Custom, Excise & Service Tax Tribunal
Cce, Delhi-Iii vs Hollister Medical India Pvt. Ltd on 24 September, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI-110066
BENCH-SM
COURT IV
Excise Appeal No.E/55916/2014 EX. [SM]
[Arising out of Order-in-Appeal No.186/CE/DLH/2014 dated 29.08.2014 passed by the Commissioner (Appeals), Central Excise, Delhi-I]
Excise Appeal No.E/ 55924/2014 EX. [SM]
[Arising out of Order-in-Appeal No.185/CE/DLH/2014 dated 29.08.2014 passed by the Commissioner (Appeals), Central Excise, Delhi-I]
For approval and signature:
HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
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?
CCE, Delhi-III Appellant
Vs.
Hollister Medical India Pvt. Ltd. Respondent
Present for the Appellant : Mr.M.R. Sharma, D.R. Present for the Respondent: Ms. Tripti Dhar, Advocate Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL) Date of Hearing/Decision: 24.09.2015 FINAL ORDER NO. __54274-54275/2015__ PER: S.K. MOHANTY
Brief facts of the case are that the respondent is an export oriented unit and is engaged interalia, in the manufacture and export of medical products namely, Intermittent Catheters and Catheter Kits. For manufacture of the said exported goods, the respondent procures various inputs and input services and avails Cenvat credit of Central Excise duty and service tax paid thereon. Since, the goods manufactured by the respondent are exported to the outside countries, there were no scope for payment of any duty on the finished product, and accordingly, the respondent during the disputed period had filed the refund application in terms of Rule 5 of the Cenvat Credit Rules, 2004. The refund application was rejected by the original authority on the ground that the disputed services are not confirming to the definition of Input Service contained in Rule 2 (l) ibid and also there is no nexus between the disputed services with the goods manufactured by the respondent. In appeal, the Commissioner (Appeals) vide the impugned orders has allowed the appeal, holding that the disputed services are confirming to the definition of input services and also those services have the nexus with the pharmaceutical products manufactured by the respondent. Feeling aggrieved with the impugned order, the Revenue has preferred these appeals before the Tribunal.
2. Shri M.R.Sharma, the ld. D.R. appearing for the appellant reiterates the submissions made in the grounds of appeal.
3. Per contra Ms. Tripti Dhar, the ld. Advocate appearing for the respondent submits that the disputed services have nexus with the Pharmaceutical Products manufactured by the respondent and also those services are confirming to the definition of input service contained in Rule 2 (l) of the Cenvat Credit Rule, 2004. To justify her stand that the services falls under the definition, the ld. Advocate has submitted the chart, which are placed below:-
Chart - I CORRELATION OF INPUT SERVICES JANUARY 2012 - MARCH 2012 S.No. Name of Service Nature of Service Order-in-Appeal 1 Cleaning Activity Service This pest control/sterilization service is used by Appellant in maintaining the hygienic environment in the manufacturing plant. This service is most important in keeping the environment safe and clean as the Appellant is to manufacturing of Medical Products. Hygienic environment would ensure better quality products and lesser rejection of the finished goods due to contamination.
Quality Control Services are covered under inclusive part of Input Service definition as per Rule 2(I) of the CCR, 2004. Allowed 2 Clearing and Forwarding Agent's Service Clearing & Forwarding agent plays in the promotion of sales by storing the goods, transportation up to the place of removal and supplying the same to the customers, thereby promoting the sales. Moreover, this service is also used by the Appellant for inward transportation of Inputs which are essential for manufacturing of finished goods.
Inward Transportation of Input and outward transportation up to the place of removal services are covered under inclusive part of Input Service definition as per Rule 2(I) of the CCR, 2004. Allowed 3 Consulting Engineer Services This service is related to verification and review of quality parameters and adherence thereto while manufacturing the finished products.
Quality Control Services are covered under inclusive part of Input Service definition as per Rule 2(I) of the CCR, 2004. Allowed 4 Erection, Commissioning or Installation Services This includes services used in relation to repairs, installation/fabrication of sheds and other similar work in the factory.
Repair, Renovation services in relation to factory are very much covered under inclusive part of Input Service definition as per Rule 2(I) of the CCR, 2004. Allowed 5 Information Technology Services Information Technology Services are related to computer networking in the factory premises. Allowed 6 Management Consultant, Business Auxiliary Services, Business Support Services This service pertains to professional service procured by the Appellant towards accounting and consultancy services in order to comply with the statutory requirements and compliances. Compliance with various statutory laws such Income tax, Excise/Custom, Labour Laws are must for the smooth and efficient functioning of manufacturing plant and thus integrally connected with the manufacture of finished goods. Allowed 7 Packaging Activity Service Packaging services procured for getting the export goods properly stacked/ packed in the export container so that the wear and tear during the transit is minimised. Any damage to the finished goods in transit could result in rejection by buyer, leading to losses to the Company. Allowed 8 Security Agency's Services This service pertains to security personnel services procured from some outsourced agencies to safeguard the building, plant and machinery, tools, equipments, raw materials, finished goods etc. which are necessary and integral to manufacturing.
Security Services are covered under inclusive part of Input Service definition as per Rule 2(I) of the CCR, 2004. Allowed Chart - II CORRELATION OF INPUT SERVICES OCTOBER 2011 - DECEMBER 2011 S.No. Name of Service Nature of Service Order-in-Appeal 1 Chartered Accountant Service This service is used by Appellant by procuring services from professionals for auditing their financial statements or certifying various details/financial information in the form of certificates which are statutorily required to be furnished under various laws. . This service is most important in business of Appellant. Auditing Services are very much covered under inclusive part of Input Service definition as per Rule 2(I) of the CCR, 2004. Allowed 2 Cleaning Activity Service This pest control/sterilization service is used by Appellant in maintaining the hygienic environment in the manufacturing plant. This service is most important in keeping the environment safe and clean as the Appellant is to manufacturing of Medical Products. Hygienic environment would ensure better quality products and lesser rejection of the finished goods due to contamination.
Quality Control Services are covered under inclusive part of Input Service definition as per Rule 2(I) of the CCR, 2004. Allowed 3 Clearing and Forwarding Agent's Service Clearing & Forwarding agent plays in the promotion of sales by storing the goods, transportation up to the place of removal and supplying the same to the customers, thereby promoting the sales. Moreover, this service is also used by the Appellant for inward transportation of Inputs which are essential for manufacturing of finished goods.
Inward Transportation of Input and outward transportation up to the place of removal services are covered under inclusive part of Input Service definition as per Rule 2(I) of the CCR, 2004. Allowed 4 Consulting Engineer Services This service is related to verification and review of quality parameters and adherence thereto while manufacturing the finished products.
Quality Control Services are covered under inclusive part of Input Service definition as per Rule 2(I) of the CCR, 2004. Allowed 5 Erection, Commissioning or Installation Services This includes services used in relation to repairs, installation/fabrication of sheds and other similar work in the factory.
Repair, Renovation services in relation to factory are very much covered under inclusive part of Input Service definition as per Rule 2(I) of the CCR, 2004. Allowed 6 Information Technology Services Information Technology Services are related to computer networking in the factory premises. Allowed 7 Management Consultant, Business Auxiliary Services, Business Support Services This service pertains to professional service procured by the Appellant towards accounting and consultancy services in order to comply with the statutory requirements and compliances. Compliance with various statutory laws such Income tax, Excise/Custom, Labour Laws are must for the smooth and efficient functioning of manufacturing plant and thus integrally connected with the manufacture of finished goods. Allowed 8 Packaging Activity Service Packaging services procured for getting the export goods properly stacked/ packed in the export container so that the wear and tear during the transit is minimised. Any damage to the finished goods in transit could result in rejection by buyer, leading to losses to the Company. Allowed 9 Security Agency's Services This service pertains to security personnel services procured from some outsourced agencies to safeguard the building, plant and machinery, tools, equipments, raw materials, finished goods etc which are necessary and integral to manufacturing.
Security Services are covered under inclusive part of Input Service definition as per Rule 2(I) of the CCR, 2004. Allowed
4. I find from the above chart that the disputed services are confirming to the definition of input service and also the nexus has been established either directly or indirectly with the manufacture of the final products in the factory of the respondent. Therefore, I am of the view that the Respondent is eligible for refund of service tax paid on the disputed services, in terms of Rule 5 ibid. Therefore, I do not find any infirmity in the impugned order passed by the Commissioner (Appeals), and accordingly, dismiss the appeals filed by the Revenue.
(Dictated and pronounced in the open Court) (S.K. MOHANTY) MEMBER (JUDICIAL) Anita 0 2