Custom, Excise & Service Tax Tribunal
C.C.E. & S.T, Ltu, New Delhi vs Gail India Ltd on 10 November, 2015
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R.K.Puram, New Delhi COURT-IV Date of hearing/decision:10.11.2015 Central Excise Appeal No.50751 of 2014 Arising out of the order in appeal No.55/DIB/CE(A)/GHY/13 dated 4.10.2013 passed by the Commissioner (Appeals), Customs & Central Excise, Guwahati. For approval and signature: Honble Mr. S.K. Mohanty, Judicial Member 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 26 of 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? C.C.E. & S.T, LTU, New Delhi .. Appellant Vs. Gail India Ltd. . Respondent
Appearance:
Present Shri Vaibhav Bhatnagar, A.R for the appellant/Revenue Present S.C. Kamra, Advocate for the respondent Coram: Honble Mr. S.K. Mohanty, Judicial Member Final Order No. 54014/2015 Per S.K. Mohanty:
The issue involved in the present appeal relates to availment of cenvat credit of service tax paid on the input service namely, Security Agency Service received by the respondent herein for its off-factory guest house and residential colony situated at a distance of approximately 40 kms. from the factory. The adjudicating authority has disallowed the cenvat benfit on the ground that there is no nexus between the disputed service and the final product manufactured by the respondent. In appeal, the Commissioner (Appeals) has allowed the appeal in favour of the respondent, holding that service tax paid on the disputed services are available as cenvat credit. Feeling aggrieved with the impugned order, the Revenue has preferred the appeal before this Tribunal.
2. Shri Vaibhav Bhatnagar, ld. A.R. appearing for the appellant/Revenue submits that there is no nexus between the disputed services and the finished goods manufactured by the respondent, and thus, such services are not confirming to the definition of input service for the purpose of availment of cenvat credit. To support his above stand, the ld. A.R. has relied on the judgment of Honble Bombay High Court in the case of C.C.E, Nagpur vs. Manikgarh Cement, reported in 2010 (20) STR 456 (Bom.).
3. Per contra, Shri S.C. Kamra, learned Advocate appearing for the respondent submits that appeal against the judgment of Honble Bombay High Court in the case of Manikgarh Cement (supra) is pending before the Honble Supreme Court and the principles decided therein are not applicable to the facts of the present case. He also relies upon the judgment of the Honble Andhra Pradesh High Court in the case of C.C.E., Hyderabad III vs. ITC Limited, reported in 2013 (32) STR 288 (A.P.) and also the decision of this Tribunal in the case of Reliance Industries Ltd. vs. C.C.E. & ST. (LTU), Mumbai reported in 2015 TIOL 2343 CESTAT MUM to justify his stand that the respondent is eligible for Cenvat Credit on the disputed service.
4. Heard both sides and perused the record.
5. The period involved in this case is January, 2006 to October, 2009, when un-amended definition of input service contained in Rule 2(l) of Cenvat Credit Rules, 2004 was in vogue. In the inclusive part of the said definition, the phrase activities relating to business was finding a place for consideration of certain services as input service for the purpose of Cenvat benefit. The legislative intent behind addition of such phrase in the definition clause was to enlarge the scope of input service. Upon analysis of the definition of input service, the Honble Andhra Pradesh High Court in the case of ITC Limited (supra) have allowed Cenvat credit of service tax paid on various taxable services for maintenance of staff colony.
6. The issue regarding inclusion of cost of setting up of the township/colony and the maintenance cost thereof in the cost of production for arriving at assessable value of the final product was not urged by the Counsel before the Honble Bombay High Court in the case of Manikgarh Cement (supra). Therefore, there was no occasion for the Honble High Court to discuss the said aspect in the judgment. With regard to availment of Cenvat Credit on the disputed service, I find that this Tribunal in the case of Reliance Industries (supra), by placing reliance on the judgment of Honble Mumbai High Court in the case of Coca Cola India Pvt. Ltd. (2009 TIOL 449 HC MUM ST) has held that services received by the employer in the residential township constructed for employees merits consideration as input service and the service tax paid thereon is admissible as Cenvat Credit.
7. On a query from the Bench regarding consideration of expenses towards the services in the cost of production for determination of the Assessable value by the respondent, the ld. Advocate concedes that the expenses have been taken into consideration in the annual cost statement. However, no documents/ records to that effect were produced by the ld. Advocate either before the lower authorities or before the Tribunal.
8. Considering the submission of the respondent that expenditure towards the disputed service have been included in the cost of production of the excisable goods, on which Central Excise duty liability has been discharged, I am of the view that same shall merit consideration as input service for the purpose of taking cenvat credit. However, since no documentary evidences to that effect were produced by the respondent before the lower authorities, I am of the opinion that the matter is required to be remanded back to the original adjudicating authority for verification of the documents/records maintained by the respondent to demonstrate that the cost of disputed service and the service tax paid thereon is forming a part of the cost of production of the finished goods on which Central Excise duty liability has been discharged.
9. Therefore, by setting aside the impugned order, I remand the matter back to the adjudicating authority for de novo adjudication. During adjudication proceedings, the appellant shall produce the documentary evidence to show that the cost of disputed service and the service tax paid thereon are forming part of the cost of production.
10. The appeal is allowed by way of remand.
(S.K. Mohanty) Judicial Member scd/ 10.11.15 1