Custom, Excise & Service Tax Tribunal
The India Cements Ltd vs Tiruchirapalli Ce&St on 26 August, 2024
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT NO. III
Excise Appeal No. 42428 of 2015
(Arising out of Order-in-Original No. 10/2015 (C.Ex.) dated 21.09.2015 passed by Commissioner of
Central Excise and Service Tax, No. 1, Williams Road, Cantonment, Tiruchirapalli - 620 001)
M/s. The India Cement Limited ...Appellant
Dalavoi Works,
Cement Nagar Post,
Sendurai Taluk,
Ariyalur - 621 730.
Versus
Commissioner of GST and Central Excise ...Respondent
Tiruchirapalli Commissionerate,
No. 1, Williams Road,
Cantonment,
Tiruchirapalli - 620 001.
APPEARANCE:
For the Appellant : Mr. M.N. Bharathi, Advocate
For the Respondent : Ms. Anandalakshmi Ganeshram, Authorised Representative
CORAM:
HON'BLE MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL)
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
FINAL ORDER No. 41155 / 2024
DATE OF HEARING/ DECISION: 26.08.2024
Order :- Per Ms. Sulekha Beevi C.S.
Brief facts are that the appellant is engaged in manufacture of
cement and clinker and is registered with the Central Excise Department.
They availed Cenvat credit of service tax paid on various input services
under the provisions of CENVAT Credit Rules, 2004. On verification of the
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Cenvat credit account of the appellant, it was noticed that they have taken
input service credit for the service tax paid on the purchase of Fly Ash from
M/s. Ash Tech India (P) Ltd., Chennai, M/s. Ash Tech Engineers, Sankar
Nagar and M/s. Mani Enterprises. In the column for item description for the
purchase of the Fly Ash, it is seen mentioned as "charges for operation and
maintenance of TTPS Dry Fly Ash collecting system from TTPs to Dalavoi for
the month of .....".
1.2 The Department was of the view that the charges paid for
operation and maintenance of TTPS and procurement of Fly Ash cannot be
considered as a consideration received from providing services. Show Cause
Notice was issued proposing to deny the credit availed and to recover the
same along with interest and for imposing penalties. After due process of
law, the Original Authority disallowed the credit and confirmed the demand,
interest and imposed penalty. Aggrieved by such order, the appellant is now
before the Tribunal.
2.1 The Ld. Counsel Shri M.N. Bharathi appeared and argued for the
appellant. It is submitted that since the material is being consumed by
various Cement Manufacturers, for the collection and supply of allotted fly
ash, the appellant entered into agreements with various service providers.
The service providers are charging the appellant along with service tax for
providing service of collection and supply of fly ash. Since they incur
operation and maintenance expenses at the Silos situated at Thermal power
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stations, where the thermal power plants flush their fly ash, as it is a waste
for them. For extracting the fly ash from these silos, some equipments are
installed in the silos like Electrostatic precipitator which is used to extract the
fly ash from silos and fill them in closed containers. For the operation of
such equipments, the service providers have to pay operation and
maintenance charges. In turn, the service providers charge the cement
plants with service charges, based on the tonnage of fly ash drawn and
supplied. On these service charges, they charge service tax and the
appellant, in turn, takes credit of such service tax. These services are in
relation to procurement of inputs used for the production of final product i.e,
cement and is eligible to avail credit.
2.2 The Ld. counsel argued that the issue stands covered by the
decision rendered by the Tribunal in their own case for the earlier period.
Further that the expenses incurred are for procurement of fly ash which
would fall within the inclusive part of the definition of input services and
even though the period of dispute is after 2011, the appellant would be
eligible for credit. The Ld. Counsel prayed that the appeal may be allowed.
3. The Ld. Authorised Representative Smt. Anandalakshmi
Ganeshram appeared for the Department. The Ld. AR referred to para 48 of
the impugned order and reiterated the findings. It is prayed that the appeal
may be dismissed.
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4. Heard both sides.
5. The issue to be analysed is already decided by the Tribunal in
the appellant's own case vide Final Order Nos. 42412-42413/2021 dated
20.10.2021. The relevant paras read as under:-
"3. The above charges are made to be part of the input services in addition to
the cost of the input [Fly Ash]. That these charges incurred for operation and
maintenance of Dry Fly Ash collecting system at Tuticorin Thermal Power
Plant by the service providers, is not an input service for the appellant in
terms of the definition of "input services" in section 2(l) of Cenvat Credit
Rules, 2004. Though service tax was paid on these charges it appeared to
the department that the procedure had been devised by the seller of Fly Ash
in order to camouflage the sale of Fly Ash as something related to service
activity as the sale of Flay Ash is prohibited by the State Government,
4. It was also noticed that appellant has taken credit of service tax paid on
services in the nature of Catering Services, Compound Wall & Canteen
Construction, Labour Supply for Garden Maintenance and Colony
Housekeeping, Railway Siding & Bush Cutting Work, Maintenance of Miner
Vehicles etc. That there was no nexus for these input services with the
manufacturing activity of the appellant and, therefore, credit is not eligible.
Show-cause notice was issued proposing to disallow the Cenvat credit and for
recovery of the same along with interest and for imposing penalties. After
due process of law, the original authority confirmed the demand, interest and
imposed penalties. In appeal, the Commissioner (Appeals) allowed the credit
in regard to Outdoor Catering Service to the extent of the amounts which are
not collected from the employees.
.
.
.
13. The appellant is engaged in the manufacture of cement. Fly Ash is one of the inputs used by them for manufacture of cement. The Thermal Power Plant in the process of generating power also generates Fly Ash. In order to obtain the input, namely, Fly Ash without any hindrance, the appellant has availed services in the nature of operation and maintenance of Dry Fly Ash collecting system. They have also paid service tax for such services. When the fact that the appellant has used the Fly Ash as well as payment of service tax is not in dispute by the department, they cannot deny the credit availed on the service tax paid for these services. Such services are availed in relation to the manufacture of finished products. We hold that the credit is eligible. During the relevant period the definition of "input services" had a wide ambit as it included the words "activities relating to business". The definition has already been noticed above. All the impugned services in these appeals are prior to 01.04.2011. The period of dispute in Excise Appeal 5 No.00453 of 2012 is from 05/2007 to 04/2009 and period of dispute in Excise Appeal No.00454 of 2012 is from 12/2008 to 08/2010.
14. In the case of M/s. Hindustan Zinc Ltd. Vs. Commissioner of Central Excise & Service Tax, Udaipur reported in 2017 (49) S.T.R. 315 (Tri-Del.), the credit availed on Input services in the nature of construction of RCC wall and tube well were allowed. In the M/S. Raymond UCO Denim Pvt. Ltd., Vs. Commissioner of Central Excise, Nagpur reported in 2017 (7) G.S.T.L. 346 (Tri-Mum.) the credit availed on the input services for construction of canteen wall and dining hall was allowed. In the case of M/s. Heidelberg Cement India Ltd. Vs. Commissioner of Central Excise, Bangalore-1 reported in 2017 (47) S.TR. 98 (Tri-Bang.) the credit availed of the service tax paid on input services in the nature of Consultancy Services used for green house gas emission was allowed. The Hon'ble High Court of Bombay in the case of M/s. Coca Cola India Pvt. Ltd., Vs. CCE, Pune-III reported in 2009 (15) S.T.R. 657 (Bom.) had considered the eligibility of credit on various input services for the period prior to 01.04.2011. In para 25 to 27, the Hon'ble High Court discussed the issue as to the various activities which would fall within the ambit of "activities relating to business". It was held that the said phrase and words are of wide import. Most of the services, which are used for the business of manufacture would fall within the expression of "activities relating to business" and, therefore, we are of the considered opinion that the credit availed on these impugned services are eligible. However, with regard to the credit availed on Labour Supply for Garden maintenance & Colony Housekeeping, the appellant is not able to produce documents to show that the entire credit was not availed on Labour Supply for Garden maintenance. We are of the opinion that the said issue requires to be remanded to the adjudicating authority. So ordered.
15. In the result, the credit availed on all services in Excise Appeal No.00454 of 2012 is allowed except the credit availed on Labour Supply for Gardening & Colony Housekeeping. The issue with regard to the credit availed on Labour Supply for Garden maintenance & Colony Housekeeping to the tune of Rs.55,319/ in Excise Appeal No.00454 of 2012 is remanded to the adjudicating authority to reconsider the same. Impugned order in Excise Appeal No. 00453 of 2012 is set aside. The appeal is allowed with consequential reliefs, if any.
16. Excise Appeal No. E/00454 of 2012 is partly allowed and partly remanded with consequential reliefs, if any. Appeals disposed as above."
6. After appreciating the facts and following the above decision in the appellant's own case, we find that the demand cannot sustain.
67. In the result, the impugned order is set aside. The appeal is allowed with consequential relief, if any, as per law.
(Order dictated and pronounced in open court)
Sd/- Sd/-
(VASA SESHAGIRI RAO) (SULEKHA BEEVI C.S.)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
MK