Custom, Excise & Service Tax Tribunal
Ace Designers Ltd vs Commissioner Of Central Excise, ... on 15 December, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/20034/2015-SM [Arising out of Order-in-Appeal No. 64/2014 dated 20/10/2014 passed by Commissioner of Central Excise and Service Tax (Appeals), BANGALORE LTU] Ace Designers Ltd. Plot No.7 & 8, 2nd Phase, Peenya Industrial Area, BANGALORE 560 058. KARNATAKA Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax Bangalore-LTU 100 FT RING ROAD JSS TOWERS, BANASHANKARI-III STAGE, BANGALORE 560 085. KARNATAKA Respondent(s)
Appearance:
Mr. B.N GURURAJ, Advocate 22.2, 3 RD MAIN ROAD CHAMARAJPET, BANGALORE.
KARNATAKA For the Appellant Mr. N. Jagadish, AR For the Respondent Date of Hearing: 15/12/2016 Date of Decision: 15/12/2016 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 21410 / 2016 Per : S.S GARG The present appeal is directed against the impugned order dated 20.10.2014 passed by the Commissioner (A) whereby the Commissioner (A) has upheld the Order-in-Original and rejected the appeal of the appellant denying CENVAT credit on three services viz., Security agency service received at the residence of the senior personnel of the appellant; training services and incineration services.
2. Briefly the facts of the case are that the appellant is engaged in the manufacturing of CNC lathe machines and component falling under Chapter Heading 8458 11 00, 8466 93 10, 8481 10 00 of the First Schedule to the Central Excise Tariff Act and are availing CENVAT credit on inputs, capital goods and input services. During the disputed period, the appellant has availed CENVAT credit of service tax paid on certain training services, security agency service and incineration services which were disputed by the Department on the ground that the same have been availed after the manufacture of the goods and all the services have no nexus with the manufacturing activity or with the provisions of any output service. On these allegations, a show-cause notice was issued demanding irregular CENVAT credit availed by the appellant amounting to Rs.4,08,773/- and also proposed penalty and interest. Appellant filed reply controverting the allegation in the show-cause notice and submitted that all these services fall in the definition of input service and the CENVAT credit has been rightly availed by the appellant. The Deputy Commissioner vide the impugned order confirmed the demand and also appropriated Rs.20,655/- along with interest of Rs.13,765/- paid by the appellant towards CENVAT credit availed on security agency service. Aggrieved by the said order, the appellant filed appeal before the Commissioner (A), who upheld the Order-in-Original and rejected the appeal of the appellant.
3. Heard both the parties and perused the records.
4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed by misapplication of the provisions of law and by ignoring the precedents. Learned counsel further submitted that the MMTPL is not only selling agent on behalf of the appellant but also engaged in providing the training services to the customers on behalf of the appellant. The training service rendered by MMTPL on behalf of the appellant is an eligible input service since it is integral to the business activity of the appellant. He further submitted that the sale process would have been incomplete without the necessary training being provided to the customers on the manner of using the said CNC lathe machine. Hence, training services are directly correlated to the business activity of the appellant. In support of his submission, he relied upon the decision in the case of CCE vs. Yokagawa Blue Star Ltd.: 2011 (21) STR 161 and Ivy Comptech Pvt. Ltd. vs. CCE, Hyderabad-II: 2016 (42) STR 66. The learned counsel further submitted that the coaching and training service have been specifically enumerated as an input service in Rule 2(l) of the Rules prior to 1.4.2011 as well as in the amended definition w.e.f. 1.4.2011.
4.1 Learned counsel further submitted that the CENVAT credit on incineration service also fall in the definition of input service as the incineration service are in the nature of waste management service and it is the statutory obligation of the appellant under Indian Environmental Protection laws. He further submitted that the disposing of waste generated out of manufacture is a statutory obligation of the appellant and violation of the same would attract penal consequences. Therefore the incineration services availed by the appellant is a direct and necessary correlation with the manufacturing processes of the appellant and thereby eligible as an input service for the purpose of CENVAT credit. In support of this, the learned counsel relied upon the decision in the case of CCE vs. Lupin Ltd.: 2012 (28) S.T.R. 291 wherein the Tribunal has categorically held that waste management is a statutory requirement and engaging third parties for such waste management to remove the waste from factory premises is an integral part of the manufacturing process and eligible for CENVAT credit.
4.2 Further with regard to the security agency service, the learned counsel for the appellant did not press for CENVAT credit as the said security was provided at the residence of senior officer and the same has nothing to do with the manufacturing process. Further, with regard to the security agency service, the appellant has already reversed an amount of Rs.20,655/- along with interest of Rs.13,765/-.
5. On the other hand, the learned AR reiterated the findings in the impugned order.
6. After considering the submissions of both parties and perusal of material on records, I find that training and coaching services very much fall in the definition of input service as contained in Rule 2(l) of CENVAT Credit Rules and the said activity is directly and substantially related with the business of the appellant. In the absence of which, it will be difficult for the appellant to promote his business. Further, the incineration service is also an input service as the appellant is under a statutory obligation to dispose of the waste, failing which, he would attract penal consequences. Moreover, the case law cited by the appellant also covers the training as well as incineration services as an input service. Therefore on both the services, the appellant is entitled to CENVAT credit and denying the CENVAT credit on these two services is wrong and not sustainable and therefore I partly allow the appeal of the appellant by setting aside the impugned order to the extent of denial on two services viz., training and coaching service and incineration service and upheld the denial of CENVAT credit on security agency service. Consequently the appeal is partly allowed.
(Operative portion of the Order was pronounced in Open Court on 15/12/2016.) S.S GARG JUDICIAL MEMBER rv 2