Custom, Excise & Service Tax Tribunal
Universal Power Transformers Private ... vs Commissioner Of Central Tax, Bangalore ... on 7 November, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/21422/2017-SM [Arising out of Order-in-Appeal No. 31/2017 dated 03/07/2017 passed by Commissioner of Central Excise (Appeals), BANGALORE.] Universal Power Transformers Private Limited No 26/A, 2nd Phase, Peenya Industrial Area, BANGALORE - 560058 KARNATAKA Appellant(s) Versus Commissioner Of Central Tax, Bangalore North West Commissionerate 2nd Floor, South Wing, BMTC Bus Stand Complex, Shivaji Nagar Bus Stand, Bangalore-560051 Karnataka Respondent(s)
Appearance:
Mr. Mohd. Rahim, Advocate K. S. Ravi Shankar No. 152(18), Race Course Road, Bangalore, - 560001 Karnataka For the Appellant Mr. Parasivamurthy, AR For the Respondent Date of Hearing: 07/11/2017 Date of Decision: 07/11/2017 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 22735 / 2017 Per : S.S GARG The present appeal is filed against the impugned order dated 3.7.2017 passed by the Commissioner (A), wherein Commissioner (A) has rejected the appeal of the appellant.
2. Briefly the facts of the present case are that the appellants are engaged in manufacture of excisable goods viz., transformers falling under Chapter 85 of CETA, 1985 and are availing CENVAT credit under CENVAT Credit Rules, 2004. During the course of verification of record, it was noticed that the appellant had availed irregular CENVAT credit of service tax of Rs.6,76,951/- during the period 1.4.2008 to 31.3.2010 in respect of the following services:
(i) Services received by their sister units viz., Unit-II, Unit III and Unit-IV for which the appellant had made the payments and availed credit of service tax paid. Since, these services were not received by the appellant, but received at their other units, it appeared that these services does not fall under the category of input service, and are not eligible services for the appellant.
(ii) Further, they had availed CENVAT credit on expenditure incurred on certain services like insurance premia paid for their employees, hiring of buses for arranging pleasure trips for employees, arranging get-togethers as a staff welfare measure, etc. It appeared that these services do not qualify as input services as per the definition of input service under the CENVAT credit Rules, 2004.
(iii) The appellant had also availed CENVAT Credit of service tax paid in respect of the services rendered to their marketing office situated at various places other than the office of the factory/output service provider. It appeared that these services also do not qualify as input services as per the definition of input service under the CENVAT Credit Rules, 2004.
Thereafter, a show-cause notice was issued to the appellant for availing irregular CENVAT credit and after following the due process, the adjudicating authority vide Order-in-Original dated 6.3.2014 confirmed the demand by invoking the extended period of limitation. Aggrieved by the same, appellant filed appeal before the Commissioner (A), who rejected the appeal; hence, the present appeal.
4. Heard both the parties and perused the records.
5. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly considering the definition of input service in rule 2(l) of CENVAT Credit Rules (CCR). He further submitted that all the services on which CENVAT credit has been denied have been held to be input service by various judicial decisions of the Tribunal and the High Court. The learned counsel for the appellant has given in the tabular form, the input services on which CENVAT credit has been denied and the case laws vide which the said service has been held to be input service.
Input Service Case Laws Sales Promotion Service Rule 3/Rule 2(l) Employee Group Insurance CST vs. Team Lease Services Pvt. Ltd.: 2014 (36) STR 543 (Kar.) CCE vs. Micro Labs Ltd.: 2011 (24) STR 272 (Kar.) Hiring of Cabs for employee tour/Rent-a-cab Service CCE vs. MRPL: 2016 (42) STR 6 (Kar.) Rent of marketing office Delta Energy Systems Ltd. vs. CCE: 2013 (31) STR 684 (Tri.-Del.) Bharat Fritz Werner Ltd. vs. CCE: 2011 (22) STR 429 (Tri.-Bang.) Jaypee Rewa Plant vs. CCE: 2009 (16) STR 707 (tri.-Del.) CCE vs. Siemens Healthcare Diagnostics Ltd.: 2014 (36) STR 192 (Tri.-Ahmd.) Carrier Air-conditioning & Refrigeration Ltd. vs. CCE: 2016 (41) STR 824 (Tri.-Chand.) Manpower recruitment for marketing office
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5.1 He further submitted that in respect of services paid on employee related expenses such as group insurance scheme and rent-a-cab service for employee tour/trip, fall in the definition of input service as the same has been spent on the employees. It forms part of the employee cost i.e., direct and indirect labour and the appellant has factored and included the expenditure towards employees welfare in the cost of production of the final product i.e., in CAS-4. He further submitted that this aspect has not been disputed by the lower authorities and therefore, these services would fall within the ambit of input services as defined under Rule 2(l) of CCR. He further relied upon the decision of the Bombay High Court in the case of Coca Cola India Pvt. Ltd.: 2009 (242) ELT 168 (Bom.) wherein it has been held that once the cost incurred by the service has to be added to the cost, and is so assessed, it is a recognition by the Revenue of the said services having a connection with the manufacture of the final product and in the present case also it is not disputed that the employees cost on which credit taken has formed part of cost of production of final product and the Revenue has collected the Central Excise duty on that. He further submitted that various Courts have given very wide interpretation to the definition of input service and it includes all the services which are in relation to business. Further, each service has been held to be input service in the decision cited by the appellant, which are given in the table above.
6. I also find that in appellants own case for the previous period vide Final Order No.21759 21761/2017 dated 22.8.2017, this Tribunal held in favour of the appellant by holding that service tax paid on those impugned input services are eligible as CENVAT Credit as per the definition of input service provided in the CENVAT Credit Rules, 2004. By following the ratios of the various decisions relied upon by the appellant cited supra I am of the view that all these services fall in the definition of input service and the appellant has rightly taken the CENVAT credit on these impugned services and therefore, I allow the appeal of the appellant by setting aside the impugned order.
(Operative portion of the Order was pronounced in Open Court on 07/11/2017) S.S GARG JUDICIAL MEMBER rv...
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