Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S Gtc Industries Ltd on 29 June, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO. IV
Appeal No. E/1279/07
E/CO/239/07
(Arising out of Order-in-Appeal No. CPA(125)02/STC/2007 dated 16.3.2007 passed by the Commissioner of Central Excise (Appeals), Mumbai-I).
For approval and signature:
Honble Shri S.K. Gaule, Member (Technical)
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1. Whether Press Reporters may be allowed to see : No 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 : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== Commissioner of Central Excise, Mumbai-V Appellant Vs. M/s GTC Industries Ltd. Respondents Appearance: Shri Sanjay Kalra JDR for Appellant Ms. Anjali Hirawat Advocate for Respondent CORAM: SHRI S.K. GAULE, MEMBER (TECHNICAL) Date of Hearing: 29.06.2011 Date of Decision: 29.06.2011 ORDER NO. WZB/MUM/2011 Per: S.K. Gaule Heard both sides.
2. This appeal is arising on account of Hon'ble High Courts order in Central Excise Appeal No. 21 of 2010, wherein the Hon'ble High Court has remanded the case to decide the question raised in this appeal in accordance with the decision of the Court in the case of Ultratech Cement Ltd. reported in 2010-TIOL-745-HC-MUM-ST.
3. To recapitulate, the facts of the case, in brief, are that the respondents are engaged in the manufacture of cigarettes, packing materials of paper and paper board and printing inks falling under Chapter 24, 48 and 32 of Central Excise Tariff Act, 1985. The respondents also availed CENVAT credit facility on their inputs, capital goods and input services. They availed CENVAT credit of Rs.3,96,044/- during the period March 2005 to March 2006 in respect of Service Tax paid on outdoor caterers service provided by M/s Chintamani Caterers. The said credit was disallowed to them on the ground that the said service is not an input service. The lower adjudicating authority accordingly disallowed the credit and demanded interest towards and imposed penalty under Section 11AC of the Central Excise Act. The respondents challenged the order before the Commissioner (Appeals), who allowed the respondents appeal. Aggrieved by the same, the department preferred the appeal before the Tribunal. Larger Bench of this Tribunal decided the case in favour of the respondents. The department challenged the Tribunals order before the Hon'ble Bombay High Court. A question of law before the Hon'ble High Court was as under: -
In the facts and circumstances of the case, whether service tax paid on canteen services is input service in manufacture of final product? The Hon'ble High Court remanded the case to the Tribunal to decide in accordance with the decision of the Hon'ble High Court in the case of Ultratech Cement Ltd. (supra).
4. The contention of the learned JDR is that in para 39 of Hon'ble High Court in the case of Ultratech Cement Ltd. (supra) has held that once the service tax is borne by the ultimate consumer of the service, namely the worker, the manufacturer cannot take credit of that part of the service tax which is borne by the consumer. The learned Counsel counters the same by submitting that the position of cost of canteen service was borne by the worker, was not the point of proceedings of the case, at any stage.
4. I have carefully considered the submissions and perused the records. The Hon'ble High Court in the Ultratech Cement Ltd.s case (supra) in para 31 has held as under: -
31.?In our opinion, the ratio laid down by the Apex Court in the case of Maruti Suzuki Ltd. (supra) in the context of the definition of input in Rule 2(k) of 2004 Rules would equally apply while interpreting the expression activities relating to business in Rule 2(l) of 2004 Rules. No doubt that the inclusive part of the definition of input is restricted to the inputs used in or in relation to the manufacture of final products, whereas the inclusive part of the definition of input service extends to services used prior to/during the course of/after the manufacture of the final products. The fact that the definition of input service is wider than the definition of input would make no difference in applying the ratio laid down in the case of Maruti Suzuki Ltd. (supra) while interpreting the scope of input service. Accordingly, in the light of the judgment of the Apex Court in the case of Maruti Suzuki Ltd. (supra), we hold that the services having nexus or integral connection with the manufacture of final products as well as the business of manufacture of final product would qualify to be input service under Rule 2(l) of 2004 Rules.
5. From the above, it follows that the service having nexus or integral connection with the manufacture of final products as well as the business of manufacture of final product would qualify to be input service under Rule 2(1) of 2004 Rules. Under the provisions of Section 46 of the Factories Act, 1948, it is mandatory for the appellant to provide canteen facility for the worker in their factory premises as a measure of welfare of the workers. The canteen facility also helps in furtherance of the manufacture. Thus, the caterer service has nexus or integral connection with the business of manufacture of final product and this would qualify to be input service under Rule 2(1) of Cenvat Credit Rules, 2004. The only contention raised by the Revenue now is that a certain portion of the caterers service was borne by the workers. I find force in the contention of the respondent that this was never a part of departmental proceedings, at any stage, which is also clear from the question which was before the Hon'ble High Court.
6. In view of the above, I do not find any infirmity with the order of the Commissioner (Appeals) and the same is upheld.
7. Revenues appeal is dismissed.
(Dictated and pronounced in Court) (S.K. Gaule) Member (Technical) Vks/ 1