Custom, Excise & Service Tax Tribunal
M/S Piramal Glass Ltd vs C.C.E. & S.T.-Surat-Ii on 14 July, 2015
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad ^^^ Appeal No : E/1178/2011, E/1203-1205/2011 (Arising out of (1) OIA-BC-154-SURAT-II-2011 05/07/2011 (2) OIA-BC/170/SURAT-II/2011 12/07/2011 (3) OIA-BC/167/SURAT-II/2011 11/07/2011 (4) OIA-BC/168/SURAT-II/2011 11/07/2011 Dated 05/07/2011 passed by Commissioners of Central Excise, Customs and Service Tax-SURAT-II) M/s Piramal Glass Ltd : Appellant (s) Vs C.C.E. & S.T.-Surat-ii : Respondent (s)
Represented by:
Appellant (s) : Shri Mehul Jivani (Consultant) Respondent (s) : Shri T.K. Sikdar (Authorised Representative) For approval and signature: Mr. H.K. Thakur, Honble Member (Technical) 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?
No
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 CORAM: MR. H.K. THAKUR, HONBLE MEMBER (TECHNICAL) Date of Hearing/Decision: 14/07/2015 Order No. 11036-11039/2015 Per: H.K. Thakur
These appeals have been filed by the appellant with respect to Orders passed by Commissioner (Appeals) denying Cenvat Credit on Pest Control Services, Construction of Residential Services, Architect Services and Security Services provided at the Residential Colony of the appellant.
2) Shri Mehul Jiwani (Consultant) appearing on behalf of the appellant argued that all these Services are availed either in their factory premises or in the Residential Colonies given by the appellants to its employees. That the factory of the appellant is situated at a far off place and providing of Residence in the colony at such a remote place becomes essential without which manufacturing activity cannot be accomplished. It was thus the case of learned Consultant that Services required for maintenance of such residential colony will be eligible to Cenvat Credit under Rule (2L) of the Cenvat Credit Rule 2004 as held by Andhra Pradesh High Court in the case of ITC Limited [2013 (32) STR 288 (AP)] and also Commissioner (Appeal) for the later period under OIA No. CEEA-SRT-II?SSP-39?2013-2014 Dated 27/05/2013.
3) Shri T.K. Sikdar (Authorised Representative) appearing on behalf of the Revenue argued that input Services are not used in relation to manufacture of excisable goods and Credit has been correctly denied by the lower authorities.
4) Heard both sides and perused the case records. The issue involved in these appeals is regarding admissibility Cenvat Credit on services, like; Pest Control Services, Construction on Residential Complex Services, Architect Services and Security Services at residential colony; availed by the appellant in their factory or the residential colony situated at a far off places close to their factory. Appellant has mainly relied upon the Case Law of Andhra Pradesh High Court in Commissioner of Customs and Central Excise, Hyderabad-III and ITC Limited [2013 (32) STR 288 (AP)], where Cenvat Credit of Several Services, like; lawn moving, garbage clearing, maintenance of Swimming Pool, collection of household garbage, harvest cutting, weeding, etc; used in maintaining staff colony was upheld. Honble Andhra Pradesh High Court held as follows:
9.?The Commissioners Order-in-Appeal dated 27-5-2008 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 of the 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(l) of the Cenvat Rules, 2004.
10.?As regards the plantation activity, the same had an obvious nexus with the manufacturing activity of the respondent-Company. As pointed out by the CESTAT the matter had to be viewed in a broader perspective given the wide amplitude of the definition of input services in the Rules. It is not in dispute that the respondent-Companys factory is in a scheduled area and owing to its situation, the respondent-Company could not have acquired land for undertaking its own plantation. In such a scenario, its activity in distributing saplings to the farmers in the vicinity and buying back the fully grown trees from them cannot be said to be an activity unconnected with the manufacture of its final products. No evidence to the contrary was brought on record by the Revenue. Services pertaining to procurement of inputs also being covered by the definition clause in Rule 2(l), the plantation activity undertaken by the respondent-Company for ensuring steady supply of raw-material (wood) cannot be excluded.
A.1) In view of the ratio laid in the above case law appeals filed by the appellant are allowed.
(Operative portion of the order pronounced in court) (H.K. Thakur) Member (Technical) Abhishek 4