Custom, Excise & Service Tax Tribunal
Aet Laboratories Pvt Ltd vs Commissioner Of Central Excise, ... on 27 October, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/25812/2013-SM [Arising out of Order-in-Appeal No. 137-2012 dated 30/11/2012 passed by Commissioner of Central Excise and Service Tax , HYDERABAD-I( Appeal) ] For approval and signature: HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes AET Laboratories Pvt Ltd Survey No.42, Gaddapotharam Village, Kazipally Industrial Area MEDAK DIST - 502319 AP Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax HYDERABAD-I NULL KENDRIYA SHULK BHAVAN, L.B STADIUM ROAD, BASHEERBAGH, HYDERABAD, - 500004 ANDHRA PRADESH Respondent(s)
Appearance:
Shri R.MURALIDHAR, Advocate B-201, HIGHRISE APARTMENTS, 1-3-1024/8, LOWER TANKBUND ROAD, GANDHINAGAR PO, HYDERABAD-500 080-AP HYDERABAD - 500080 AP For the Appellant Shri Mohd. Yousuf, Addl. Commissioner(AR) For the Respondent Date of Hearing: 27/10/2015 Date of Decision: 27/10/2015 CORAM:
HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER Final Order No. 22098 / 2015 Per : ARCHANA WADHWA The dispute in the present appeal relates to availment of CENVAT credit of service tax paid on outdoor catering service and insurance service availed in respect of the insurance policy taken for the workers. The lower authorities have denied the CENVAT credit to the extent of Rs.2,21,776/- and has also confirmed interest and imposed penalty.
2. It is seen that the period covered in the present appeal is from March 2011 to January 2012. Undisputedly decision of various High Courts have held that outdoor catering service and insurance service are covered by the definition of input service, as appeared in Rule 2(l) of CENVAT Credit Rules, 2004. However it is seen that the period involved in the present appeal is post-April 2011 when there was amendment in the said Rule, which reads as follows:-
Rule 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, up to 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 up to 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 up to the place of removal; but excludes,-
(A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for
(a) construction or execution of works contract of a building or a civil structure or a part thereof; or
(b) laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services; or (B) Services provided by way of renting of a motor vehicle, in so far as they relate to a motor vehicle which is not a capital goods; or (BA) Service of general insurance business, servicing, repair and maintenance , in so far as they relate to a motor vehicle which is not a capital goods, except when used by
(a) a manufacturer of a motor vehicle in respect of a motor vehicle manufactured by such person ;or
(b) an insurance company in respect of a motor vehicle insured or reinsured by such person; or (C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits 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;
3. As is seen in terms of the said amended Rule, the definition of input service does not cover outdoor catering and life insurance etc. inasmuch as there is a specific exclusion to the same. The contention of the learned advocate appearing for the appellant is that sub-para (C) of the exclusion clause excludes the services provided in relation to outdoor catering and insurance etc., when such services are used primarily for personal use or consumption of any employee. This means that when the cost is borne by the company and the company is under a legal obligation to provide outdoor catering service to its employees or to provide insurance service to its employees, the said exclusion clause would not apply. However on being questioned as to what would be the interpretation of the expression used primarily for personal use or consumption of any employee, learned advocate failed to give any such circumstances in which case the outdoor catering service provided by a manufacturer would not be for personal use or consumption of any employee.
4. Learned AR appearing for the Revenue submits that after the amendment w.e.f. 01/04/2011, outdoor catering service as also the insurance service, along with some other services stand specifically excluded. Admittedly, these services are meant for personal use or consumption of an employee and to give it any other interpretation would amount to defeating the legislative intent. He accordingly prays for rejection of the appeal.
5. I have considered the submissions made by both the sides. There is no dispute about the factual or the legal position. The period involved in the present appeal is admittedly after 01/04/2011 and the amendment to the provisions of Rule 2(l) defining the input service came into existence w.e.f. 01/04/2011 only. The definition is extended by providing the inclusive as well as exclusive clauses. The exclusion clause was effective w.e.f. 01/04/2011 and Clause (C) of the said exclusion specifically excludes the services provided in relation to outdoor catering and health insurance or life insurance etc. Admittedly such services, prior to 01/04/2011, have been held to be covered by the definition of input services. In fact, the need for exclusion would arise only when the services are otherwise covered by the definition. Legislation, in its wisdom, has excluded certain services from the availment of CENVAT credit w.e.f. 01/04/2011, when such services are otherwise covered by the main definition clause of input service. To interpret the said exclusion clause, in such a manner, so as to hold that such services have direct or indirect nexus with the assessees business and thus would be covered by the definition, would amount to defeat the legislative intent. It is well settled that the legislative intent cannot be defeated by adopting an interpretation which is clearly against such intent. As such, I find no justifiable reason to allow the credit in respect of the two disputed services and I uphold the confirmation of denial of CENVAT credit and demand of interest thereon.
6. As regards the penalty, I find that the appellants have taken the credit by reflecting the same in their statutory records and as such there can be no mala fide or suppression or mis-statement with an intent to wrongly avail the credit. In the absence of any such intent, imposition of penalty upon them is not justified. The same is accordingly set aside.
7. Appeal is disposed of in above manner.
(Order pronounced and dictated in open court) ARCHANA WADHWA JUDICIAL MEMBER Raja..
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