Custom, Excise & Service Tax Tribunal
M/S Eicher Motors Limited vs Cce, Indore on 29 June, 2016
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R. K. Puram, New Delhi. Date of hearing/ decision: 29.06.2016 For Approval and Signature: Honble Ms. Archana Wadhwa, Member (Judicial) Honble Mr. V. Padmanabhan, Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Excise Appeal No. 824 of 2009 (Arising out of the Order in Original No. 03/Commr./ST/IND/2009 dated 06.01.2009 passed by the Commissioner of Customs, Central Excise & Service Tax, Indore). M/s Eicher Motors Limited Appellant Vs. CCE, Indore Respondent
Appearance:
Sh. B. L. Narsimhan, Advocate for the appellant Sh. Yogesh Agarwal, DR for the respondent Coram:
Honble Ms. Archana Wadhwa, Member (Judicial) Honble Mr. V. Padmanabhan, Member (Technical) Final Order No. 52437 / 2016 Per: V. Padmanabhan:
The appeal is directed against the order of the Commissioner, Indore dated 06.01.2009. In the impugned order, the Commissioner disallowed the cenvat credit availed on various input services, totally demanding an amount of Rs.97,32,229/- under Rule 14 of the Cenvat Credit Rules, 2004 as incorrectly availed cenvat credit.
2. In the present appeal the appellant has sought to reverse the order with the plea that the availment of cenvat credit in all the input services disallowed by the Commissioner in the impugned order, has been allowed by Tribunal and High Courts. They have also cited various case laws under which such credits have been allowed for the various services.
3. Heard ld. Advocate Sh. B. L. Narasimhan for the appellant and ld. DR Sh.Yogesh Agarwal for the Revenue.
4. Since the dispute centers around various services claimed as input services, it is useful to set below the definition of input service given in Rule 2(l) of the Cenvat Credit Rules, 2004:
(l) Input service means any service, -
(i) used by a provider of taxable service for providing an output service, or
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sale promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal.
5. The main submission of the appellant in the appeal is that the definition of input service is divisible into two parts-
(i) means portion and
(ii) includes portion They have claimed that all the services covered in the instant case are those which have been used in or in relation to the manufacture of the final product and therefore covered by the means portion of the definition of input service. The appellant further contended that all the services qualified as input service as actively relating to business and also that the expenditure incurred by them on the aforesaid services forms part of the cost of the final product. The appellant relied upon various judgments of the Tribunal/ High Courts wherein it was held that the expenses related to the services similar to those covered in the instant case have been considered as the expenses related to business and for the betterment of the business, eligible for deduction as expenses under the provisions of the Income Tax Act. In particular, they have relied on Coca Cola India Pvt. Ltd., vs. CCE, Pune-III 2009 (242) ELT 168 (Bom.) and other cases.
6. The appellant is a manufacturer of chassis of the vehicle which they clear to their job worker who builds the body on the chassis. As a result of this activity the complete vehicle comes into existence at the job workers premises who clears such vehicle on payment of duty. The vehicle cleared by the job worker factory is transferred to the depot of the appellant from where the sale of vehicle is effected to independent buyers. The following services have been denied the benefit of cenvat credit in the impugned order for the reason that these services have been used in relation to complete vehicles whereas the appellant is a manufacturer only of chassis.
i) Advertisement Agency Services
ii) Market Research
iii) Telephone Tours & Travel Services
iv) Business Auxiliary & Business Promotion Services
v) Commission Agent Service
vi) Event Management Services
vii) Commercial Training and Coaching Services
viii) Banking & Financial Services
ix) Security Service
x) Mandap Keeper Service
7. We find that in the case of Coca Cola India Pvt. Ltd. (supra) the Honble High Court of Bombay has considered and allowed the service tax credit for various services like advertisement, sales promotion, market research etc. availed by the manufacturer of concentrate for soft drinks. In that case Coca Cola India who manufacture concentrate was allowed to utilise the credit on various services which were used for marketing of the soft drinks which was ultimately manufactured and cleared by the bottlers. The Honble High Court took the view that all such activities relating to business are covered under input service provided there is relation between manufacture of concentrate and such activity. The Honble High Court held as follows:
Credit is availed on the tax paid on the input service which is advertisement and not on the contents of the advertisement. Thus it is not necessary that the contents of the advertisement must be that of the final product manufactured by the person advertising, as long as the manufacturer can demonstrate that the advertisement services availed have an effect of or impact on the manufacture of the final product and establish the relationship between the input service and the manufacture of the final product. .. Once the cost incurred by the service has to be added to the cost and is so assessed, it is a recognition by Revenue of the advertisement services having a connection with the manufacture of the final product.
On the admissibility of advertisement services, the appellant has also relied on the following case laws:
* CCE vs. HCL Technologies Ltd. -2016 (42) STR 48 (Tri. Del.) * Greaves Cotton Ltd. vs. CCE, Chennai-II & IV-2015 (37) STR 395 (Tri. Chennai) * Agriculture Products Market Committee vs. CCE, Vadodara-II 2013 (30) STR 558 (Tri. Ahmd.) The above decisions squarely cover the credit availed on advertisement agency service even though such advertisements are for the complete vehicles, and not only for chassis.
Now we turn to the various services in the above cluster.
(i) Credit of tax paid on market research agency service, has been specifically allowed also in the following cases in addition to the Coca Cola case (supra):
* UG Sugar & Industries Ltd. vs. CCE 2016-TIOL-1255-CESTAT-ALL * Gujarat Reclaim & Rubber Products Ltd. 2013 TIOL-509-CESTAT-Mad.
(ii) The service tax paid on telephone, tours & travel services stand disallowed in the impugned order also for the reason that such services have been availed in the regional office and have also been provided to the employees of the appellant in Regional offices, guest house and depots. We find that in addition to the decision in the Coca Cola India case, such services have also been held to be valid input services in the following decisions:
* Multiflex Laxmi Print Ltd. vs. CCE 2016-TIOL-1544-CESTAT-MUM * Semco Electric Pvt. Ltd. vs. CCE, Pune-I- 2013 (30) STR 572 (Tri. Mumbai) * Telenet Systems Pvt. Ltd. v. CCE, Belapur 2012 (277) ELT 209 (Tri. Mumbai).
(iii) Business Auxiliary & Business Promotion Services have been claimed as input service. We find that such services have been used for dealers meet, financier meet, sales force training and employee seminar etc. We find that such services have been specifically allowed as input services in the following decisions:
* Maruti Suzuki India Ltd. vs. CCE 2015-TIOL-1889-CESTAT-DEL * Shree Cement Ltd. vs. CCE- 2014 (36) STR 1107 (Tri. Del.) * J.P. Morgan Services (I) Pvt. Ltd. vs. CCE -2016 (42) STR 196 (Tri. Mum.)
(iv) Commission agent service for sales of the complete vehicle have been specifically allowed in the case of Carrier Airconditioning & Refrigeration ltd. vs. CCE 2016 (41) STR 1004 (Tri.Del.)
(v) Event Management services which were used for road show, product launch etc. have been held to be allowed input services in the following cases:
* Precision Wires India Ltd. vs. CCE 2011-TIOL-1541-CESTAT-AHM * IBM India Pvt. Ltd. vs. CCE 2014 (35) STR 384 (Tri. Bang.)
(vi) Commercial Coating and Training services for employees stands specifically allowed in the case of Toyota Kirloskar Motor Pvt. Ltd. -2015-TIOL-2716-CESTAT-MAD.
(v) Banking and Financial Services which have been paid for BRC charges, CBC handling charges etc. have been disallowed in the impugned order as post manufacturing activity. But we find that such charges stands allowed in the cases MPI Machines Ltd. vs. CCE, Indore -2013 (31) STR 103 (Tri. Del.) and Meghmani Dyes & Intermediates Ltd. vs. CCE, Ahmedabad 2013 (32) STR 671 (Tri. Ahmd.).
`(vi) Security Agency Service used at regional offices also stands specifically allowed in the case of National Engineering Industries Ltd. vs. CCE, Jaipur 2013 (30) STR 511 (Tri. Del.).
(vii) Mandap Keeper Service which was used in connection with annual day meet for celebration have been disallowed, considering it as welfare activity not related to manufacture. We find that similar services have been specifically allowed in the case of Toyota Kirloskar Motor Pvt. Ltd. vs. CCE, LTU Bangalore 2011 (24) STR 645 (Kar.).
8. The following services stand disallowed for the reason that they are not in relation to the manufacturing activity.
* Life Insurance Service * Courier Services * Repair & Maintenance Service * Real Estate Service * Canteen Service
(i) We find that life insurance service on premium paid for employees have been held as allowable in the case of Reliance Industries Ltd. vs. CCE&ST, Mumbai 2015 (38) STR 217 (Tri. Mumbai).
(ii) Courier services used for getting DEPB, DEEC, EPCG Schemes permissions etc. have been allowed in Meghmani Organics Ltd. vs. CCE, Ahmedabad 2012 (26) STR 555 (Tri.).
(iii) Repair & maintenance service used for photocopying, fax, ACs, water coolers etc. at regional offices have also been held to be allowable in Parason Machinery (I) Pvt. Ltd. vs. CCE, Aurangabad 2012 (277) ELT 215 (Tri. Mum.)
(iv) Real Estate Service used for procurement of premises on rental basis for regional offices have also been allowed in the case of Carrier Airconditioning & Refrigeration Ltd. vs. CCE 2016 (41) STR 824 (Tri. Chan.)
(v) Canteen Service availed at regional offices has been held a;s allowable in CCE vs. L&T Valves Ltd.- 2016-TIOL-750-HC-MAD-ST.
9. As discussed above, we find that all the services for which credit have been claimed under Rule 2(l) of the Cenvat Credit Rules, 2004 already stand allowed in various decisions. Hence, these issues are no longer res-integra. Respectfully, following the above decisions, we set-aside the impugned order and allow the appeal.
(Operative part of order pronounced in open Court).
(Archana Wadhwa) Member (Judicial) (V. Padmanabhan) Member (Technical) Pant 1