 2004 and accordingly it is the factory gate which would be the place of removal. Moreover, even if the definition of "place of removal" is given in Section 4(3) (c) is treated as applicable to the cases where the duty on the finished goods is payable on the value determined under Section 4A, even then, the Depot of Mys Parle Biscuits cannot be treated as "Place of removal" in respect of the goods manufactured by the appellant as the, "Place of removal" defined in Section 4(3) (0) is the place of removal for the manufacture of the goods and in case, the manufacturer after clearing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 ibid is reproduced below: Place of removal means- (i) a factory or any other place or premises of production or manufacture of the excisable goods (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duly, (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory, from where such goods are removed." 5.12 Applying the ratio of the above decision of the Hon'ble Allahabad High Court, Tribunal and Cotification No. 21/2014-C.E. (N.T), dated 11.07.2014 to the case in hand, I take the view that in this case the "place of removal in the matter cannot be accepted to be any place other than the factory gate (up to 10.07.2014) and factory gate, warehouse and depot (w.e.f 11.07.2014). In the instant matter, the party has taken credit of input services rendered and consumed at the places beyond the place of removal le factory gate, warehouse and depot. It is pertinent to keep in mind that the goods manufactured by the party are assessed to duty under section 4A of the Central Excise A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n utilization of such product directly or indirectly into the manufacture of the finished product, then such a product cannot be said to be the input utilized for or in relation to manufacture of the final product. This is also evident from the definition of the term input as found in Rule 2(k). The definition clearly uses the word "used" and further clarity the same with the expression "in or in relation to" and further uses these expressions with reference to the term "manufacture of final products". The definition disclosing the expression like "used", "in or in relation to", "the manufacture of final products" would inevitably disclose, that the same refer to only those products which are used in or integrally connected with the process of actual manufacture of the final product and only such product could be entitled to be classified as the input in or in relation to the manufacture of final products, and not otherwise. When the legislature in its wisdom has specifically defined a term, no Court or Tribunal under the guise of interpretation thereof is empowered to expand the meaning of such term. If the contention on behalf of the appellants is accepted, it would virtually amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears to have been so provided by way of abundant caution to clarify that the inputs in any case would not include machinery and equipment. From such a clarificatory provision, it cannot be concluded that the expression 'input' would include cement and steel items used for laying foundation and making supporting structures. Moreover, if for a moment one has to agree with the contention that Input included machinery etc. there would have been no need for providing a separate definition for capital goods and making a separate provision for allowing credit on capital goods. Such an argument cannot alao be accepted as it would imply that capital goods would be included twice in the definition under Rule 2(a) with limited scope and with unlimited scope under Rule 2(k). Such a proposition appears to be totally absurd as the rule-makers cannot be seen to have provided two separate definitions to cover the sane thing. There are also other rules in the Cenvat Credit aules namely Rule 3. Rule 3(1), Rule 3(5), Rule 3 (5a), Rule 3 (5b), Rule 4(1), Rule 4(2), Rule 4(3), Rule 414), Hule, 5, Rule 6, Rule 9, Rule 15 which provide for different provisions for inputs and capital goods. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product then such an item would not qualify as input. In order to get over this controversy in the above definition of "input", the Legislature has clarified that even if an item is not contained in the final product still it would be classifiable as an "input" under the above definition. In other words, it has been clarified by the definition of "input" that the following considerations will not be relevant : (a) use of input in the manufacturing process be it direct or indirect; (b) even if the input is not contained in the final product, it would still be covered by the definition. These considerations have been made irrelevant by the use of the expression "goods used in or in relation to the manufacture of final product" which, as stated above, is the crucial requirement of the definition of "input". Moreover, the said expression, viz, "used in or in relation to the manufacture of the final product" in the specific/substantive part of the definition is so wide that it would cover innumerable items as "input" and to avoid such contingency the Legislature has incorporated the inclusive part after the substantive part qualified by the place of use. For example, one of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods and the unloading/loading operations. The purpose of posting of security personnel must be discerned from the agreement between the appellant and security agency. But none is forthcoming. In this scenario, I am not in a position to accept the claim of the appellant that the security personnel were doing something, directly, or indirectly, in or in relation to the manufacture or clearance of final product. In other words, the claim is unsustainable. Coming to "rent-a-cab services", I am told that these services were used by functionaries, officials and employees of the company for purposes connected directly or indirectly with the manufacture or clearance of the final products. To a specific query from the Bench, the learned counsel submits that, if the representative of the company who is present in Court to assist him avails himself of "rent-a-cab service" for commuting between the administrative office of the company and this Court, Cenvat credit on the service is admissible to the appellant. This argument is farfetched inasmuch as, if it is accepted, Cenvat credit will have to be allowed to the assessee in respect of "rent-a-cab service " availed by the counsel himsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch). In this case, it was held by the Hon'ble Tribunal that since there was по пехus between duty paid inputs and the telecommunication services hence credit was not extendable. The larger bench observed that Cenvat credit was not available because Telecom companies have created infrastructure and provided such business support service to themselves. So, Infrastructure spun out to separate companies. In such case, no distinction could be made between telecom operators and Infrastructure companies in deciding eligibility of Cenvat credit on MS angles, channels, etc. and pre-fabricated shelters, used for fabricating telecommunication towers into concrete platform at ite. Therefore, Rule 2(1) of CC Rules, 2004 does not allow credit on such activities. The relevant paras (21 823) are reproduced below: 21. Learned Counsel relied on the Hon'ble Supreme Court's decision in CCE, Ahmedabad v. Solid & Correct Engineering Works reported in 2010 (252) E.L.T. 481 (S.C.). The Supreme Court was examining excise duty liability of asphalt drum hot mix plant. The Court examined Section 3(26) of the General Classes Act with reference to "Immovable Property". The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elecommunication antenna and other equipment. It is necessary to decide whether duty paid MS angles/shelter are used by infra-companies for providing business support service to telecom companies or for providing telecom service by telecom operators. This will bring us to the next question relevant to decide this issue. Question of nexus and Cenvat credit flow :- The duty payment is on MS angles, channels (or towers in CKD as claimed by the appellants) and pre-fabricated shelters. The credit of this duty is claimed. The admitted basic requirement for eligibility of any duty credit is that goods on which duty is paid (credit of which is claimed) should have a connection or nexus to the output service. The credit availed on input is used for discharging tax on output service. In the present case, the duty paid MS angles, channels, etc., are brought to the site, fabricated into towers on a concrete platform. Similarly, the duty paid pre-fabricated shelters are brought and fixed to the ground base firmly. On such towers, the antenna or dish are fixed and connected by cables to electronic equipment housed in the pre-fabricated shelter on the ground. It is apparent that these duty paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rical boxes are to be considered as parts of electricity generator is not of any help to appellants. Applicability of ratio followed for telecom companies to infrastructure companies :- On the above analysis, the first point for difference of opinion referred to this Larger Bench relating to non-applicability of the decision of the Hon'ble Bombay High Court in Bharti Airtel to infrastructure companies to provide business support service to telecom operators can be examined. We find in the normal course the nature of output service should not have any bearing to decide credit eligibility on capital goods now under dispute. A distinction was sought to be made that the decision of Hon'ble Bombay High Court was applicable only to active telecom service providers and not to providers of passive infrastructural support to such telecom operators. Reliance was sought to be placed on the decision of the Tribunal in GTL Infrastructure Ltd. v. CST, Mumbai reported in 2015 (37) S.T.R. 577 (Tri. - Mumbai) and Tribunal's final order Nos. A/382-383/2015, dated 26-11-2014 in Reliance Infratel Ltd. v. CST, Mumbai-II reported in 2015 (38) S.T.R. 984 (Tri. - Mumbai). We have perused the GTL Infrast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned items now under consideration." 5.18 In the case of Vikram Ispat Vs CCE Raigad reported in 2010 (19) S.T.R. 52 (Tri.- Mumbai), I observe that that Hon'ble Tribunal have held that no service may be classified as input service unless quintessential requirements laid down in main part of definition is not established. In the absence of any nexus between a services and manufacture/clearance of goods, such services may not be termed as input services on which the assessee could claim benefit of credit of service tax. The Hon'ble Tribunal quoted the case of Manikgarh Cement Work Final Order No. A/632/2009/SMB/C-IV, dated 3-11-2009 with approval and held that - 5. I have considered the grounds of this appeal, the written submissions of the appellant and the argument of the learned SDR. The lower authorities have found that the barges and tugs were used in the sea and the channel and not in the jetty. In other words, it has been found that these vessels were operated in the sea and channel beyond the jetty. On the other hand, the appellant has claimed in the memorandum of appeal that the said vessels were used not only for bringing raw materials from the ships anchored i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, the Hon'ble Supreme Court's decision impliedly overrules the High Court's decision. I agree. In the case of Maruti Suzuki, the Supreme Court was considering the definition of 'input' given under the CENVAT Credit Rules. The definition reads as under :- "(k) 'input' means - (i) all goods, except light diesel oil, high speed diesel oil and 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, within the factory of production; (ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service; Their Lordships considered the above definition to be divisible into three parts : (1) specific part (main or substantive part); (2) inclusive part; (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved that the item is used in the course of manufacture of final product. Mere fact that the item is a packing material whose value is included in the assessable value of final product will not entitle the manufacturer to take credit. Oils and lubricants mentioned in the definition are required for smooth running of machines, hence they are included as they are used in relation to manufacture of final product. The intention of the Legislature is that inputs falling in the inclusive part must have nexus with the manufacture of the final product." (emphasis supplied) The above judgment of the Supreme court hands down an important ruling, which it is to the effect that, where the inclusive part of a definition provides a list of items, any such item should also satisfy the quintessential ingredients of the main part of the definition. In other words, the definition has to be considered in its entirety. The inclusive part is not independent of the main part. It is not a 'stand-alone' provision. This ruling is applicable to 'input service', given the definition of this expression under Rule 2(l) of the Cenvat Credit Rules. There is nothing in this definition to indicate that the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Suzuki case is to the contra and the same is constitutionally binding on this Tribunal. 7. In the result, the view taken by the lower appellate authority by following an earlier decision of this Tribunal which is presently under challenge before the Hon'ble High Court cannot be accepted. On the other hand, the view taken by the Ld. DR on the strength of the Hon'ble Supreme Court's ruling in Maruti Suzuki case should be followed. Accordingly, it is held that, as the respondent has not established nexus between any of the four services and the manufacture or clearance of excisable goods, the benefit of Cenvat credit in respect of such service cannot be allowed. It is ordered accordingly. However, I think, in a case of this nature, the assessee should not be penalised. This case involves rival interpretations of a provision of law. In typical cases of interpretative nature, penalties have been waived by this Tribunal. In this view of the matter, the order-in-original is sustained except in respect of penalty imposed by the original authority. The appeal is disposed of accordingly." 6. Following the above view, I have to reject the appellant's plea that the Hon'ble High Court's de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bom.). However, I find the issue to be squarely covered by the said decision of Hon'ble Bombay High Court. Relevant paras of the said decision are reproduced as follows:- "19. To answer the questions framed we shall have first to answer as, what constitutes manufacturing cost? The Supreme Court in Union of India Vs. Bombay Tyres International [1983 (14) ELT 1896 (SC)] has held that all elements given to enrich the value of the excisable goods and contribute to its marketability, must form part of the manufacturing cost of the goods. The relevant portion of paragraph 49 of the said judgment is reproduced herein: "49. We shall now examine the claim. It is apparent that for purposes of determining the "value", broadly speaking both the old Section 4(a) and the new Section 4(1)(a) speak of the price for sale in the course of wholesale trade of an article for delivery at the time and place of removal, namely, the factory gate. Where the price contemplated under the old Section 4(a) or under the new Section 4(1) (a) is not ascertainable, the price is determined under the old Section 4(b) or the new Section 4(1)(b). Now, the price of an article is related to its value ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore the levy of Central Excise duty should be only on manufacturing cost and manufacturing profit. However, the Supreme Court held that even though the levy was on the manufacture, the measure can be with reference to the sale price. d. In this context, the Supreme Court observed that the price of article is related to its value and into that value several components are poured including those which have enriched its value and give to the article its marketability in the trade. Accordingly, the Supreme Court held that the expenses for marketing and selling the articles, including advertisement and publicity expenses would be one of the several components poured into the value of the goods under assessment and hence rejected the claim of the assessee, that value for levy of duty, should be only manufacturing cost and profit. Supreme Court therefore held that from the price, advertisement cost cannot be deducted. 21. That Advertisement of soft drink enhances the marketability of the Concentrate in our opinion is no longer res intergra as it has been recognized in the following judgments: Pepsi Foods Ltd. vs. Collector 1996 (82) ELT 33 (T) where the Supreme Court affir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. [See ( i ) Stroud's Judicial Dictionary , 5th edn. Vol. 3, p. 1263 and (ii) C.I.T. v. Taj Mahal Hotel 1 , ( iii) State of Bombay v. Hospital Mazdoor Sabha. This has been reiterated in C.I.T. Vs. T.T.K. Health Care Ltd. (2007) 11 SCC 796. In M/s. Mahalakshmi Oil Mills Vs. State of Andhra Pradesh, AIR 1989 Supreme Court 335, the Court dealing with the expression "means and includes" observed as under : "As Lord Watson observed in Dilworth v. Commissioner of Stamps [1899] AC 99 the joint use of the words "mean and include" can have this effect. He said, in a passage quoted with approval in earlier decisions 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, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the expression "means and includes" is exhaustive. By the word "includes" services which may otherwise have not come within the ambit of the definition clause are included and by the words means these are made exhaustive. 24. The next expression to be considered from the definition is "such as". A few dictionary meanings of the term "such as" are reproduced: Concise Oxford Dictionary, 'Such as' means for example or of a kind that; Chambers Dictionary, 'Such as' means for example: In Good Year India Ltd V/s Collector of Customs 1997 (95) ELT 450 the Supreme Court observed as under: "The words such as stainless steel, nickel monel, incoloy, hastelloy in sub-heading (2) are only illustrative of the various metals from which valves can be made but the said description is not exhaustive of the metals." The words "such as" therefore are illustrative and not exhaustive. In the context of business, these are services, related to the business. They may not be exhaustive, but are illustrative. 25. The expression Business is an integrated/continuous activity and is not confined restricted to mere manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in relation to: 48. The expression in relation to (so also pertaining to), is a very broad expression which pre-supposes another subject matter. These are words of comprehensiveness which might both have a direct significance as well as an indirect significance depending on the context, see State Wakf Board v. Abdul Aziz (A.I.R. 1968 Madras 79, 81 paragraphs 8 and 10,following and approving Nitai Charan Bagchi v. Suresh Chandra Paul (66 C.W.N. 767), Shyam Lal v. M. Shayamlal (A.I.R. 1933 All. 649) and 76 Corpus Juris Secundum 621. Assuming that the investments in shares and in lands do not form part of the undertakings but are different subject matters, even then these would be brought within the purview of the vesting by reason of the above expressions. In this connection reference may be made to 76 Corpus Juris Secundum at pages 620 and 621 where it is stated that the term relate is also defined as meaning to bring into association or connection with. It has been clearly mentioned that relating to has been held to be equivalent to or synonymous with as to concerning with and pertaining to. The expression pertaining to is an expression of expansion and not of contraction. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived from the manufacturing company so as to support the manufacturing unit, whether it amounts to a business expenditure? The claim was disallowed by ITO and AAC on appeal. The tribunal allowed the expenditure on the finding that the same has incurred wholly and exclusively for the purpose of assessee's business out of commercial expediency. This view was upheld by the Hon'ble High Court observing as under: "A sum of money expended, not of necessity and with a view to a direct and immediate benefit to the36 trade, but voluntarily and on the grounds of commercial expediency, and in order indirectly to facilitate the carrying on of the business, may yet be expended wholly and exclusively for the purposes of the trade. This test has been quoted with approval and applied by the Supreme Court in Eastern Investments Ltd. vs. CIT (1951 ITR 20 ITR 1 SC)). 30. The House of Lords in the context of Credit under VAT itself, in Customs and Excise Commissioners v. Redrow Group Plc. (1999 Simon Tax Cases 161) has taken an identical view relating to input VAT deduction. Facts of that case, briefly stated as under:- Redrow was involved in constructing new houses for sale to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s down the chain of supply, each taxable person receives a service when another taxable person does something for him in the course or furtherance of a business carried on by that other person for which he takes a consideration in return. Questions such as who benefits from the service or who is the consumer of it are not helpful. The answers are likely to differ according to the interest which various people may have in the transaction. The matter has to be looked at from the standpoint of the person who is claiming the deduction by way of input tax. Was something being done for him for which, in the course or furtherance of a business carried on by him, he has had to pay a consideration which has attracted value added tax? The fact that someone else in this case, the prospective purchaser also received a service as part of the same transaction does not deprive the person who instructed the service and who has had to pay for it of the benefit of the deduction. & (emphasis supplied) Then in the speech of Lord Millet it was thus observed : The solution lies in two features of the tax to which I have already referred. The first is that anything done for a consideration which is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue added tax tribunal. 31. CBEC by Circular No. 80/10/2004-ST dated 17.09.2004, inter alia, clarified as under: Service Tax like CENVAT is basically a value added tax which is operated through credit mechanism. 32. CBEC Circular No. 56/5/2003-S.T. dated 25.04.2003 issued in the context of export of services, clarified that service tax is a consumption tax. Relevant extract is reproduced herewith as under (remaining paragraphs in context of export of services are not quoted here): "I am directed to clarify that the Service Tax is destination based consumption tax and it is not applicable on export of services." 32A. Name of tax was rechristened as Cenvat w.e.f. 12.05.2000. Section 3 of Central Excise Act, 1944 as it stood before 12.05.2000 read as under:- SECTION 3. Duties specified in the [the First Schedule and the Second Schedule] to the Central Excise Tariff Act, 1985 to be levied - (a) a duty of excise on all excisable goods which are produced or manufactured in India as, and at the rates, set forth in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); (b) a special duty of excise, in addition to the duty of excise specified in cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dapwalas etc. Performance based services are services provided by service providers like stockbrokers, practising chartered accountants, practising cost accountants, security agencies, tour operators, event managers, travel agents etc.. 20. On the basis of the above discussion, it is clear that service tax is VAT which in turn is both a general tax as well as destination based consumption tax leviable on services provided within the country. (emphasis supplied) 34. It is therefore, clear that the burden of service tax must be borne by the ultimate consumer and not by any intermediary i.e. manufacturer or service provider. In order to avoid the cascading effect, the benefit of cenvat credit on input stage goods and services must be ordinarily allowed as long as a connection between the input stage goods and services is established. Conceptually as well as a matter of policy, any input service that forms a part of the value of the final product should be eligible for the benefit of Cenvat Credit The appeal filed against this decision has been dismissed by Hon'ble Supreme Court on monitory grounds. 48. The services of ASC and DSC availed by the appellant definitely go to enrich ..... X X X X Extracts X X X X X X X X Extracts X X X X
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