Custom, Excise & Service Tax Tribunal
Commissioner Of Customs And Service Tax ... vs Ge Medical System Pvt Ltd on 11 July, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: C/450/2009-SM [Arising out of Order-in-Appeal No.27/2009/CUS(B) dated 18/03/2009 passed by the Commissioner of Customs (Appeals), Bangalore.] Commissioner of Customs and Service Tax BANGALORE-CUS C.R. BUILDING, QUEENS ROAD, P.B.NO. 5400, BANGALORE, - 560001 KARNATAKA Appellant(s) Versus GE MEDICAL SYSTEM PVT LTD. NO-122, PART I , EPIP WHETEFIELD, BANGALORE-5600060 Respondent(s)
Appearance:
Mr. S. Teli, Dy. Commissioner (AR) For the Appellant Mr. L.S. Karthikeyan, Advocate For the Respondent V. LAKSHMIKUMARAN & V. SRIDHARAN WORLD TRADE CENTRE No.404-406, 4TH FLOOR, SOUTH WING BRIGADE GATEWAY CAMPUS NO.26/1, DR. RAJKUMAR ROAD, MALLESWARAM, BANGALORE - 560 055 KARNATAKA Date of Hearing: 11/07/2014 Date of Decision: 11/07/2014 CORAM:
HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER Final Order No. 22447 / 2014 Per : S.K. MOHANTY Revenue has filed this appeal against the impugned order dated 18.03.2009 passed by the Commissioner of Customs (Appeals), Bangalore, wherein it has been held that the respondent herein is eligible for refund of service tax paid on input services, i.e., Catering, Chartered Accountant, Consulting Engineer, Maintenance and Management Consultancy services, by observing that the said services have been used by the respondent, in or in relation to manufacture of exported final products. With regard to Catering service, it has been held that lunch provided to the employees of the respondent herein, can be considered as input service, relating to the business and CENVAT credit in respect of the same will be admissible.
2. Revenue has preferred this appeal on the ground that no material evidences have been produced by the respondent herein to prove that the aforesaid disputed services have been exclusively used for manufacture of goods; rather, most of the services are relatable business expenses only and not related to the manufacture of finished goods. Thus, according to the Revenue, the impugned order holding that the respondent is eligible for refund of service tax on the disputed services, is not legal and proper.
3. The learned Advocate appearing for the respondent has reiterated the findings recorded in the impugned order and further submitted that since the disputed services by nature of their use and participation in the activities of the appellant are confirming to the definition of 'input service' as contained in Rule 2(l) of the CENVAT Credit Rules, 2004, refund of unutilised credit relatable to such services in terms of Rule 5 of the said rule, cannot be restricted/denied. He has cited the judgement of Hon'ble Karnataka High Court delivered in the case of CCE, Bangalore-III vs. Stanzen Toyotetsu India (P) Ltd: 2011 (23) STR 444 (Kar.) and CCE, LTU, Bangalore vs. ABB Ltd.: 2011 (23) STR 97 (Kar.) to justify his above stand.
4. Heard the ld. counsel for both the parties and perused the records.
5. I find from the available records that while passing the impugned order, the commissioner (Appeals) has adequately dealt with usage of the disputed services in the premises of the respondent, which have been clearly spelt out in the order itself. In the said order, with regard to certain services such as Business Support Service and Consulting Service, the impugned order has disallowed the credit, by holding that the same cannot be construed as input services, since they have not been used in or in relation to manufacture of final products that are exported, and therefore, credit is not permissible on the said services. It transpires from the impugned order that with regard to the other services (disputed herein) which have actually been used by the respondent, in relation to either manufacturing or for the purpose of business activities, the credit has been allowed, upon proper analysis of the definition of input services contained in Rule 2(l) of the CENVAT Credit Rules, 2004. Wherever the credit has not been admissible, being not within the purview and the scope of such definition, the CENVAT credit has been disallowed by the appellate authority. Revenue in the present appeal has not specifically submitted as to why the CENVAT credit shall not be available to the respondent and not distinguished the decisions relied on by the first appellate authority in the impugned order.
6. The business activities in the case of a manufacturer are not only confined to mere manufacture of the final product, but also include other activities, which a manufacturer is required to perform for accomplishing the purpose of business. For smooth functioning of the business of manufacturing and other like activities, the manufacturer avails various services and it cannot be inferred that such services are not in relation to the business of manufacturing the final product. On perusal of the definition of 'input service', it would transpire that the substantive part covers services used directly or indirectly, in or in relation to manufacture of final product; whereas, the inclusive part covers various services used in relation to the business of manufacturing the final product. In other words, the services envisaged in the inclusive part of the definition is very broad and a narrow interpretation cannot be placed to conclude that the services used only in the manufacture of final product will qualify as 'input service' for the purpose of taking CENVAT credit. Therefore, considering the scope and spirit of the definition of 'input service', I am of the considered view that the stand of Revenue that "usages of the services 'in or in relation to manufacture' alone determines its qualification to be an input service" is not in harmony with the statutory provisions.
7. I find that the judgments cited by the respondent squarely apply to the facts of the present case. The principles decided therein are that if the services have been utilised either directly or indirectly, in or in relation to the manufacture of the final product or used in relation to activities relating to business, then such services fall within the definition of input service and the manufacturer is eligible to avail CENVAT credit of the service tax paid on such services.
8. Rule 5 of the CENVAT Credit Rules, 2004 deals with the situation of allowing refund of service tax in the eventuality, when the manufacturer is not able to utilise the CENVAT credit. In the case in hand, it is not in dispute that the conditions of Rule 5 read with the notification issued there under have not been fulfilled by the respondent. However, the refund claim has been denied on the sole ground that the disputed services cannot be considered as 'input service' for claiming refund of service tax paid thereon. Such ground of revenue-appellant is not in agreement with the definition of 'input service' in view of the discussions in the foregoing paragraphs; and thus, the disputed services merit classification as 'input service' for the purpose of Rule 5 of the CENVAT Credit Rules, 2004.
9. Therefore, I am of the opinion that there is no infirmity in the order passed by the Commissioner (Appeals) and accordingly the same is upheld with consequential relief, if any, to the respondent.
10. The appeal filed by the Revenue-appellant is dismissed.
(Operative portion of the Order was pronounced in open court) S.K. MOHANTY JUDICIAL MEMBER ssk 4