Custom, Excise & Service Tax Tribunal
M/S. Strides Arcolab Ltd vs Commissioner Of Central Excise, ... on 5 December, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/27371/2013-SM, E/27372/2013-SM, E/27373/2013-SM, E/27374/2013-SM [Arising out of Order-in-Appeal No. 200 to 204/2013-CE dated 19/04/2013 passed by Commissioner of Central Excise (Appeals-I), BANGALORE ] M/s. Strides Arcolab Ltd Opposite IIMB, Bilekahalli, Bannerghatta Road BANGALORE - 560076 KARNATAKA Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax BANGALORE-I POST BOX NO 5400, CR BUILDINGS, BANGALORE 560 001. KARNATAKA Respondent(s)
Appearance:
Shri Akbar Basha, CA HIRAGANGE & ASSOCIATES #1010, 1st floor(Above Corp. Bank) 26th Main, 4th T Block, Jayanagar, Bangalore - 560041 Karnataka For the Appellant Mr. Pakshi Rajan, AR For the Respondent Date of Hearing: 05/12/2016 Date of Decision: 05/12/2016 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 21393-21396 / 2016 Per : S.S GARG These four appeals have been filed by the appellant against the impugned order dated 19.4.2013 passed by the Commissioner (A) vide which the Commissioner (A) disposed of five appeals, partially allowing the appeals against the Orders-in-Original. Aggrieved by the impugned order passed by the Commissioner (A) denying the refund of service tax on input services, the appellant have filed the present appeals. Since the services involved in all the four appeals are same, they are being disposed of by this common order. Further in appeal No. E/27373/2013, there is an additional ground of limitation also.
2. Briefly the facts of the case are that appellant is a 100% EOU engaged in the manufacture of pharmaceutical formulations and preparations and export of pharmaceutical products. During the period April June 2009 and July September 2009, appellant filed refund claim under Rule 5 read with Notification No.5/2006 dated 14.3.2006. The assessing officer rejected the refund on the ground that the input services are not related to the manufacture of goods. Aggrieved by the said order, the appellant filed appeal before the Commissioner (A) who partially allowed the appeal of the appellant and rejected the refund of credit on the following services. Banking and Financial Services; Credit Distributed as ISD; Annual Subscription; Garden Maintenance; Listing Fees; Validation Charges; Project Management; Registration renewal; insurance; share holding charges; Xerox machine charges; housekeeping services.
Aggrieved by the said order, the appellant has filed these appeals before this Tribunal.
3. Heard both the parties and perused the records.
4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same is passed by ignoring the definition of input services as contained in Rule 2(l) of CENVAT Credit Rules as well as various decisions of the higher judicial fora. He further submitted that all the input services on which refund has been claimed have been used in or in relation to the manufacture of the goods. He also submitted that the refund claim has been rejected mainly on the ground that the appellant failed to produce the sufficient documents whereas the appellant has all the documents which can clearly establish the nexus between the input service and the manufacture of the goods. He further submitted that the impugned order does not have any specific findings under the ISD head. In support of his submission, the counsel has given a table containing the nature of service and the nexus as well as the decision, which is reproduced herein below:
Nature of Service Submissions Supported by Garden Maintenance These services are used for maintenance of garden, which is mandatory under Factories Act for the Pharmaceutical industries. They are not beatification per se. Therefore the Appellant is entitled for Cenvat credit.
1. CCE Vs Lupin Ltd 2012 (28) STR 291 (Tri)
2. Mukand Ltd., Vs. C. of C. Ex., Belapur 2016(42) STR 88 (tr.-Mum.)
3. Sterlite Industries India Ltd., Vs. C of C, Ex., Madurai 2016 (41) STR 867 (Tri.-Chennai)
4. HCL Technologies Ltd., Vs. C. of C. Ex., Noida, 2016 (40) STR 369 (Tri. Del) Xerox Machine Charges These services are used for maintaining photo coping machine, therefore very much necessary for processing of documents used by quality control dept. besides for accounting and administrative purposes and solely for the business of Appellant. Therefore the Appellant is entitled for Cenvat credit and refund.
1. In case of Parason Machinery (I) Pvt Ltd Vs CCE 2009 (16) STR 20 (Tri- Mum.)
2. MEGMA DESIGN AUTOMATION (I) PVT. LTD. Vs. COMMR. OF S.T., BANGALORE 2015 (40) S.T.R. 800 (Tri. - Bang.)
3. BAL PHARMA LTD. VS. COMMR. OF C. EX., CUS. & S.T., BANGALORE-I 2014 (34) S.T.R. 752 (Tri. - Bang.) House Keeping Services In terms of GMP (Prescribed Good Manufacturing Practices) and statutory obligations, every Pharmaceuticals Industries Should keep the premises / plant / production area clean and hygiene in terms of ISO and Regulatory Compliance.
The appellant wishes to rely upon the decision of M/s Loreal India Pvt Ltd Vs CCE- 2011 (22) STR 89 (Tri-Mum), where it was held that activity is in relation to business and hence are eligible for cenvat credit. Therefore these services are very much used for manufacturing purpose indirectly. Therefore the question of denial of credit is not sustainable.
1. Commissioner of Service Tax Vs. Jubilant Biosys Ltd., 2016 (42) STR 729 (tri.-Bang)
2. Hinduja Foundries Ltd., Vs. CCE Chennai-I 2016 (42) STR 494
3. Megma Design Automation (I) Pvt Ltd., Vs. Comm. Of ST., Bang 2015 (40) STR 800
4. M/s. Reliance Industries Ltd., Vs. C. Ex. & ST, LTU, Mum. 2016-TOIL-2392-CESTAT-MUM
5. HCL Technologies Ltd., Vs. C. Cus., Ex., & ST, NOIDA 2015 (40) STR 1124 (Tri.-Del.) 4.1 The learned counsel also submitted that bills of certain input services were received at the corporate office and the corporate office after registering as an ISD has distributed the credit to the manufacturing unit and appellant has also given below the details of those input services with nexus distributed as ISD to its manufacturing units. Nature of Service Submissions Supported by Clearing and Forwarding Includes loading and unloading charges, hamali charges towards procurement of import material which are used in manufacture and export of finished goods. Therefore, the same is very essential for manufacturing/ business purpose and eligible for Credit and refund.
1. M/s. Reliance Industries Ltd., Vs. C. Ex. & ST, LTU, Mum. 2016-TOIL-2392-CESTAT-MUM
2. Heera Overseas (P) Ltd Vs CCE, 2012 (26) STR 545 (Tri-Bang)
3. 2013 (29) STR 385 (Tri-Bang) C. Cubed Solutions Pvt Ltd Freight Inwards / Outwards Service tax paid on expenditure relating to freight inward and outward.
The Appellant submits that in the case of export, port is the place of removal
1. Delta Energy Systems Ltd Vs CCE 2013 (31) STR 684 (Tri-Del)
2. Adani Pharmachem (P) Ltd Vs CCE 2009 (238) ELT 179 (Tri) Installation Charges Charges towards installation of machinery and equipment in manufacturing area.
Maintenance and Repair / Annual Maintenance Charges towards maintenance of equipment, machinery, computers, etc. at regular interval (Annual/ Quarter/ Monthly).
Machinery includes Plant and Machinery, Compressor, Air conditioners, AHUs, Weighing balance, Spectrometer, Boiler, DG set, etc. which are used in plant for manufacture of the finished products.
Regular maintenance of the equipment, plant and machinery is a mandatory to comply with guidance of the Regulatory Authorities.
Without the routine maintenance activity, the plant will not be able to function effectively/ efficiently for the smooth manufacturing of final products. Therefore, the Annual maintenance is an activity directly related to the manufacture of finished goods/final products.
1. M/s. Reliance Industries Ltd., Vs. C. Ex. & ST, LTU, Mum. 2016-TOIL-2392-CESTAT-MUM
2. CCE Vs Aricent Communications Pvt Ltd 2013 (31) STR 548 (Tri-Bang)
3. HCL Technologies Ltd., Vs. C. Cus., Ex., & ST, NOIDA 2015 (40) STR 1124 (Tri.-Del.) Security Charges Security charges for factory building and office building.
1. CCE Vs Deloitte tax Services India Pvt Ltd 2008 (11) STR 266 (Tri-Bang)
2. M/s. Reliance Industries Ltd., Vs. C. Ex. & ST, LTU, Mum. 2016-TOIL-2392-CESTAT-MUM
3. HCL Technologies Ltd., Vs. C. Cus., Ex., & ST, NOIDA 2015 (40) STR 1124 (Tri.-Del.) Technical Testing and Analysis Services Charges towards testing and analysis of raw material, packing material used in the manufacture of final goods. These tests are compulsorily required to be fulfilled as per statutory regulation and GMP requirements.
1. CCE Vs Lupin Ltd 2012 (28) STR 291 (Tri)
2. UTOPIA INDIA PVT. LTD. Vs. COMMISSIONER OF SERVICE TAX, BANGALORE 2011 (23) S.T.R. 25 (Tri. - Bang.) Telephone Charges Charges towards telephone to factory, office, etc.,
1. CCE Vs Lupin Ltd 2012 (28) STR 291 (Tri)
2. M/s. Reliance Industries Ltd., Vs. C. Ex. & ST, LTU, Mum. 2016-TOIL-2392-CESTAT-MUM
3. ALLIANCE GLOBAL SERVICES IT (I) (P) LTD VS. C.C., C.E. & S.T., HYDERABAD-II 2016 (42) S.T.R. 438 (Tri. - Hyd.) Advertisement Service towards publication of quarterly/ annual accounts, printing of literature, promotion of brands, etc.
1. CCE Vs Lupin Ltd 2012 (28) STR 291 (Tri)
2. CCE Vs Deloitte tax Services India Pvt Ltd 2008 (11) STR 266 (Tri-Bang)
3. 2013 (29) STR 385 (Tri-Bang) C. Cubed Solutions Pvt Ltd
4. HCL Technologies Ltd., Vs. C. of C. Ex., Noida, 2016 (40) STR 369 (Tri. Del) Audit Fees Services towards compliance and Plant audit under various statutes which are mandatory for Pharma Industry and Statutory Audit (Internal/ External).
1. CCE Vs Lupin Ltd 2012 (28) STR 291 (Tri)
2. HCL Technologies Ltd., Vs. C. Cus., Ex., & ST, NOIDA 2015 (40) STR 1124 (Tri.-Del.) Banking and Financial Services The Appellant submits that these services are used for the purpose of meeting its day to day banking operations like DD charges, bank charges on loan etc. As the definition of input service clearly covers financial services, therefore the question of denying refund on the same is not sustainable.
1. Wipro Ltd., Vs. Union of India 2013 (29) STR 545 (Del.)
2. Commissioner Vs. Jeans Knit Pvt Ltd., 2015 (37) STR J244 (Kar)\
3. Commissioner of Service Tax Vs. Jubilant Biosys Ltd., 2016 (42) STR 729 (tri.-Bang)
4. 2016 (41) STR 994 (Tribunal Bombay/Mumbai) CCE Vs Rosy Blue (India) Pvt Ltd.
Business Auxiliary Services Credit available on Service tax paid on Import of Services/ Reverse charge mechanism for the services received by Appellant such as Export sales Commission, Professional Fees, Brand Fees, etc. which are directly related to manufacturing activity.
1. Commissioner of Service Tax Vs. Jubilant Biosys Ltd., 2016 (42) STR 729 (tri.-Bang)
2. VST Industries Ltd., Vs. CCE, Hyd-II 2010(262) ELT 749 (Tri-Bang) Catering Services Charges towards supply of food and catering for staff and plant operators which is statutory requirement as per the Factories act, since. The Appellant has more than 250 employees.
1. Stazen Toyotetsu India (P) Ltd., 2011 (23) STR 444
2. BNY MELLON INTERNATIONAL OPERATIONS (I) P. LTD Vs. CCE (A) Pune-III 2013 (30) STR 567 (Tri.Mumbai)
3. Semco Electrical Pvt Ltd., Vs. CCE, Pune 2010 (18) STR 177 (Tri.-Mumbai).
4. Commissioner of Service Tax Vs. Jubilant Biosys Ltd., 2016 (42) STR 729 (tri.-Bang)
5. M/s. Reliance Industries Ltd., Vs. C. Ex. & ST, LTU, Mum. 2016-TOIL-2392-CESTAT-MUM Consulting Services Services towards Inspection, retainer ship, advisory services, certification, investor relations, etc. These services are used for obtaining services in various fields like, production, HR, legal etc.
1. CCE Vs Deloitte Tax services India Pvt Ltd 2008 (11) STR 266 (Tri-Bang)
2. M/s. Reliance Industries Ltd., Vs. C. Ex. & ST, LTU, Mum. 2016-TOIL-2392-CESTAT-MUM
3. M/s. Heartland Bangalore Transcription Services (P) Ltd. v. CST: 2011 (21) S.T.R. 430 (Tri.-Bang.) Courier Services Charges towards sending and receiving documents/ materials/ parcel/ samples in the course of business.
1. CCE Vs Lupin Ltd 2012 (28) STR 291 (Tri)
2. M/s. Reliance Industries Ltd., Vs. C. Ex. & ST, LTU, Mum. 2016-TOIL-2392-CESTAT-MUM
3. HCL Technologies Ltd., Vs. C. Cus., Ex., & ST, NOIDA 2015 (40) STR 1124 (Tri.-Del.) Insurance Services These services are used for obtaining insurance on plant and machinery, which are used for manufacturing activity. Further, these services also include insurance to employees, which is a Statutory requirement in the terms of Factories Act, as the Appellant has more than 250 employees.
1. CCE Vs Stanzen Toyotetsu India (P) Ltd, 2011 (23) STR 444 (kar)
2. M/s. Reliance Industries Ltd., Vs. C. Ex. & ST, LTU, Mum. 2016-TOIL-2392-CESTAT-MUM
3. CCE Vs Millipore India Pvt Ltd 2012 (26) STR 514 (Kar)
4. UTOPIA INDIA PVT. LTD. Vs. COMMISSIONER OF SERVICE TAX, BANGALORE 2011 (23) S.T.R. 25 (Tri. - Bang.) Listing Fees Service in respect stock exchange charges, as the Appellant is a listed company. In terms of Stock Exchange Regulation, every listed company Is required to pay listing fees for various service provided by the stock exchange for various service Therefore the service availed by the Appellant will clearly fall within the ambit of financial charges, which is also covered within the definition of input services, therefore, refund on these services cannot be denied.
Appellant submits that listing fees being a statutory requirement, therefore the appellant is entitled for credit and refund of the same. Man power Supply Charges towards supply of labour and operator for production, packing, maintenance, storage and other services that support production of finished goods.
1. HCL Technologies Ltd., Vs. C. Cus., Ex., & ST, NOIDA 2015 (40) STR 1124 (Tri.-Del.)
2. Reliance Industries Ltd., Vs. C of C. Ex & ST (LTU) Mum. 2016 (42) STR 457 (Tri.Mum)
3. ALLIANCE GLOBAL SERVICES IT (I) (P) LTD VS. C.C., C.E. & S.T., HYDERABAD-II 2016 (42) S.T.R. 438 (Tri. - Hyd.) Professional Fees Fees towards inspection, retainer ship, advisory services, certification etc.
1. HCL Technologies Ltd., Vs. C. Cus., Ex., & ST, NOIDA 2015 (40) STR 1124 (Tri.-Del.)
2. COMMISSIONER OF S.T., MUMBAI-II Versus MMS MARITIME (INDIA) PVT. LTD 2016 (41) S.T.R. 869 (Tri. - Mumbai) Recruitment expenses These services are used for recruitment of employees, who are utilized for production and administration works.
1. Reliance Industries Ltd., Vs. C of C. Ex & ST (LTU) Mum. 2016 (42) STR 457 (Tri.Mum)
2. ALLIANCE GLOBAL SERVICES IT (I) (P) LTD VS. C.C., C.E. & S.T., HYDERABAD-II 2016 (42) S.T.R. 438 (Tri. - Hyd.)
3. 2013 (29) STR 385 (Tri-Bang) C. Cubed Solutions Pvt Ltd Rent Charges Rent mainly relating to factory buildings and office premises
1. Jeans Knit P Ltd Vs CC 2011 (21) STR 460 (Tri-Bang)
2. M/s. Reliance Industries Ltd., Vs. C. Ex. & ST, LTU, Mum. 2016-TOIL-2392-CESTAT-MUM
3. HCL Technologies Ltd., Vs. C. Cus., Ex., & ST, NOIDA 2015 (40) STR 1124 (Tri.-Del.)
4. ALLIANCE GLOBAL SERVICES IT (I) (P) LTD VS. C.C., C.E. & S.T., HYDERABAD-II 2016 (42) S.T.R. 438 (Tri. - Hyd.) Software Develop-
ment Charges towards up gradation/ development of software- SAP-ERP system such as-Production Planning- Procurement-Production- Finance etc. Commissioner of Service Tax Bangalore Vs. Yodlee Infotech (P) Ltd., 2015 (39) STR 695 (Tri.-Bang). Stock Exchange Charges Fees paid towards approval of ESOP Scheme for employees(Employee Stock Option Plan). This being a statutory requirement in terms of company law, therefore the appellant was entitled for credit and refund of the same.
Training Charges These services are used to the employees, in the area of manufacture.
1. CCE Vs Deloitte Tax services India Pvt Ltd 2008 (11) STR 266 (Tri-Bang)
2. COMMR. OF CUS. & S.T., BANGALORE Vs. SUPRAJIT AUTOMOTIVE PVT. LTD. 2015 (37) S.T.R. 408 (Tri. - Bang.)
3. Wipro Ltd., Vs. Union of India 2013 (29) STR 545 (Del.) Travelling Expenses Air travel incurred for the production, Marketing and Management personal for the furtherance/ enhancement of Business.
1. Dell International Services India Pvt Ltd., vs. CCE, Bang 2010(17) STR 540
2. CCE Vs Stanzen Toyotetsu India (P)Ltd -Kar HC 2011 (23) STR 444
3. Commissioner of Service Tax Vs. Jubilant Biosys Ltd., 2016 (42) STR 729 (tri.-Bang) Bio Study Charges These services are used for Bio study of the products which is nothing but testing and analysis, which is very much used for its manufacture of its final product, which is exported. These services being essential for the pharma company which was direct on impact on R&D for manufacturing. Therefore appellant entitled for credit and refund of the same.
4.3 Further, the learned counsel submitted that in appeal No.E/27373/2013, the refund has been held to be barred by limitation which is also a wrong finding returned by the authorities because the relevant date from which the period should be counted has not been considered properly.
5. On the other hand, the learned AR reiterated the findings of the impugned order.
6. After considering the submissions of the learned counsel for the appellant and the decisions cited supra, I am of the view that the services cited supra fall in the definition of input service as contained in Rule 2(l) of CCR. By the impugned order, the learned Commissioner (A) has not given any findings as regards to ISD as well as not examined the documents in support of the input services produced by the appellant. Therefore, in my considered opinion, all these four appeals are remanded back to the original authority for verification of the documents. Before passing the order, the original authority will provide sufficient opportunity to the appellant to produce the documents in support of their case. Thereafter the original authority will pass a reasoned order within a period of three months from the date of receipt of copy of this order. With these observations, all the appeals are allowed by way of remand.
(Operative portion of the Order was pronounced in Open Court on 05/12/2016.) S.S GARG JUDICIAL MEMBER rv 10