Custom, Excise & Service Tax Tribunal
M/S. Hindustan Petroleum Corporation ... vs Cce,C&St, Visakhapatnam on 19 July, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Bench Division Bench
Court I
Appeal No.E/21548/2015
(Arising out of Order-in-Original No.VSP-EXCUS-001-OM-004-15-16 dt. 19/05/2015 passed by CCE,C&ST, Visakhapatnam)
For approval and signature:
Honble Mr. Madhu Mohan Damodhar, 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?
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 Lordship wish to see the fair copy of the Order?
4.
Whether Order is to be circulated to the Departmental authorities?
M/s. Hindustan Petroleum Corporation Ltd.
..Appellant(s)
Vs.
CCE,C&ST, Visakhapatnam
..Respondent(s)
Appearance
Shri G. Prahlad, Advocate for the appellant.
Shri Arun Kumar, Deputy Commissioner(AR) for the respondent.
Coram:
Honble Mr. Madhu Mohan Damodhar, Member(Technical)
Date of Hearing:19/07/2016
Date of decision:19/07/2016
FINAL ORDER No._______________________
[Order per: Madhu Mohan Damodhar]
Brief facts of this case are as under:-
a. The Appellants are engaged in refining and clearing diverse petroleum products. During the period January 2014 to September 2014, (M/s HPCL, Visakh Refinery) the Appellants availed Service tax on credit on gardening services, booking binding services, ticket booking services, e-filing services, repairs to culvers & piling works, business improvement services/catering/restaurant services, painting services, mechanical repairs to tanks, washing of lab coats/ laundry services, crane hiring services, foreign payments, data entry services, consultancy services, fabrication services, erection & commissioning services, shifting of scrap services, road cleaning services, AMC for Godrej make furniture, water washing of vehicles etc. Department issued SCN dt.30.01.2015 alleging that the above services were not eligible for CENVAT Credit and the Service Tax paid on these items were in no way involved in or in relation to the manufacture by the assessee and it was recorded in the SCN that as per the definitions of CENVAT Credit Rules 2004, these input services were not eligible for CENVAT Credit.
b. Adjudicating Authority passed the impugned Order-in-Original dt.19.5.2015 dropping the SCN proposals for recovery of CENVAT Credit of Rs. 3,37,38,040/- being the cenvat credit availed on service tax paid on Vegetation (Gardening), Booking Binding & Printing, Ticket Booking, TDS e-filing services, Piling works & repairs of culverts, Painting services, Mechanical repair of tanks, AMC for X ray baggage, Xerox, Elevator, AMC for cleaning of empty Bitumen drums, Brokerage commission, Laundry services, transformer oil testing services, collection & removal of scrap, tender & e-auction of scarp, Hiring of cranes, Patrolling waterline, Foreign payments, Consultancy services, Fabrication Service, and Erection, Installation & commissioning and confirming the recovery of CENVAT Credit of Rs.12,37,341/- being the CENVAT credit availed on service tax paid on the services of Business improvement / convention services, Anti Termite treatment, Interior development, AMC for furniture, Repairs of JCB, Washing of Vehicle, Tanker Agency at Ports, Data entry activities, Airport agency services, Air cargo service, Cleaning of roads & Housing keeping along with interest and imposing equal amount of penalty.
c. Aggrieved by the above Order in Original, the Appellants are filing this appeal.
2.1. The learned advocate who appeared on behalf of the appellant made the following main submissions:-
a. Adjudicating authority (the Respondent) has disallowed the CENVAT credit on the following input services on which the CENVAT credit was availed by the Appellants:
Rs.
(a) Anti termite treatment 30294
(b) Business improvement, convention services 299637
(c) Interior development 724626
(d) AMC for furniture 2310
(e) Repairs for JCB 6118
(f) Washing of vehicle 3928
(g) Tanker Agency at ports 31271
(h) Data entry activities 78108
(i) Airport agency service, Air cargo service 42998
(j) Cleaning of roads 13601
(k) Housing keeping 4450
-------------
12,37,241/-
------------
b. As far as a manufacturer is concerned, in the eligibility of CENVAT credit availment on service tax paid on all services (except those that are specifically excluded from the eligibility like civil foundation, specified employee related expenses etc.) that are used in the manufacturing process, there is no change even after 01.04.2011.
c. The demands made in impugned Order do not reflect the quantum of proportionate reversal done by the Appellants under Rule 6 of the CENVAT Credit Rules while availing the CENVAT credit, during the relevant period covered by the impugned order.
d. The impugned Order has assumed that the said services are specifically excluded from the definition of the input services. The Appellants rely on the Supreme Court decision in the case of Ramala Sahkari Chini Mills Limited vs. CCE Meerut I reported in 2010 (260) ELT 321 (SC) where the Court has ruled that as per the language of Rule 2(g) of the CENVAT Credit Rule 2002, the Legislature did not intend to impart the restricted meaning to the definition of inputs for the input services and accordingly referred the matter to Larger Bench. Thus, it is very clear that on the eligibility of availment of CENVAT Credit on input services is concerned, two views are possible and there are many judicial decisions which say that when two views are possible, the assessee is free to follow the view that is more beneficial to the assessee.
2.2. They refer and rely on the following decisions of CESTAT:
Sundaram Clayton Ltd Vs. CCE, Chennai.
2010(25) STR 172 (Tri. Chennai) Balkrishna Industries Ltd Vs. CCE, Aurangabad 2010 TIOL 535-CESTAT-MUM also reported in 2010 (254) ELT 301 (Tri.Mum) where CENVAT credit availed on Housekeeping services was ordered to be eligible for CENVAT credit. Stanzen Toyotetsu India Pvt. Ltd.
2011 (23) STR (444) -- CESTAT Decision dated 10.11.2014 (Misc Order No.22917/2014) in their own case where the CENVAT credit was allowed on various services used in Refinery. Balkrishna Industries Ltd Vs. CCE, Aurangabad 2010 (254) ELT 301 (Tri.Mum) where CENVAT credit availed on Housekeeping services was ordered to be eligible for CENVAT credit.
3. On behalf of the Department, learned AR Shri Arun Kumar vehemently opposed the appeal and pointed out that after the amendment to Rule 2(l) of the CENVAT Credit Rules w.e.f. 01/04/2011, credit availed on the said services by the appellant have become ineligible or otherwise, there is no nexus with the manufacturing activity and are not related either directly or indirectly in the manufacture of final products and clearance of final products upto the place of removal. For these reasons, the present appeal deserves to be dismissed.
4. I have heard both sides and have also gone through the facts of the case. The period involved in the present appeal is January 2014 to September 2014. For the sake of better understanding, the definition of input service under Rule 2(l) of the CENVAT Credit Rules 2004 amended w.e.f. 01/04/2011 and 2006-2012 is reproduced under:-
input service means any service, -
(i) used by a provider of [output service] for providing an output service; or
(ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to modernization, renovation or repairs of factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal [but excludes],-
(A) --------
(B) --------
(C) Such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;] [ but excludes], -
[(A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for-
(a) construction or execution of works contract of building or a civil structure or a part thereof; or
(b) laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services; or] [(B) [services provided by way of renting of a motor vehicle], in so far as they relate to a motor vehicle which is not a capital goods; or [(BA) service of general insurance business, servicing, repair and maintenance, in so far as they relate to a motor vehicle which is not a capital goods, except when used by-
(a) A manufacturer of a motor vehicle in respect of a motor vehicle manufactured by such person; or
(b) An insurance company in respect of a motor vehicle insured or reinsured by such person; or] (C) Such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;] [Explanation. For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis.] The aforesaid amended Rules 2(l) is relevant and applicable during the period of dispute in the present appeal. I now propose to take up eligibility of the disputed services with reference to the aforesaid Rule 2(l).
a. Anti-termite treatment (disputed credit Rs.30294/-) The Appellants submit that undertaking pest control activities is basic requirement to maintain any building where huge volume of documents are being handled and the said activity is directly connected with refinery manufacturing activity.
The above service is required to be considered as utilized in relation to manufacture of final products since proper maintenance of related documents are essential to such manufacture. Hence I hold that the appellant is eligible to avail the said credit.
b. Business improvement, convention services (Disputed credit Rs.2,99,637/-) It is seen from the invoices submitted by the appellant that this pertain to training/seminars arranged for refinery employees held in various hotels and conducted by the service providers. These expenses have been grouped together with other hotel bills which covered boarding/lodging. In view of the specific inclusion of services used in relation to coaching and training, I hold that the appellant is eligible to avail the aforesaid credit on this item.
c. Interior development (Disputed credit Rs.7,24,626/-) Appellants have submitted that this service has been utilized to cater seating arrangements for refinery manpower and refinery infrastructure by service provider KPS Projects Ltd. These activities are definitely are not in the nature of the excluded services in the A, B, BA and C of the said Rule 2(l). This being so, I hold that the appellant is eligible to avail the said credit.
d. AMC for furniture (Disputed credit Rs.2,310/-) e. Repairs for JCB (Disputed credit Rs.6,118/-) I find that aforementioned activities are in the nature of services in relation to repairs, which is specifically part of the inclusions in Rule 2(l). Hence I hold that the appellant is fully eligible to avail the said credits on the said services.
f. Washing of vehicle (Disputed credit Rs.3.928/-) I find that the said Rule 2(l) is inclusive definition along with certain specific exclusions. In any case, the impugned activity does not find place in the exclusions A, B, BA and C of Rule 2(l). Hence I hold the appellant is eligible to avail the said credit.
g. Tanker Agency at ports (Disputed credit Rs.31,271/-) i. Airport agency service, Air cargo service (Disputed credit Rs.42,998/-) These are definitely activities used by the appellants in or in relation to manufacture and clearance of final products upto place of removal. I therefore hold the appellant is eligible to avail the said credits.
h. Data Entry services (Disputed credit Rs.78,108/-) Data Entry Operators services are very much covered in the inclusions of Rule 2(l). Hence I hold the appellant is eligible to avail the said credit.
j. Cleaning of roads (Disputed credit Rs.13,601/-) The appellants have contended that as the refinery is spread over 711 acres, the refinery roads have to be got cleaned and maintained and hence the service is very essential for their operations. I am not convinced on this aspect. I am of the considered opinion that the said service cannot fall in the ambit of one used by a manufacturer, whether directly or indirectly in or in relation to the manufacture of final products and clearance of final products. Therefore I have no hesitation in holding that the appellant is not eligible to avail the credit of Rs.13,601/- in relation to cleaning of roads.
k. House keeping services (Disputed credit Rs.4,450/-) This is a settled issue, in a number of decisions including the one relied upon by the appellant , Balkrishna Industries Ltd Vs. CCE, Aurangabad (supra). I therefore hold that the appellants are eligible to avail the credit (Rs.4,450/-) in relation to housekeeping services.
5. To sum up, the appeal is allowed except in respect of credit amount of Rs.13,601/- availed by the appellant in relation to cleaning of roads. Appeal partly allowed.
(Operative part of this order was pronounced in court on conclusion of the hearing) (MADHU MOHAN DAMODHAR) MEMBER(TECHNICAL) Raja..
11