Custom, Excise & Service Tax Tribunal
Saint Gobain India Private Limited vs Jaipur on 9 October, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO.3
Excise Appeal No. 55022 Of 2023
[Arising out of Order-in-Appeal No. 66(RLM)CE/JPR/2022 dated 23.12.2022 passed by
the Commissioner (Appeals) CGST & Central Excise, JAIPUR]
SAINT GOBAIN INDIA PRIVATE LIMITED : Appellant
Plot No. SP-01, Kaharani,
Bhiwadi Extension, RIICO Industrial Area,
Bhiwadi, Alwar, Rajasthan-301019
Vs
COMMISSIONER OF CGST & CENTRAL EXCISE- : Respondent
JAIPUR N C R Building, Jaipur, Rajasthan-302005 APPEARANCE:
Shri Ranjan Mehta, Advocate for the Appellant Shri Rohit Issar, Authorised Representative for the Respondent CORAM:
HON'BLE MR. SATENDRA VIKRAM SINGH, MEMBER (TECHNICAL) FINAL ORDER No. 51637/2025 Date of Hearing:14.08.2025 Date of Decision: 09.10.2025 SATENDRA VIKRAM SINGH
1. M/s. Saint Gobain India Private Limited, Bhiwadi, Alwar, Rajasthan (Appellant) are manufacturing Float Glasses both Tinted as well as Non-
Tinted and Laminated and Tempered Safety Glasses under Chapter 70 of the Central Excise Tariff Act,1985. During audit of their records, officers found that the appellant had availed Cenvat Credit of Rs.11,45,320/- on service tax paid on the invoices issued by M/s. Nettur Technical Training Foundation (M/s.NTTF) for the training provided to the students of weaker section as part of "Earn While Learn Programme"
under Corporate Social Responsibility. The department alleged that the said service is not their input service and hence, above Cenvat Credit
2 E/55022/2023-SMB was wrongly availed by them. After conducting inquiry, a show cause notice dated 10.04.2019, was issued to the appellant proposing recovery of Cenvat Credit of Rs.11,45,320/- under Rule 14 of the Cenvat Credit Rules,2004 (hereinafter referred to as "CCR, 2004") read with Section 11 A of the Central Excise Act, 1944 along with interest and penalty under Rule 15 of the CCR, 2004 read with Section 11 AC and penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11 AC of the Central Excise Act, 1944.
1.1 The said show cause notice was decided vide Order dated 30.06.2021 wherein, the learned Adjudicating Authority confirmed recovery of Cenvat Credit of Rs.11,45,320/- along with interest. He also imposed equal penalty on the appellant under Rule 15 (1) of CCR,2004 read with Section 11 AC(1)(a) of the Central Excise Act, 1944 and penalty of Rs.50,000/- under Rule 25 of the Central Excise Rules, 2002. Aggrieved with the said order, the appellant filed appeal before Commissioner (Appeal) who vide impugned order dated 23.12.2022, wherein he upheld the order of the lower authority and rejected the appeal. Hence, the present appeal.
2. The appellant has taken the following grounds:-
a) They are eligible to the Cenvat Credit of service tax paid on training services provided by M/s. NTTF to the weaker sections of the society under Rule 2(l) read with Rule 3, of the CCR, 2004 as it is directly linked with the manufacturing activity carried out by them. The inclusive part of the definition of input service under Rule 2(l) covers those input services which are used "in relation to" various activities. They rely on the decision in the case of CCE
3 E/55022/2023-SMB vs. Bakelite Hylam (1996 [84] ELT 5 SC) wherein, the term "in relation to" has been elaborated.
b) The word in relation to has very broad expression and includes both direct as well as indirect activities. The said expression is not restrictive. They rely on the decision in the case of State of Karnataka vs. Azad Coach Builders, Appeal ((civil) 5616-5617 of 2000).
c) M/s. NTTF have entered into MOU with the appellant to provide services of training to various students in a "Learn While Earn Programme". The students are provided training while working in the factory of the appellant. They have availed the Cenvat Credit on these invoices issued by M/s. NTTF.
d) In this programme, NTTF are enrolling students who are taken through an eight semester Diploma in Manufacturing Technology. This Diploma is imparted at Saint Gobain India Private Limited (SGIPL)-NTTF practice school located at Bhiwadi.
e) Cenvat Credit on training services is allowed, for which they rely on the decision in the case of M/s Avery Dennison India Interiors Private Limited vs. CCE & ST (2018-TIOL-3488-CESTAT-CHD). The Tribunal held that it is undisputed that the training services are by the appellant for its business i.e. manufacturing activity and therefore being an input service, Cenvat Credit is available to the appellant.
f) Services received towards fulfilment of Corporate Social Responsibility are eligible as Cenvat Credit. The CSR expenditure is incurred as per the Companies Act, 2013 which mandates each and every company, fulfilling a pre-specified criteria to spend 4 E/55022/2023-SMB certain portion of its profit for CSR activities. They are placing reliance on the decision in the case of Essel Propack Limited vs. Commissioner of CGST [2018-VIL-621-CESTAT-MUM-ST] wherein, the CENVAT credit on CSR activities has been allowed while holding it to be an input service.
g) The Order-in-Original as well as Order-in-Appeal have been passed taking ground not alleged in the impugned SCN. On this ground, the impugned order is liable to be set aside as principles of Natural Justice have been grossly violated. He relied on the decision in the case of Commissioner of Excise, Nagpur Vs Ballarpur Industries Limited reported in 2007 (215) ELT 489 (SC), wherein, it was held that any order passed beyond the grounds of the show cause notice is bad in law and liable to be set aside. He also relied on the decision in the case of Sachin Gandhi vs Commissioner of Central Excise & ST, Vapi reported at 2016 (339) ELT 73 (Tri-Ahmd) wherein, it was held that the order confirming demand and interest and imposing penalty on ground different than alleged, is not sustainable as it is beyond the scope of SCN. He also relied on the following decisions:-
I. CCE Bhubaneswar-I vs Champdany Industries Ltd reported in 2009 (241) ELT 481(SC).
II. M.K. Industries vs CCE, Daman reported in 2013 (31) STR 59 (Tri-Ahmd) III. United Telecos Ltd vs CST, Hyderabad reported in 2011(22) STR 571 (Tri-Bang)
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h) Levy of interest under Rule 14 of the Cenvat Credit Rules, 2004 is not tenable as Cenvat Credit has rightly been availed on the invoices issued by NTTF.
i) Levy of penalty under Rule 15 of CCR, 2004 and Rule 25 of the Central Excise Rules, 2002 read with Section 11 AC of the Central Excise Act, 1944 is not tenable as they have availed cenvat credit in a proper manner. There is no suppression of fact, wilful misstatement, fraud or tax evasion as they have taken the cenvat credit in a bonafide manner. Further, it is a case covered under audit where, they had provided all the documents wilfully to the revenue and all transactions were properly recorded in their Books of Account. They relied on the following decisions:-
I. Commercial Taxes Officer Vs Shyam Agency [2015] 78 VST 75 (RAJ), II. Assistant Commissioner, Anti-Evasion, Rajasthan-live, Jaipur Vs. Agarwal Aluminium & Company [2013] 60 VST 141 (RAJ), In view of the above, they requested to set aside the impugned order and allow their appeal with consequential relief.
3. During hearing on 14.08.2025, learned counsel for the appellant explained the services availed by them and argued that these services have direct nexus with their manufacturing activity and therefore, Cenvat Credit is available on the invoices issued by M/s. NTTF. Such services are covered within the definition of input service as defined under Rule 2(l) of the Cenvat Credit Rules, 2004. Learned Advocate also
6 E/55022/2023-SMB highlighted that it is obligatory on their part to spend certain percentage of their profit for CSR activities and in pursuance to that, they have started the programme, "Earn While Learn" in collaboration with M/s. NTTF. The students from weaker sections get training out of which some of them are given employment even in their own unit. He tried to establish nexus with the manufacturing activities and also explained the ratio of various decisions which are applicable in their case for allowing the Cenvat Credit.
3.1 On this date, learned Advocate was also given liberty to make additional submissions which they made vide e-mail dated 21.08.2021, which are as under:-
a) Under MOU, the appellant identified various positions in its manufacturing area to be utilised as practice school modules for student interns wherein, they could be exposed to contemporary equipments, machines, manufacturing processes and customer requirements. They were assigned to different functional areas of production and carried out practical training on the shop floor under direct supervision of their team members and team leaders.
The learning schedules of these interns was monitored and regulated by an authorised agency engaged for the purpose, by the appellant ensuring that training was structured and consistent with industrial standards.
b) During training, the students were not merely observing but were actively engaged in the manufacturing process in their factory and thus, contributing to the factory output. Their involvement enhanced not only their skill development but also operational 7 E/55022/2023-SMB efficiency of the appellant's business. The main focus was to enable these students to get such skills so as to get employed in the factory of the appellant itself as this will help the appellant to get skilled personnel all the time. As per the certificate issued by NTTF total 64 trainees out of batches 10 were offered employment in their factory through this programme. The services provided by the NTTF were not merely charitable in nature but were directly linked with the manufacturing activity of the appellant and thus, are eligible as input services.
c) Expenditure on CSR in itself are activities related to business as it is mandated under law. Under Rule 2(l) of the CCR,2004, "Input Services" not only cover services used directly or indirectly in manufacture but also activities relating to business. They rely on the decision of Hon'ble Supreme Court in the case of CCE v. Rajasthan State Chemical Works (1991 (55) ELT 444 (SC)) which explains the phrase "in relation to". He also relied on the decision of the Larger Bench in the case of Reliance Industries Ltd. Vs CCE & ST (LTU), Mumbai 2022 (380) E.L.T. 457 (Tri.-LB) which upholds judgment of the Tribunal in the case of Essel Propack Ltd.
d) The ruling of Division Bench in case of Power Finance Corporation dated 09.06.2022 which held that benefit of Cenvat Credit on services used in CSR is not correct and not applicable in their case.
e) The SCN alleges that Cenvat Credit is not available on the ground that the trainees were not employees of the appellant and therefore, the demand has been confirmed beyond the allegation made in the show cause notice.
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4. Countering arguments, learned AR mentioned that the service provided to the weaker section students by NTTF does not have nexus with the business of the appellant. The industrial training provided to the students of weaker section is nothing but a welfare activity which was undertaken to meet their corporate social responsibility. On limitation, he mentioned that availment of inadmissible Cenvat Credit came to the notice of the department during audit of their records. Eventhough, they had filed ER-1/ ST-3 returns but details of invoices or input services on which credit has been availed does not get reflected in these returns and therefore, extended period of limitation has correctly been applied in this case.
4.1 The learned AR also mentioned that the appellant has taken two grounds for allowing Cenvat Credit, (a) Students are given on the job training, some of whom were subsequently absorbed in the appellant's factory as employees and thus, appellant got trained workforce in the process. (b) CSR activities, are related to business as they intend to engage business with the society in which it operates and provide a holistic development to the society and maintain cordial relation with them which is must for business to run. Learned AR argued that at the time of imparting training to the students of weaker sections of society, they are not the employees of the appellant. As per MOU, students enrolling for this programme shall be provided with monthly sustenance scholarship for which NTTF raised the invoices and the appellant made the payments. It mentions that the payments are related to scholarship, training fee and certain reimbursement of expense related to internet, uniform, lunch etc. of the trainees. Thus, these students were neither 9 E/55022/2023-SMB hired/recruited as labour for working in the factory of the appellant nor NTTF was acting as manpower supplier. There is no single clause in the MOU to establish that all these students will be hired after training. This was therefore, pure welfare activity under CSR for which NTTF were engaged and paid. The argument of learned Advocate that they fall under 5th category of service as identified by the Larger Bench decision in the case of Reliance Industries Limited cited supra i.e. services used in relation to activity relating to business but this is not coming out on the basis of documents/ evidences on record. He relies on the decision of Hon'ble Bombay High Court in the case of CCE, Nagpur vs. Manikgarh Cement, wherein, it was held that welfare activities of assessee not an activity integrally related to business. Similarly, in the case of Power Finance Corporation Limited, it was observed that CSR expenses cannot be treated as input services for providing output services. CSR obligation arise only after providing the output services. Also in Rule 2(l), there is no mention of "activity relating to business" as input service. Therefore, the scope of this Rule cannot be enlarged and accordingly, Cenvat Credit is not eligible to the appellant.
5. Heard the rival submissions and seen the records. The issue to be decided is whether, service tax paid on CSR activities can be availed as Cenvat Credit. Learned Advocate in his arguments has emphasized that these activities are an integral part of their business and therefore, such services are covered under the definition of input service as given under Rule 2(l) of the Cenvat Credit Rules, 2004. He also relied on the decision in the case of Essel Propack Limited vs. Commissioner, CGST, Bhiwandi reported at 2018 (362) ELT 833 (Tri-Mumbai) which held that Cenvat 10 E/55022/2023-SMB Credit of service tax paid on CSR activities is admissible being an integral part of the business. Learned Advocate stated that CSR was a mandatory requirement for public sector undertakings and also obligatory for the private sector, unless the same is treated as input service in respect of activities relating to business, production and sustainability of the company itself could be at stake. He also relied on the decision of larger bench in the case of Reliance Industries Limited reported at 2022 (380) ELT 457 (Tri-Larger Bench) to plead his case. On the other hand, learned AR relied on Tribunal's decision dated 09.06.2022 in the case of M/s. Power Finance Corporation Limited Vs. Commissioner (Appeal) Central Excise and Service Tax (LTU), New Delhi and also on the decision of Hon'ble Bombay High Court in the case of CCE, Nagpur Vs. Manikgarh Cement. There are some other decisions also relied by both the sides in support of their plea. 5.1 The mandatory/obligatory nature of CSR for the companies is not in dispute as they are required to spend certain percent of their profit for such activities. I find that the Larger Bench of the Tribunal in the case of Reliance Industries Limited cited supra has considered the decision of Tribunal in the case of Deloitte Support Services India Pvt. Limited Vs. CCE, Hyderabad, decision of Hon'ble Karnataka High Court in Millipore India Pvt. Ltd, decision of Hon'ble Gujarat High Court in the case of Essar Oil Ltd., decision of Hon'ble Bombay High Court in Coca Cola India Pvt. Ltd, in Ultratech Cement case and in the case of Willis Processing Services (India) Ltd and also the decision of Hon'ble Apex Court in the case of Maruti Suzuki. It answered the reference on 11 E/55022/2023-SMB interpretation of Rule 2(l) of the Cenvat Credit Rules, 2004 for the period prior to amendment made in year 2011, in following terms: -
"(i) The answer to the first issue would be :
(a) The Bombay High Court in Coca Cola India and Ultratech Cement
has settled the interpretation of 'input service' in Rule 2(l) of the 2004 Rules, as it stood prior to its amendment on 1-4-2011;
(b) The definition of input service can be effectively divided into the following five categories, in so far as a manufacturer is concerned :
(i) Any service used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products;
(ii) Any service used by the manufacturer whether directly or indirectly, in or in relation to clearance of final products from the place of removal;
(iii) Services used in relation to setting up, modernization, renovation or repairs of a factory, or an office relating to such factory;
(iv) Services used in relation to advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs; and
(v) Services used in relation to activities relating to business and outward transportation upto the place of removal.
(c) So far as it concerns the dispute raised in this appeal, the definition would cover not only 'input services' which have a nexus with the manufacture of the final product (covered by the first limb in the definition), but also other 'input services', which do not have such a nexus but are covered by either of the other four limbs of the definition;
(d) Each limb of the definition is independent and benefit of Cenvat credit would be available even if any one of them is satisfied;
(e) So far as the first limb is concerned, the requirement of establishing a nexus between the 'input services' and the process of manufacture would stand satisfied if the expenditure incurred for the 'input service' forms part of the cost of production/value of the final product on which duty of the excise is levied;"
12 E/55022/2023-SMB 5.2 To be eligible to Cenvat Credit, service should satisfy any of the above five limbs. Therefore, it is to be examined whether CSR activities on which in this case service tax has been paid, satisfy these limbs for being eligible to Cenvat Credit. I find that the appellant has entered into MOU with M/s. Nettur Technical Training Foundation (M/s.NTTF) for imparting training to students of weaker sections of the society. Under Corporate Social Responsibility, such students were to be given scholarship, uniform, lunch, internet etc. for which, M/s. NTTF raised invoices on the appellant and also charged the service tax thereon. Sample copy of invoices issued by M/s. NTTF in the month of February, 2017 are reproduced below:-
13 E/55022/2023-SMB 14 E/55022/2023-SMB 15 E/55022/2023-SMB 5.3 The above invoices show that M/s. NTTF have charged training fee and also some amount for granting scholarship to the trainees along with certain expenses such as re-imbursement of warden salary, internet charges, second semester books, uniform for trainees, lodging expenses of Sadam at Kota, lunch expenses and books transportation charges etc. These expenditure heads on account of students of weaker sections of society, clearly show that the invoices do not have co-relation with the business activity of the appellant. At the time of imparting such training, these students were not employees of the appellant factory.
The training imparted to them was also not adding or assisting in the production of final goods. As per CSR mandate, expenses on such training were out of the profit of the company and therefore, these did not form part of the cost of goods manufactured by the appellant. I therefore, find that such activities were not coming within any of the above five limbs and hence, not covered as Input Service as defined under Section 2(l) of the Cenvat Credit Rules, 2004. I also find that the decision in Essel Propack Limited has tried to cover all CSR activities within the definition of input service but such an interpretation will make the definition of "Input Service" redundant. The definition clearly allows Cenvat Credit on those services which are related to business. Even broader definition as elaborated by the Larger Bench also does not cover the CSR activities within the definition of Input Service. I find that the Division Bench, Delhi in the case of Power Finance Corporation Limited has discussed the issue of admissibility of Cenvat Credit of service tax paid on CSR activities in great details. It held that the activities relating to CSR are not coming within the definition of Input Service. The 16 E/55022/2023-SMB relevant paras 14, 15, 16 & 17 of the said decision are reproduced below:-
14. We find that the dispute in the case before the Hon'ble High Court was with reference to medical and personal accident policy, insurance, personal vehicle services, catering services and landscaping of factory, garden etc. Aggrieved by the denial of Cenvat Credit on these services, the appellant had filed the appeal before the Hon'ble High Court of Karnataka. The High Court has held that landscaping of factory garden falls within the scope of modernisation, renovation, repair etc. of office premises which is fact of the inclusion part of the definition. With respect to the medical and personal accident policy etc. they were held to be related to the business of manufacture of excisable goods. Accordingly, Cenvat Credit was allowed. There was a passing reference to corporate social responsibility in para 7 of the judgement but that was not issue in dispute nor was there any decision on if it qualifies as an input service.
15. As we have discussed above, several services which are not directly input services for providing of output services or which are not used for manufacturing final product have been included in the inclusion part of the definition under rule 2(l). This includes modernisation, repair etc.
16. As far as Essel Propack Ltd. (Supra) case is concerned, it was on the specific ground of denial of Cenvat Credit on corporate social responsibility. Learned single member in this case has discussed the matter at length, paras 8 & 11 of which are reproduced below:
"8. The refusal of such Cenvat credit availed by the appellant by the department, was mainly on three scores. First CSR is a charity which is unrelated to production. Second, no direct service was availed by the appellant from the said Kalama Charitable Trust as it had made the expenditure itself and sought reimbursement from the appellant. Third, the same is not in conformity to the Rules meant for raising of invoice as contemplated under Rule 9(2) besides being outside the scope of input service defined under Rule 2(1) of the Cenvat Credit Rules, 2004 for which the credit as referred above was inadmissible.
.... ..... .....
11. To pin point the dispute, it is now to be looked into as to if CSR can be considered as input service and be included within the definition of "activities relating to business" and if in so doing, a company's image before corporate world is enhanced so as to increase its credit rating as found from the handbook of CSR activities discussed above. The answer is in the affirmative since to win the confidence of the stakeholders and shareholders including the people affected by the supply of raw material from their locality, say natural resources like mines and minerals etc., the hazardous emission that may result in production activities."
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17. In our considered view, the order of the learned Member does not lay down the correct law as Rule 2 (l) does not include "activities relating to business" as input service. It is not open for this Tribunal to modify or enlarge the scope of this Rule which is a legislative or quasi-legislative function. It can only apply it as such. In our considered view one cannot read words "activities relating to business" into the definition of input services under rule 2(l). We therefore, respectfully disagree with the learned Member and hold that the appellant was not entitled to Cenvat Credit on the services used for corporate social responsibility." 5.4 Agreeing with the above decision of Division Bench in Power Finance Corporation Limited, I hold that the appellant are not eligible to Cenvat Credit of service tax paid by M/s. NTTF on invoices raised for CSR activity (i.e. training of students of weaker sections) which has no relation to their business activity.
5.5 The appellant has also challenged invocation of extended period of limitation in this case on the ground that there is no suppression of fact, wilful mis-statement, fraud or tax evasion and that they had provided all the documents to the revenue during the audit. I find that the appellants were filing ER-1 returns with the department which basically show a consolidated figure of Credit availed on inputs and input service. Under inputs category also, there are several sub categories such as credit availed on manufactures invoice, credit on dealer's invoice, credit on imported goods etc. Against a consolidated entry of Cenvat Credit on input services, no further break up is provided. Therefore, eventhough, they have filed requisite ER-1 returns, revenue is not in a position to verify as to which of the invoices are eligible for availment of Cenvat Credit. It was only during audit, the officers verified all the documents and found out discrepancy. Therefore, plea taken by 18 E/55022/2023-SMB the appellant that transactions were recorded in their Books of Account does not come to their rescue. Accordingly, I reject their plea. Consequently, their plea for waiver of penalty under Rule 15 (2) of CCR, 2004 read with Section 11 AC of the Central Excise Act, 1944 is also rejected.
6. The appeal filed by the appellant is disposed of in above terms.
(Order pronounced in the open court on 09.10.2025) (Satendra Vikram Singh) MEMBER (TECHNICAL) Bharvi