Custom, Excise & Service Tax Tribunal
M/S. The India Cements Ltd vs Cce, Tirupathi on 12 February, 2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench SMB
Court I
Date of Hearing: 12/02/2010
Date of decision:12/02/2010
Appeal No.E/47/09
(Arising out of Order-in-Appeal No.39/2008(T)CE dt. 10/11/2008 passed by Commissioner(Appeals), Guntur)
For approval and signature:
Honble Mr. P.Karthikeyan, Member(Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
Yes
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3.
Whether their Lordship wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. The India Cements Ltd.
..Appellant(s)
Vs.
CCE, Tirupathi
Respondent(s)
Appearance Mr.K.Krishnamurthy, Consultant for the appellant.
Ms. Joy Kumari Chander, Jt.CDR for the Revenue.
Coram:
Honble Mr. P.Karthikeyan, Member(Technical) FINAL ORDER No._______________________2010 Per P.Karthikeyan This appeal is filed by M/s. The India Cements Ltd. assailing an order of the Commissioner(Appeals) which sustained denial of cenvat credit taken by the appellant on service tax paid under the category management, maintenance or repair services during the period February, 2007 to October, 2007 to the tune of Rs.13,074/-, penalties of Rs.2000/- imposed under Rule 15 of Cenvat Credit Rules, 2004 and equal amount of penalty under Rule 25 of Central Excise Rules, 2002 ordered by the original authority. The appellants have taken the grounds that the services were incurred for maintenance of the residential colony housing the employees of the assessee which was essential for the effective running of the factory. The main ground taken by the appellant is that the impugned activity is input service since the same is carried out in or in relation to the manufacture of the assessees final product cement though indirectly. The assessees factory was located in a remote rural area and it was under statutory obligation to provide residential accommodation for its workers. Ld. Consultant relies on a decision of the Tribunal in the case of Manikgarh Cement Vs. CCE&C, Nagpur [2008(9) STR 554 (Tri. Mum.)] in support of the assessees case.
2. Ld. Jt.CDR submits that repair and maintenance involved has no direct or indirect relation to the manufacturing activity carried on by the assessee and the impugned credit has been rightly denied by the lower appellate authority.
3. I have carefully considered the case records and the submissions made by both sides. In the Manikgarh Cement case relied on by the appellant, the Tribunal held that the repairs and maintenance of civil construction for residential colony constituted input service as defined under Rule 2(l) of the Cenvat Credit Rules, 2004 and therefore service tax paid on such services was admissible. I find that the decision of the Tribunal relied on by the ld. Jt.CDR related to admissibility to credit of service tax paid by the appellants therein under the heads of security services, rent a cab services and mobile telephone services. The Tribunal held that the appellants therein were not entitled to credit of service tax paid on various services involved in that case for the reason that they were not used directly or indirectly, in or in relation to the manufacture or clearance of the final product. On a perusal of the impugned order, it is not clear as to the exact nature of the activity on which the appellants had paid service tax. The relevant finding contained in para 8 of the order-in-appeal is as under:-
8. It is an undisputed fact that the electrical maintenance works are establishing the on-line communication linkage used in relation to occasional guidance/advices etc., to the production/administration staff of the factory, by senior people like General Manager, at times of need only. I find that the communication linkage established by the electrical maintenance work is not exclusively put to such use alone all through each day during any given period of time. At the most, establishing the said communication linkage may also be a small portion of the more elaborate services pertaining to the maintenance of the electrical lines/circuits etc., rendered to cover the overall domestic needs of the employees of the assessees and the members of their families.
4. From the above, it is not clear whether the activity is one which was the subject matter of the decision in the case of Manikgarh Cement (supra). In any case, credit would be available in respect of such services relatable to business of manufacturing carried on by the appellants as held by the Honble High Court of Gujarat in the case of CCE Vs. Excel Crop Care Ltd. [2009(90) RLT 861(Guj.)]. In the circumstances, the matter is remanded to the original authority to examine the nature of service involved and entitlement of the assessee to credit of the service tax paid on such activity in the light of the judgment of the Honble High Court of Gujarat. As the disputed entitlement of the assessee is highly contentious as reflected in several decisions of the Tribunal and High Court, I do not think that it is a fit case where the assessee can be visited with any penalty. The penalties are set aside. The appeal is allowed by way of remand.
(Pronounced and dictated in open court) (P.KARTHIKEYAN) Member (Technical) Nr 4