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TMI Blog2025 (3) TMI 1241X X X X Extracts X X X X X X X X Extracts X X X X ..... road etc. For this purpose, the Appellant is duly registered with the Service Tax Department vide Registration No. AAACL1745QST003. 3. Appellant is providing, after-sales service by Authorized Service Centres (ASCs) and Direct Service Centres (DSCs) to end consumers for their products. These services include In-warranty service, Annual Maintenance contract service (repair & maintenance) and Out-of-warranty service. For In-warranty service and AMC service provided by ASCs to end customers, the ASCs charge monthly compensation from the Appellant. However, for Out of warranty service, the repair and maintenance charges are collected by the ASCs from end 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 records were carried out for the period from April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 23.08.2007 issued by the Central Board of Excise & Customs. The said note and circular indicate that even the Department is of the view that a manufacturer is entitled to avail Cenvat Credit on all input services, the cost incurred on which becomes a part of the Assessable Value for payment of excise duty on final products. 10. He further submitted that the input service used is integrally connected with the manufacturing of the final product and the cost of such input service is included in the cost of the final product, as such credit of service tax paid on such input service is allowable. He relied upon the following judgments in support of such a preposition: a. CCE, Nagpur v. Ultratech Cement Ltd., 2010 (260) ELT 369 (Bom.) b. Coca Cola India Pvt. Ltd. v. Commissioner, 2009 (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.) 11. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of this, he submitted that the Call Centres which helps to connect the customers to DSC and ASC in turn help directly to cause sales promotion and accordingly the services provided by the call centre were admissible and covered under the inclusive part "sales promotion" of the definition of input services. Thus, it is submitted that the Credit of the service tax paid on the services received from the call centres is admissible. 17. The learned Departmental Representative appearing on behalf of the Revenue has justified the impugned order and prayed that the appeal filed by the Appellant, being devoid of any merits, be dismissed. 18. Heard both the sides and perused the appeal records. 19. We find that from the bare reading 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant (Service Provider/ DSC) for providing an Output Service i.e. Repair and Maintenance Service. Thus, the impugned service falls within means clause of Rule 2(1) of Credit Rules. Therefore, the credit pertaining to Impugned Service provided by Call Centres to DSC (Appellant) could not be denied as the same is directly related to the output service provided by the Appellant. Paras 11,12 24. The learned Adjudicating Authority has relied on various judgements in the Order-In-Original but none of them applies to the facts of the present case. The reasoning adopted by the learned Adjudicating Authority is completely flawed and the decision of the Tribunal in the case of Kohinoor 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. 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. 25. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each service category or transaction-wise. Only the total availment of Cenvat credit is required to be reflected in the return. Therefore, the finding that the Appellant did not inform the Department of such availment of Cenvat credit on the said services is unsustainable. 31. We observe that the issue of Cenvat Credit on invoices of Authorized Service Station for the services provided during the warranty period has already been dealt by the Tribunal in the Appellant's case being Service Tax Appeal No.70634 of 2017 vide Final Order No.70514 of 2024 dated 08.08.2024. The relevant paragraphs of the judgment are reproduced below:- 4.4 Availed CENVAT Credit on invoices of Authorized Service Stations for the services provided during the Warranty Period This issue is also no longer res-integra. In case of Escorts Construction Equipment Ltd, supra after taking note of previous decisions on the issue Chandigarh Bench has observed as follows: "6. After considering the submissions of both the parties and perusal of material on record, we find that the issue involved in the present case has been considered in the appellant's own case for a different period by this Bench of the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it stood prior to 01.04.2011, is also reproduced below : 5. prior to 01.04.2011 "2(l) "input service" means any service,- (i) used by a provider of taxable 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 setting up, 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, 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 of inputs or capital goods and outward transportation upto the place of removal;" (emphasis supplied) 22. "Input service' either prior to 01.04.2011 or w.e.f. 01.04.2011 means any service used by the manufacturer, whether directly or indirectly, or in relation to the manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with intend to evade payment of service tax. Besides this, the audit of the record of the appellant was conducted in February/March 2007 whereas the show cause notice was issued in 2009 after the expiry of two and half years which makes the substantial demand beyond the period of limitation. 30. In view of our discussion above, the impugned orders are set-aside and both the appeals of the appellant are allowed with consequential relief, if any, as per law." 6.2 Further, we find that the Tribunal in the case of M/s New Hollend Construction Equipment (I) Pvt. Ltd. cited (supra) has considered the identical issue and has held as under:- "41. It is, therefore, considered appropriate to follow the three decisions rendered by the Tribunal in Carrier Airconditioning & Refrigeration, Honda Motorcycle and Samsung India Electronics in preference to the later decision rendered on 24.11.2017, which has distinguished these three decisions on a non-existent ground. This is what was observed by the Supreme Court in Babu Parasu Kaikadi and the relevant portion is reproduced below: "18. Furthermore, this Court, while rendering judgment in DhondiramTatoba Kadam vs. Ramchandra Balwantrao ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Jakap Metind Pvt. Ltd. v. Commissioner of Customs, Pune, -III reported at 2015 (329) E.L.T. 485 (Tri. -Mumbai) 35. 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. 36. 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. We do not find any ingredient to indicate that the Appellant contravened any provisions of law as they did not avail any credit in contravention of any provisions of law. 37. According to Rule 14 read with Section 11AA, interest is chargeable only when any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded or Cenvat credit has been erroneously taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal: but excludes. - Explanation For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis" From the above definition of 'input service', it is observed that eligibility for input service credit on services used for clearance of final products, viz., outward transport services, storage, loading/unloading etc. is to be examined in connection with place of removal but there is no such requirement as regards to other services. In respect of other services what is to be examined is whether they can be held to be rendered in or in relation to manufacture directly or indirectly or whether they are included in the inclusive definition of input services under Rule 2(1) of the CCR'04. The services provided by the call centres utilized towards facilitating services provided by the service centres on their own account cannot be held to be rendered in or in relation to manufacture of appellant's final products directly or indirectly. The appellant contended that the call center s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to output goods being manufactured by the appellant. The credit in such cases need not be denied. The said ratio has been very categorically laid down by Hon'ble Bombay High Court in the case of M/s Coca Cola India Pvt. Ltd. 2009 (242) E.L.T. 168 (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 v. Bombay Tyres International [1983 (14) E.L.T. 1896 (S.C.)] 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. Wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le goods. (c) In the case of Bombay Tyre International, the Supreme Court was considering the challenge to the levy of Central Excise duty on the basis of sale price. The assessees contended that the levy was on the manufacture of the goods 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 enri.ched 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 Adver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. [See (i) Strouds 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. v. T.T.K. Health Care Ltd. - (2007) 11 SCC 796. In M/s. Mahalakshmi Oil Mills v. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lear that 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. Collector of Customs - 1997 (95) E.L.T. 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, those 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 manufacture of the product. Therefore, activities in relation to business can c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pposes 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 (AIR 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. The expression Relating to thus widens the scope of the definition. 27. Similarly, the use of the word activities in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the 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. v. CIT (1951 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 prospective customers. The prospective customer of a Redrow home had an existing home to sell and cannot purchase unless and until they have a buyer for their existing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 not : a supply of goods constitutes a supply of services. This makes it unnecessary to define the services in question. The second is that unless the services are rendered for a consideration they cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircular No. 56/5/2003-S.T., dated 25-4-2003 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. 12-5-2000. Section 3 of Central Excise Act, 1944 as it stood before 12-5-2000 read as under :- SECTION 3. Duties specified in 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 clause (a) above, on excisable goods specified in the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) which are produced or manufactured in India, as, and at the rates, set forth in the said Second Schedule..... Section 3 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 42. The services of ASC and DSC availed by the appellant definitely go to enrich the value of the output goods cleared by them by creating a brand image for the appellant. Hence, in terms of the Rule 2(l) of Cenvat Credit Rules, exists between the said services and the goods being cleared by the appellant. I do not find ..... 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