Custom, Excise & Service Tax Tribunal
M/S. Ultratech Cement Ltd vs Commr. Of C. Ex., Customs & Service Tax on 22 November, 2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EAST REGIONAL BENCH : KOLKATA
Service Tax Appeal No.-261/2011
(Arising out of the Order in Appeal No. 31/CE/BBSR-II/2011 dated-23.03.2011 passed by the Commissioner (Appeals), Central Excise Customs & Service Tax, BBSR-II)
For approval and signature of :
DR. I.P. LAL, HONBLE TECHNICAL MEMBER :
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1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982 ?
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?
4. Whether Order is to be circulated to the Departmental :
Authorities ?
M/s. Ultratech Cement Ltd.
APPELLANT(S)
VERSUS
Commr. of C. Ex., Customs & Service Tax-
BBSR-II
RESPONDENT(S)
APPEARANCE
Sri Rijay Bhowmik, Advocate
FOR APPELLANTS
Sri S.Chakraborty, A.C. (A.R.)
FOR THE RESPONDENTS
CORAM:
DR. I.P. LAL, HONBLE TECHNICAL MEMBER
DATE OF HEARING & DECISION : 22.11.2013
ORDER NO.FO/A/71130/2013
Per DR. I.P. LAL
Heard both sides and perused the records.
2. At the outset, the Ld. Advocate has submitted that appellants viz. M/s. Ultratech Cement Ltd. are, inter alia, engaged in the manufacture of excisable goods i.e. cement OPC/cement PPC falling under Chapter Heading No. 25232910/ 25232930/25231000 of Central Excise Tariff Act, 1985. They engaged M/s. Mahesh Behara to provide manpower services for services required at their factory and the residential colony, such as gardening, sanitation, water supply, pantry and courier services etc. The service provider is registered with the Service Tax Department under the taxable service of manpower, supply or recruitment services. The service provider raised invoices on the appellants for services provided by him. The appellants on payment of Service Tax to the service provider availed credit of Rs.99,428/-. Appellants also availed credit of Rs.40,969/- on GTA services on the strength of supplementary invoices. Department sought to deny the credit availed as above and issued a show cause notice for demand of irregularly availed credit for the period 2007-08 on the ground that the gardening, sanitation, water supply, pantry and courier services have not been used directly or in relation to manufacture of their final products i.e cement. Incase of supplementary invoice, it was held that they are not specified as a document for taking credit under Rule 9 of Cenvat Credit Rules, 2004. The Ld. Commissioner (Appeal) upheld the order of adjudicating authority confirming the demand. The present appeal is filed against the Commissioner (Appeals) order to this forum. Ld. Advocate submitted that Honble High Court of Andhra Pradesh in the case of CCE, Hyderabad-III Vs. M/s. ITC Ltd. reported in 2012-TIOL-199-HC-AP-ST has held that plantation activity had an obvious nexus with activities relating to business. Ld. Advocate submitted that Honble High Court in the above cited case has observed that the staff colony provided by the Respondent company, being directly or intrinsically linked to its manufacturing activity would not be excluded from the ambit of Rule 2 (l) of Cenvat Credit Rules.As regards Service Tax demand on Pantry services, the Ld. Advocate submitted their case is covered by the judgment of Honble Mumbai High Court in the case of CCE, Nagpur Vs. Ultratech Cement Ltd. reported in 2010 (20) STR 577 (Bombay). Ld. Advocate has cited this Tribunals decision in case of M/s. Tufropes Pvt. Ltd. Vs. Commr. of Central Excise, Vapi reported in 2012 (277) ELTL 359 (Tri.-Ahmedabad) wherein credit on courier services were held admissible. As regards the credit taken on supplementary invoices, it is the contention that in case of GTA services, differential amount of service tax was paid on account of escalation in contract price and the credit was taken by the appellants of the service taxpaid through these supplementary invoices
3. As per contra, the Ld. A.R. reiterated the findings of the Commissioner (Appeal). It is his contention that these input services have no nexus with the manufacture and therefore input service credit has been denied to the appellant.
4. After careful consideration of the rival contentions and the case laws cited by the appellant, I find that the appellant had provided the services of Sanitation, Gardening, Water Supply etc. to their factory and maintenance of staff colony. During the relevant period as per Rule 2 (l) of Cenvat Credit Rule, 2004, 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 the 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 net working, credit relating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal.
5. Thus the definition of input service not only covers services, which fall in the substantial part of the definition, but also covers services which are covered under the inclusive part of the definition. I find that Honble High Court of Andhra Pradesh in the case of ITC Ltd. (supra) under para 8 & 9 observed as under :
8.The language of the definition makes it clear that the phrase input service has been given the widest amplitude. The definition by its very nature is an inclusive one and the words used therein leave no room to doubt that all services used in relation, directly or indirectly, to the manufacture of final products and clearance of such products upto the place of removal are covered. The inclusive part of the definition manifests that services used in relation to the setting up of the factory or office or premises, including its modernization, renovation, repair etc., and also services used in relation to advertisement, sales promotion, market research, procurement of inputs and all activities relating to the business would also fall within the ambit of input services.
9.The Commissioners Order-in-Appeal dated 27.05.2008 reflects that he accepted that the efficiency of the employees of an organization would be dependent on various factors, one such being the provision of a housing colony. He further conceded that these facilities would contribute to the enhancement of the productivity of the organization. Having stated so, the appellate authority surprisingly took the view that maintenance residential colony by the respondent company was only an obligatory activity owing to situational exigencies and was not connected either directly or indirectly to the manufacture of its final products. This inherent contradiction in the Order-in-Appeal was noted by the CESTAT, which opined that if accommodation was not provided by the respondent company to its employees at this remote location, it would not be feasible for it to carry on its manufacturing activity. The finding of the Commissioner that providing a colony to the employees was not directly or indirectly connected with the manufacturing activity of the respondent company was therefore not borne out on facts. The staff colony, provided by the respondent company, being directly and intrinsically linked to its manufacturing activity could not therefore be excluded from consideration. Consequently, the services which were crucial for maintaining the staff colony, such as lawn mowing, garbage cleaning, maintenance of swimming pool, collection of household garbage, harvest cutting, weeding etc., necessarily had to be considered as input services falling within the ambit of Rule 2 (1) of the CENVAT rules, 2004. Accordingly, I am of the view that the services of gardening, plantation, sanitation, water supply etc. to the appellants manufacturing unit and to the residential colony cannot be excluded from the ambit of Rule 2 (l) of Cenvat Credit Rules, 2004. As regards the credit taken on the pantry services, the Ld. Advocate has cited the judgment of Honble High Court of Bombay (citied supra) in their own case. On the issue of the credit taken on the Courier services, I find that this Tribunal in case of M/s. Tufropes Pvt. Ltd. (supra) has held that courier services used in sending documents/invoices to various customers and other offices are definitely relating to manufacturing activity undertaken by the appellant and therefore credit of service tax paid on courier service is allowable. As regards credit taken on supplementary invoices, there is no dispute that the service tax was paid on the differential amount through these supplementary invoices. Since the credit has been taken on the amount which was paid as service tax and relevant particulars are available in the said invoices, therefore, the credit cannot be denied in this case also. In these circumstances, I set aside the order of the Commissioner (Apepals) and allow the appeal of the appellant.
(Dictated and pronounced in the open Court) Sd/- 26/11/2013 (DR. I.P.LAL) JUDICIAL MEMBER k.b/-
Service Tax Appeal No.-261/2011 2