Karnataka High Court
Commissioner Of Central Excise vs M/S Stanzen Toyotetsu India (P) Ltd on 8 April, 2011
Bench: N.Kumar, Ravi Malimath
._ 1 _. IN THE HIGH COURT OF KARNATAKA AT BANGALQRE DATED THIS THE 8?" DAY OF APRIL 2011g.]'j<«.._T'~'--,_ PRESENT THE HUMBLE MR. Tusififié';\:.._;<L;TM;aTTi.:_': '-- T V' AND _ I THE HUMBLE MR.3us'Tz§':'E RAv:"Txa"A'L:."_MAT;;TVV CEA.NOS.96 or 200$?.C--,iW-'_V97f2O0.§.T.398/2009 99/2009, 124/2099; k.1V'2n.£;/2'~'O¥O-V9fl>',. " IN CEA,NC). BETWEEN:€ A M x Bangal'Qre'- --'III Co'mrTnisS'i--Q__ri'era'te Bangaioref ~'~ S60.__OU.1~.. "APPELLANT (By S.ri..T.N. Ve_. nka£a é-edaty, Advocate) 'M/'s}--..St:érééen'Téyvotetsu India (P) Ltd., P!dt44No..2Q,; j'?3u§!ding N612, Bidaifi I"ndu'stria¥ Area, Bidadi ?ost, "-».Banga'i<.>;#s;= (Rura£) District -« 552109 .,,.F<:ESPONDENT "x_A'(Sy KS. Ravéshankar', Adxsecate} L/A This CEA filed under Section 356 of:--t1?:éj"-éi;e-:$E&-5:' Excise Act, 1944 arising sut of the Centraf E><Cise'ATCt,41§44_é arising out of Order dated 31.12.¢2OU8_- ;5és's»e'd ":'njFtn-al V' Order No.1419 to 1422/2008,:"pr3'ying'«._to -.:ie<:V:d_e"' the substantiaf question of law stated 'eh'erein;»._set'asideé the order passed by the CESTAT,?._ South >;5:A:)n'e " Ben"<:h','-, Bangafere in finai erder N0;'1ri%19 to'-1422/2'QG8.'evate::f 312' 12~2008 arfsed in Appeat No'-;s.E}"236/20--Q_8,win; the ends of justice and equity. ' ii IN CEA NO. 97 OF 200?) AA " BETWEEN C0mmissiojn"e%* gof: "Cent'ra~£gE_>€i:iVs}::V, ' Bangaiore ~-.1111._C9mm§s4si0ne_ra'te Bangafer-ev S60 V = gwrt)' 5'/5~%"' § (By S . v\_fe'r Advocate) AND A' % V V M/,s;5eSt3fiZen T<5y'o.t_etsvu India (P) Ltd., A 'A =PIo't NoE"20",' Building No.2, Eiéads -.I_nL:!su's_tr%a_¥ Area, Bidadi Post, *s...Ba_nga!,Q're (Rurei) District - 562109 ....RESPONDENT
(B\,:__$ri iiavéshankar, Advocate) >§<>i<3i< " Tfnis CEA flied under Section 356 ef the Centred '-- _E§}<_CESf3 Act, 1944 arising Gut of the Centrai Excise Act, 1944 erzseng out of Grder dated 31/12/2008 passed in Fine! Qirder N0.l419 in 1422/2008; praying to decide the ~-substantial question of Saw stated therein! set aside the order passed by the CESTAT; South Zane Bench, 3?/' Commissioner of Central Excise, Bangaiore --~III Commissionerate ;
Bangalore ---- 560 001. c (By Sri. T.M. Vankata Reddy, Advocate) AND M/s. Stanzen Toyotetsu India (P)f1 Plot No. 20, Building No.2, Bidadi Industrial Area, Bidadi' Post, " _ > Bangalore (Rural) District - '.-..V.A.i§5ES«i?O'NDENT ' (By Sri. K.S. Ravishankar, A i This CEA filed u_n;ier_ S.ectio'n"v)3'5.G---"'of the Central Excise Act, 1944 'a_risin;g ou't~oF.l:iie'Centi:ai' Excise Act, 1944 arising out of Cir<l'er "dated 31/.12,é'2£}Ci8 passed in Final Order No._.1zif'L9_ 1--tot'-_ 1-'l:'_2:.;"/i--3.?_OC*--"8,'--«,_'praying to decide the substantial _Vqu:estion"' of_VVliafw_statetgl therein, set aside the order _,piasséd_ ._the-._CES-T.A,.T;' South Zone Bench, Bangaziore in'-final 'order"ri\.lo.14~19 to 1422x2308 dated 31- 12-zoog arised' 'iii'-;4+\ppeVaio.__N'o.Excise/235/2008, in the ends ofjusticeand e'q.uit\,<'.'.
IN Ci§fil.NO.12;i"@FV,2_QG9 Corn.rniss'io'_ner)::of Central Excise, Bangalore _-9-£11 Cornmissionerate
-V Bangaiore ---4 5613 (301.
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'~ am' 212 r 'e».:(l3'g-.S;ri.V;i".M. vankata Reddy, Advocate) tr-eiatior: te manufacture ef their finai ereducts. This cm filed under Section 35:; of thie~._:CeiritVrai Excise Act, 1944 arising eut of the Central Exci;3e_Ar:.t;- 1944 arising out of Order dated 01/05/2089 pa_<3i;ed""i-h"--..i?i1'~:.:gig Order Ne.573/2009, praying to decide the substanitiei question of iaw stated therein, setmasi<:ie -the"'e.crd.e'r'-p'a,ssed"
by the CESTAT, South Zone Bench, Ba'rt:ga*i.ere i.n_"fir_;a_i"o"rder NO.573/Z009 dated 01/05/2309 f"a:'iS€f.i ii': V No.E><cise/St/68/2009, in _E/95/c29,--,in the,ihteress--~ior..% justice and equity.
These CE!-'\'S coming -for this day, N.KUMAR 3., deiivered'i:.he roVi"ié'w:hg:g'ii. 'jut; "Mi:ci~;iT_.i' ---
All these::,:§i3peiais€» by the revenue chaiiengin:;"rh_e. which held that the assesses"'a.re'::ent:i:iiiederecfit on the service tax paid transportation charges, rent-'a~caVh"3chvei'ne an,_ci'C§:"roup heaith Insurance.
2.' The '---assessees are manufacturers of parts and »aCceVss.eVries.,:é"ef_ motor vehicies faliing under Chapter in:3?'e8'9e'oe"_tr%ar'A*éhe Centrai Excise Tariff Act, 1985. They are
--V aise" avtxiiriex Cenvat credit ef duty paid on inputs, capitai ij».,geo~«:iAs and service tax paid an services used in or in 'E E/it
3. By the scrutiny of the records; the s'<'e§:enue found that the assessee had availed and u:ti~i--i:_ed.__'__i'§é?;;§Li.i; service tax credit reiatihg to canteen servjce's--... '"?hey alsa noticed that the assessee had avaiieda: id"'sgti'1§'iAze_id"t§':ei'ihVpd't service tax credit reiatihg to»Reht~a'-{fab S€I"}f§CG.3i'!:d :§h"tihe"~iV Group Health Insurance serviiifgeisy Thef'ef:0fe:.Va Cause notice was issued tohthe to show cause as to why the avaiied in respect of ou'td'Cs«AQ:i?'catering; $ervice and Group Heafth be treated as wreng availhaiehit service credit and the same vsheeidw under Rue 14 at the Cehvat Credit Ruies..V_:'20.O.4AAa.hd"':aiso interest and penaity on the assessee gave his repiy and contended that aii.-t~h_e"s~et services was avaiied by the assessee in or in i'eIati'e:f;__A«:'to the manufacturing activity and therefore falis ,.,.4'_"wi.th"i'e the éefihitieh at "input seivii:e"' and therefere they t// mari-'ufacture or as a part of business activity for premetéhg . i K' have rightiy avaiied the benefit of Cehvat credit ae'd_ they requested for dropping of further proceedings: ":He{%}e§?er, the assessing authority overruimg the said' proceeded to pass an order hoidéihg that-'thew.'e£s:sesVse'e.» hes availed and utifized Cenvat credit':'wr:e'h§dEy interest and penalty. Agdr.i_eved ._thelseid~--;vVtirdejr thee assessee preferred eh appe-alt.""jto"'--~the 'C0'mmie.sioner of Appeals who dismissed the order of the assessing4_:at;thority;'~:f::Aggr%eVtred same, the assessee VVfr}{[';una}_ ._ -- note of the Judgment ef the Trrburnesr in £CCE vs. CABLE CORPORATIOFN OF4;1Ex'I:§IA.Vo'n__Vt'h"e point and also taking note of the .de'fihit'i§':1jefp_}nput's'erv§ce contained In the Rufes heid that Vs~é.r:ee' service is used for bringing employees to :nre..ri< i_n*t.h.edfactery for manufacture ef godds it is te be AAconsizde:;ed as if used Endiretztiy in reiatioh tp the re.sianeet of wrong avaiirnerit of Cenvai: Credit; ~10- the orcier passed by the original authority as weii're"::.the appeliate authority were set aside and the~«~~-bienlefitfit Cenvat credit was restored. Aggrieved saimei revenue is in appeal.
6. Sri T.M.Venkata'""Red»dy, ttie i'ea-rneigi Veounselw appearing for the reiQe.n_ue'.'assaiVi-Iiiijério"the «irni:5'uc_'jVneci order contends that the ciefinition as contained in Ruie 20} diti Rent-a~Cab Service o=:r" and therefore the Tribunai"'wasthing':error:'.Vpi'n:V'hto'iti'i'ri~g"§ that those services faii . V _ . _ .. he withirfithe'defin'itie_n service and in extendin U2) benefit to'«-the assessiieeué' He aiso contended that those ser~..i;ices~ are 'iri,tvheé,nature of weifare measure to the it has nothing to do with the manufacturing aetwitgii iota_ti*i.eV'assessee. Therefore he contends that the orifier of' the Tribunai is iiabie to be set aside anti the assessee is liable to pay duty, interest and penaity, in t/ g /\\r
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fir'! Per Centre, the learned z:e__Lmsel Srl l<.S.Revlshem<ar, appearing for the assesee CQ:'.§;é:"~it_i§'€Ci that all the afereseie three services are essessee te its employees and it fel.lsp_wEtl"2;'ri"l:'l':e'_x:le?Erféltieev of law: service in as much as these s'e:vlces_ are z,§seleléE:>7:;_:
the assessee indirectly er in :*el'a:.len ti: the rr?;§3h§:fa-egure ef -. ' final products and Cleerenee fiem the Slate of removal enVd"-..zV.E':_§4l.?0f,V?%eul"l':i.'f§'l"lt,l'_in the Dhrase "a<:tlvétEes relatlngv' Vege'e.hl:§ained in the inclusive pee: 1gl"§e'i*efore the Tribunal was erder passee by the euthorffifes._ l:ref:zefi'l:, He also submits that the TrlbL'£nal"stelree§:'eAe§%%.,,.%?l;lé.'.Country have taken the said view';eed..there'f<;>jjeVno ease for interference with the order :e:'.l;_lf*{e T%§.l;m9_zf1;'::.l._Es made eut .'."VlTE%ese appeals were edmlttee lie eeesleer {he 'Vfeliewlne'substantial qeestéens ef law:
Whether tee Canteen services; previdee in the feeieeg ef {lee Mfs Steezer: Teyetetse Emile {P} La}
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Lt<:I., through the/outdoor Caterers, was anjnput service, in er in refaticm to manufacture; .w%J:e«%:_?%eVr direetfy or infiirectiy, of the fmai g3re;%;'--'C;§:i:sA,; * the meaning and <::>m;3re_her;_s%c:n_-'e:"'Re_§e '2r{I7_§.Vef_ 2 the Cenvat Credit: RUEES? 25AO4=€{_?s Av; , Consequently, whet'fi:e:*-.V.:he'CeVfwa:'s;;ez:i'§'ii~-..<3F-'lthe = L' service tax, so paEd.__f5'r,'r'e_;;eévihg«.V:_EjeAfoutd00r caterefis serviees' by}Lthje(n 'f€§sdpmviding canteen servEces.~.to thAeé'.*».:ereg.':IQQyees,stwas eiégibie fer avai_i.r§7en;f a_wp1d "uii'r:;;atig_>r.=j;§,n teens cf Ruie 3 read vnth gins ggfi §n§"é:fie 9 tfiereaf?
'vV'heéh'e"r;~~._*g:'he '{;T._Lj'st:Qms;, Excise and Service Tax 'A::?£:4-'ee%EaieV-- ".?f;'§.:§'é;2*--%ff}'é¥; South Zenaf Bench, Bang2a§e.:fe;V'wh é§e passing the Order NO: 1419 ts °i4é;g2008 dated 3i2£2e2®O8{ had prepefly 1 their appeéiate functéon, whife deciding .._:'§'ée.$li;;3;3ee§ Ne, E5233 to 23652808?"
E//
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and secusity, inwaraj transportation inputs er cepitai geeds and transeertetioe upie the péece ef rem0ve--§";:"
ii}. As is dear frem the def:%:"ei::<§_h'efi'y by the manufacturer whether»sd§rectEy--.AQr*._End§re,<;;ef§V"%tz VO'*f %"i'vE refatien to the manufacture input: service. Various sesixz'_:ces" emr'e m €h'e definition expressly, as C{}f'7S'C'itU'(i§t'1f'_Z}JaISC) Endudes traesportatéon;~'e':%««£.VL§V1%":pué's and outward transportatiééje Eerneval. Therefere the test is ut§i\§ :e'd'V: by the essessee is for the Such service may be uiiiézeqdéreiiiiyfer}-n:§2'vfeVC%4y, Such service may be in the te<vaznsper%:'e'ti*Qn of inputs or Capital gases; ue-to s_t%i'es.f'2:Ct::.rjj/A :>":'e_h*;--%.ses er if the fine? predect is removes frem the,_'feci0_r;2'V'e::>_remEses fer eutwerd iraespertetien up~%:e the 'piece ef iemovai. it is an éncéuséve éefinitéen. The services i "«. :*;:ee't~%_eee<:i in the Secéiéer': are eeig: mesiratiafe am it is net "';<;L;eF:e"eerk}ECe'A'.
exhaustive. Therefore when a partieuier ser\;i<;e'e',_%'as;:t mentioned in the definition eiause is ut%%ise_§é""'b.f>{'~..'.§5€3. 2 essesseefmeeufeeturer em service tax "
eerviee is Cieémed as Cenvat Creciiéé, are the ingredients that are i:eu'::«e_. set'iVs';f_%:e"::' for credit, If the credfi: is eva%%ecf»"v'V%'t3{,;;_V"v:§'\e nie'sw.z,§_%fa'e;:iuFeflfltherz the said eervice sedge'. f:§e_e».§§'au_:i:1zee "by the manufacturer direectiy <:::fAVV_i;izv:'¢§EVsjeLs.;"'V?;vE yflLEe"'*e'k'x'»§hJ._eeiation to the manufacture in reiation to actévmes lfe./33;}? we Qf these twg tests e VV'eervEce fefis within the " » L-. rvx E, e'eflnE%:ier'é'Ve'fe §:s;>_ut..V'vee:~:;_§:e" aufi 'me manufacturer is e%EgEb§.g..re a\;/'e§..£ €:e.§'2ve"E :%ea;: of the service tax paid on 3; .A'§T'$..~:a§se ueefué to refer fie Ci-'aS---4 Staneases whe":=ein..__eEi-téie eiemersts ef Caste wh%<:?'& are required is be "---D€r:c§e:;ded'V--"in the Coating of finai preeuei have been . e§z':';mere:?:ed. E: eeeesa es ueeer : -
'V1.1. Cost of Production: Cost of prc>duct§or;1 "»e shakl consist of materée: consumed, c:':i~;--*e§_<;,V'::.__'__e' wages and salar%ee,, direct e:><;::enSeS_..,v_A"v2;.<3r§<.$ é everheade, quaéity controi <:o3t,_HE*e,se_er'%ih=_a'r:{,in__LW deveiepment cost, packeirig cost, "es-dm§neE.e"i:f;$té\2'e "
overheads reiatmg te erfideicfiene v"TO'V"e-.9%Evfle;:et cost of ,{3FC)éL:C€3é:{f':,_ 0f'V g§::tc>edé;,.e'%~s.patchveAdV Vfor Ca ptive conga m ptzjeté/', ,a us§trrs'e,rit stock of vxz<>r'%<~ir1%;";:4r':'gj::.e's~s,"-fén§s%*Ted"'g.eeéiev,.recoveries for saéeszef s;;f:t.:ae,'wa4§:§teVge,'*eicjg,shaii be made. .i3E're2f>*:__ks;a§€5'*..e_::--dIsaiaries shaii inciude house .rer1't--aE'%dw_e%'2-rgegyovertime and incentive '9eeymeVnt:..V_éffi?a'deV'to empéoyees directiy engaged iii' the manufacturing activities.
sf prevident funds and ESES B.:3':%ue:fe><~gratée payment fie empieyees ?"r<:§v%sEons fer refirement benefits sum as greiuity ene sueerermeatien i r' Medical benefits ,« Subsidized food ,»~ Leave with pay am %':<3EEday eayment r Leave eneaehment ,» Other aifewances sud? 3%, e'd'£25'7~.3AA<ia'ei',,0i"«?.VV aéiowaece, c0nveyance*e:Ii0waAfice payabie to empteyees fine-'che'L'~n'dr.ma§ e'Qurse..»'ef business et<:."' CANTEEz§_g.g--gv:C:§ 12, iii i}§a:'mihen the assessee g,:>revEde:3":*5utC£§:f:;r gee";-f:e"e:7&"--%"aciE§'t'ies"V:because Qf a statutory ebligatiee Lmder $eCt%en 46 of the Faeterées Act, ii: £:)e:c>Am»e'::..~7a condition of service as far as 'V..,:he._'e'}tfi;§§_ey'ees eEe'ce.n«~'*erneG§ He has eaid the S€§"\/%C€ tax em b'a3:d'ee'r:VCe h"E--een eervéces. The said exeenses incurred bgmfse assevieteee WEE? aiso be taken Ernie eensifieraicéoré eefere 'g_fL><mg' pvrice 0? the flea? ereduct, It may be a weifare f"mea":§ure but Ceria%n:%g it £3 set 3 afzheritgx erevided by the eiepieyer fie {he emeéczgseesg. E1': is 53;': eeeyeue Eega: 5/ E M18...
obfiégaticm émpased on mm. "fhe Casi: incurred in rendgréng such service wéif be incéuded in the cost of ;3r0duCtiQ§'1;:.f--. '*,_ RENT-A~CAB SERVICEJTRANS3Q_R'fAT':C'E*§i"j: TjV 4 13' Rem:-a--Cab servéce is to these workers to reach * L' which has a cfireci beaimg ohVgfésv:_§T'u3_;::ufs§{:i::§fé§:gJ%:zctivity. In fact the emp%oyeé""-R';..ai?.sQ{, gs:§i:§¥:§gs'§j--..tQ cenveyance auowances It aIs_0-yfouid"'f{;:;-rift of service and the .._4--x*L{?;f5':"'uflifsveyance sf the emp{oye§3s_ Va WEE! be taken into conséde}-iatéorz Av§fi'§»i7t*%<:§§'ejmp}?3yfe'es in fixing the price 31' the finaé ;:)I'OCf'L;££4f:j.ss By 'kiss of imagination can it be C<3nst;jLiéd.as a"w..éE'areVmsasure, It is a basic necessfiy. .e'ns:;E€.AQih4a"t...the w<3r'i< farce comes on time at the work §'§aC'4i5,_%£fie3:'Aeg.:yj;:§.§3%'érs have taken thés measure which has a V VV _ a'ireC%';--befirirsfien the manufacturing aatévitys At any rate if: z/ is 8f3s'.&CtiV§i§;Cy reiaétirzg to business, §Ww+ T.__"i;%VSu;A"ance fixct. Q48; §TiaF?§3f€S ma: S{3i"}j€C'£ is the %./ .._ ..
INSURANCE HEALTH POLECY
14. in so far as Insurance Coverage_,v~%i»:>"~.._ t5fie3 empiayeeg is concerned in the Course sf em;:EQ~;§i_?1:e'r%t.'.i%fi_iré%2_ . empiayees suffer injury or dies, there is a \:*2'C'a:"~%é%:%SV'i'Ea¥:;%VE%:y L' I émpsged an the empioyer to C0mp§:3nsa§te.. the empioyer empioyg its %;ra"r'is§3V'c:»r':ati«f§'?1A»{§a..<;éV£i%.g,» En Grder to cover the risik risk cf workers who are c0vére3..5 i.r7 estabfishment. He has to take'.'fh'e which the vehicie the workmervs Com;3en§;j:%:o'n.V{}i'.%EVf:: __§}é the Insurance Poficy coverirég tiffi:-1 The empiayee State Insuran<: e"».}:§{Ct heath of the emptoyees aisQ"4.;js3f1d;..casté'..§_fi'obEV%gation on the empéayer ta g3r0vide "ir2:+:_L;%an€::~é £»_ eA%'\{i::es. Under these Circumstances, this Group 3:55-T{_:__:*g.3r%z:é"--E"%<:§e3i1't:VE'i Pcaéicy ihmsgh is aEso 5 weéfare measure is an '%:2b§§g;'ét%3§*é which is gas: under the Statute that the . emg3.Eoyéa:"r.. 'has; ':3 sbeyg Sectéim 38 cf the Empioyeeg State
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provisions of the Act; an empbayees in fecterieeper estebiishmemts fie which this Act eppéies shaié V' the manner provided by this Act. May be aise have to Centribute but the:v'Je%i§';:§eéye§ ebéigation to take an Insuraeee p e§i__<:;re_a"ed share, Therefore; the said mPeE%cy 'V taken by the assessee wéemd eenstitute an activity reiating :3 speeificaiéy inciuded in they i'€i{:§L _i'Z sewEee.:':ie€éVré'2'E%_g:.r3fh
15. Therefore, ' m'e%e§.y"'be<:eu'se these services are "set e><;>re*5s_%§?' the' de.;r:E'£Een of éepui: service E1: cannot Said' t.ha'€:"tf§e--xg_ ":::<:3 not constitute input: service and §%'a'eeAasses2:ee"i?5 net 'emitted to the benefit ef CENVAT "{jhfe.c:t, 3 of the Cenvai: Ruies, 2034, V'e._.§';§~e-eiVfE::e:'§'E~rge' esrievides that the manufeeturer of finaé ere"e_ue:_:':.f€e%A§ he eiiewed fie take eredétf the service tax §e\.{§eb%e..--e:mder Seciien 65 of the Finance Act and paie en We ::-§:..§5e;3:.5t sewéce reeeévee by me meeefectufer 0? e flee? é/
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product Therefore under the scheme of the Ruies, 2604, the serwce tax paid on ail fcheeev which the assessee has utiiized :i'E%"eCti'y ac)'; ir7.dT.;fect_§y"E%é 0:'. in reiation to the finaé preduct § s1__e':3V:.itEed. _:{3"e%aiE9r*:_ "i:§§§e~, credit. Therefcsre, the 3udg?r':veV.fi'i. of .i:'r'2--»:--3 T~:"%€5_=ue'e»Z "E'S siege? V' and vaiid and is in acC,<3r.;;_iancee"iA;E:"i§: Ea"w.._and de'es'"not suffer from any iegafi infirmity '»Az'hE?:'21':"c'a§is.LT'§€i_'::.Ve'ai3y inztefiererzceg Hence, the guestantiaézi q;z;e'S'céefiSvL"_je.f §a"fJvVframed in these appeais are azj1's:v\ie're_d 3-ge'aif1"stV3§hév--:»re.\.!enue and in faveur of the asiseéseeef;
RS"kg"~