Custom, Excise & Service Tax Tribunal
Cce, Hyderabad vs M/S. Dr. Reddy S Laboratories Ltd on 22 February, 2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench - SMB
Court I
Date of Hearing:22/02/2013
Date of decision:22/02/2013
Appeal No.E/728-729/2011
(Arising out of Order-in-Appeal No.83 & 84/2010(H-I)CE dt. 29/11/2010 passed by CC,CE&ST(Appeals), Hyderabad)
For approval and signature:
Honble Mr. P.G. Chacko, Member(Judicial)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
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
CCE, Hyderabad
..Appellant(s)
Vs.
M/s. Dr. Reddys Laboratories Ltd.
..Respondent(s)
Appearance Ms. Sabrina Cano, Superintendent(AR) for the appellant.
None for the respondent.
Coram:
Honble Mr. P.G. Chacko, Member(Judicial) FINAL ORDER No.25119 & 25120/2013 These appeals filed by the Department are directed against a common order passed by the Commissioner(Appeals) in two appeals filed by the assessee against two Orders-in-Original. The substantive issue raised by the appellant is whether the respondent was entitled to take CENVAT credit on the following services during the period from September 2008 to August 2009:
(a) Sponsorship service
(b) Renting of immovable property service
(c) Rent-a-cab service
(d) Air travel agents service.
2. The original authority denied CENVAT credit on the above services on the ground that none of the services qualified to be input service defined under Rule 2(l) of the CENVAT Credit Rules 2004. The first appellate authority set aside the orders of the original authority after recording a finding that the above services were used in relation to the business activities of the assessee. Hence the present appeals of the Revenue.
3. The respondent in these appeals does not want to be personally heard. They have filed written submissions wherein they have relied on a plethora of decisions regarding the aforesaid services. The respondent has, particularly, relied on Final Order Nos.1304 to 1310/2009 dt. 18/09/2009 passed by this Tribunal in a batch of appeals filed by the same assessee viz. Dr. Reddys Laboratories Ltd. The said Final Order has been relied on in relation to rent-a-cab service and air travel agents service.
4. The appellant is represented by the learned Superintendent(AR) who submits that the appeals filed by the Department against Final Order Nos.1304 to 1310/2009 ibid were admitted by the Honble Andhra Pradesh High Court and, therefore, the said Final Order cannot be said to have attained finality. With regard to other services, it is submitted that the learned Commissioner(Appeals) accepted the submissions of the assessee without stating specific reasons for the same.
5. The learned Superintendent(AR) submits that, for a service to fall within the ambit of the definition of input service under Rule 2(l) of the CENVAT Credit Rules, it should be shown to be integrally connected with the business activities of the assessee. In this connection, reliance is placed on CCE, Nagpur Vs. Ultratech Cement Ltd. [2010(260) ELT 369 (Bom.)].
6. After considering the submissions of the learned Superintendent(AR) and the written submissions of the respondent, I record the following findings:
a. In so for as rent-a-cab service and air travel agents service are concerned, the Final Order cited by the respondent, which was passed in their own case, has to be appropriately followed as a precedent. Though appeals against the said Final Order were filed by the Department two years ago, no stay of its operation has been obtained so far. In this scenario, the said Final Order of this Tribunal holds the field and would operate as a precedent. Therefore, CENVAT credit on the aforesaid two services viz. rent-a-cab service and air travel agents service is admissible to the respondent as held by the lower appellate authority.
b. However in respect of sponsorship service and renting of immovable property service, there is some force in the submissions of the learned Superintendent(AR). In the impugned order, the learned Commissioner(Appeals) recorded the submissions of the party and proceeded to observe that the relation of the services to the business activities of the party was not disputed as if the Department was also heard by the Commissioner(Appeals). But there is nothing in the impugned order to indicate that any representative of the Department was heard by the Commissioner(Appeals). Moreover, as rightly pointed out by the Superintendent(AR), what is required for classifying a service as input service defined under Rule 2(l) of CENVAT Credit Rules is not a mere relation but an integral connection to business. This legal position was affirmed by the Honble High Court in para 34 of its judgment in Ultratech Cement case, which reads thus:-
34. Therefore, the definition of input service read as a whole makes it clear that the said definition not only covers services, which are used directly or indirectly in or in relation to the manufacture of final product, but also includes other services, which have direct nexus or which are integrally connected with the business of manufacturing the final product. In the facts of the present case, use of the outdoor catering services is integrally connected with the business of manufacturing cement and therefore, credit of service tax paid on outdoor catering services would be allowable.
The above ruling has been followed by this Tribunal in similar cases. In the impugned order, the learned Commissioner(Appeals), apparently, did not have occasion to consider the Honble High Courts decision in Ultratech Cements case. In the aforesaid circumstances, I am of the view that the question whether CENVAT credit on sponsorship service and renting of immovable property service was admissible to the respondent during the period of dispute requires to be addressed afresh by the Commissioner(Appeals). Accordingly, his order is set aside in so far as his decision on the said services is concerned and the said question regarding CENVATability of the two services (sponsorship service and renting of immovable property service) is directed to be reconsidered by the learned Commissioner(Appeals) in accordance with law and the principles of natural justice and having regard to the relevant observations made in this order. As regards the other two services, the decision of the Commissioner(Appeals) is affirmed.
7. The two appeals are accordingly disposed of.
( Pronounced and dictated in open court ) ( P.G. CHACKO ) MEMBER (JUDICIAL) Nr 6