Custom, Excise & Service Tax Tribunal
Hindustan Zinc Ltd vs C.C.E. & S.T., Jaipur-Ii on 12 November, 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/51506/2015-EX [SM]
Excise Appeal No.E/52833/2015-EX [SM]
[Arising out of Order-in-Appeal No.24-25/(SLM)CE/JPR-II/2014 dated 29.12.2014 passed by the Commissioner, (Appeals) Central Excise, Jaipur].
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?
Hindustan Zinc Ltd. Appellant
Vs.
C.C.E. & S.T., Jaipur-II Respondent
Present for the Appellant : Smt. Sukriti Das, Advocate Present for the Respondent: Shri M.R. Sharma, D.R. Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL) Date of Hearing/Decision: 12.11.2015 FINAL ORDER NO. ___54255-54256/2015_ PER: S.K. MOHANTY
Brief facts of the case are that the appellants are engaged in the manufacture of Lead and Zinc Ores, which are transferred to their smelter Division, for manufacture of non-ferrous metal concentrate. For smooth transportation of ore from the mines to its smelter Division, during the relevant period, as a part of the expansion project, the appellant had arranged private Railway siding between Fatehnagar and Rajpura-Dariba. For the purpose of establishment of Railways siding, the appellants had engaged a consultant for undertaking survey and connected jobs and to submit its report to the appellants. For the purpose of acquisition of the land required for laying the railway siding, the appellant also engaged a Consultancy firm to rehabilitate the land owners with suitable compensation. For providing the above taxable services, the consultant paid the service tax and issued the invoice to the appellants. Based on those invoices, the appellants availed cenvat credit, which was denied by the Jurisdictional Central Excise Authorities on the ground that said services cannot be considered as input service, since there is no nexus between the services and the goods manufactured by the appellants. Pacing reliance on the judgment of Honble Supreme Court in the case of Maruti Suzuki Ltd. vs. C.C.E., Delhi reported in 2009 (240) ELT 641 (SC), the ld. Commissioner (Appeals) vide the impugned order, has dismissed the appeal of the appellant. Denial of cenvat credit in the impugned order is the subject matter of present dispute before this Tribunal.
2. Ms. Sukriti Das, ld. Advocate appearing for the appellants submits that the disputed services are confirming to the definition of input service, in as much as, the said services were utilised by the appellant for accomplishing the manufacturing business and covered under the phrase activities relating to business contained in the definition clause. To support her stand that the disputed services merit classification as input service, the ld. Advocate relies on the judgment of Honble Bombay High Court in the case of CCE, Nagpur vs. Ultratech Cement Ltd. reported in 2010 (20) STR 577 (Bom.). She also relies on the decision of this Tribunal in the case of RSWL Ltd (Fabric Division) vs. Commissioner of Central Excise, Jaipur -II reported in 2015 (37) S.T.R. 1074 (Tri.-Del.).
3. Shri M.R. Sharma, the ld. D.R. appearing for the Revenue reiterates the findings recorded in the impugned order.
4. I have heard ld. Counsel for both sides and perused the records.
5. In the inclusive part of definition of input service, it has been provided that activities relating to business should also be qualified as a service for the purpose of availment of cenvat credit. In interpreting the expression activities in relation to business, the Honble Bombay High Court in the case of Ultratech Cement (Supra) have held that definition of input service postulate activities which are integrally connected with the business of the assessee; that if the activity is not integrally connected with the business of the manufacture of final products, the service should not qualify to be an input service under Rule 2 (l) of the Cenvat Credit Rules, 2004. In the present case, it is an admitted fact that laying of railway lines between the factory and the nearest railway siding is a necessity of the business of the appellants. Without laying the railway lines/track material, the goods cannot smoothly be transported to their Smelter Division. Further, the expenditure incurred for both the category of consultancy services have been taken into consideration as part of the manufacturing cost of the finished goods for the purpose of determination of the assessable value. Therefore, in view of the principle decided by the Honble Bombay High Court in the case of Ultratech Cement, I am of the view that the service tax paid on the Consultancy services shall be eligible for cenvat benefit to the appellants.
6. Further, by applying the ratio laid down by the Apex Court in the case of Maruti Suzuki Ltd. (supra), the Honble Bombay High Court in the case of Ultratech Cement have also held that services having nexus or integral connection with the manufacture of final products as well as the business of manufacture of final product, would qualify to be input service, in as much as, there is no restriction in the definition of input service that the services mentioned therein shall only be used in the manufacture of final product and that the definition of input service is wider than the definition of input. The relevant paragraphs of the judgment of the Bombay High Court are extracted herein below:-
31.?In our opinion, the ratio laid down by the Apex Court in the case of Maruti Suzuki Ltd. (supra) in the context of the definition of input in Rule 2(k) of 2004 Rules would equally apply while interpreting the expression activities relating to business in Rule 2(l) of 2004 Rules. No doubt that the inclusive part of the definition of input is restricted to the inputs used in or in relation to the manufacture of final products, whereas the inclusive part of the definition of input service extends to services used prior to/during the course of/after the manufacture of the final products. The fact that the definition of input service is wider than the definition of input would make no difference in applying the ratio laid down in the case of Maruti Suzuki Ltd. (supra) while interpreting the scope of input service. Accordingly, in the light of the judgment of the Apex Court in the case of Maruti Suzuki Ltd. (supra), we hold that the services having nexus or integral connection with the manufacture of final products as well as the business of manufacture of final product would qualify to be input service under Rule 2(l) of 2004 Rules.
33.?It is argued on behalf of the Revenue that not only the ratio but the decision of the Apex Court in the case of Maruti Suzuki Ltd. (supra) must be applied ipso facto to hold that the credit of service tax paid on outdoor catering services is allowable only if the said services are used in relation to the manufacture of final products. That argument cannot be accepted because unlike the definition of input, which is restricted to the inputs used directly or indirectly in or in relation to the manufacture of final products, the definition of input service not only means services used directly or indirectly in or in relation to manufacture of final products, but also includes services used in relation to the business of manufacturing the final products. Therefore, while interpreting the words used in the definition of input service, the ratio laid down by the Apex Court in the context of the definition of input alone would apply and not the judgment in its entirety. In other words, by applying the ratio laid down by the Apex Court in the case of Maruti Suzuki Ltd. (supra), it cannot be said that the definition of input service is restricted to the services used in relation to the manufacture of final products, because the definition of input service is wider than the definition of input.
7. In view of the above settled position of law, I do not find any merits in the impugned order, and therefore, the same is set aside and the appeals are allowed in favour of the appellants.
(Dictated and pronounced in the open Court) (S.K. MOHANTY) MEMBER (JUDICIAL) Anita 0 2