Custom, Excise & Service Tax Tribunal
) Rotork Control (India) Pvt. Ltd vs ) Commissioner Of Central Excise, ... on 4 June, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal Nos.E/253/2009 (by assessees)
E/275/2009 (by dept.)
[Arising out of Order-in-Appeal No.101/2008 (M-II) dt. 28.11.2008 passed by the Commissioner of Central Excise (Appeals), Chennai]
For approval and signature:
Honble Ms.JYOTI BALASUNDARAM, Vice-President
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 the Member wishes to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
1) Rotork Control (India) Pvt. Ltd.
2) Commissioner of Central Excise, Chennai
Appellant/s
Versus
1) Commissioner of Central Excise, Chennai
2) Rotork Control (India) Pvt. Ltd.
Respondent/s
Appearance:
Shri M.N.Bharathi, Advocate Shri T.H.Rao, SDR For the Assessees For the Revenue CORAM:
Honble Ms.Jyoti Balasundaram, Vice-President Date of hearing : 04.06.2010 Date of decision : 04.06.2010 Final Order No.____________ The assessees herein, who are manufacturers of Electrical Manual Value Actuators, availed credit of service tax paid on services such as insurance for public and product liabilities, building and machinery, maintenance of water coolers, manpower agency, consultancy services, clearing and forwarding services, banking commission etc. Notices were issued proposing denial of ineligible credit of Rs.1,02,578/- together with interest and proposing penal action; credit was disallowed by the adjudicating authority; Commissioner (Appeals) allowed credit with respect to services such as insurance for building and machinery, maintenance of water coolers within factory premises, house keeping of the area within the factory premises holding that these were in relation to business activity and hence entitled to credit. However, he disallowed credit in respect of services such as insurance for public and product liabilities, consultancy services, clearing and forwarding services, banking commission, insurance for laptop computer, annual maintenance contract for computer, printer maintenance contract and mediclaim insurance. Appeal No.253/2009 has been preferred by the assessees and Appeal No.257/09 has been preferred by the Revenue against the same impugned order.
2. I have heard both sides. Services availed by the assessees are expenses falling within the category of those listed in para 4.1 of CAS-4 which defines cost of production as follows :-
Cost of production: Cost of production shall consist of Material consumed, Direct Wages and Salaries, Direct Expenses, Works Overheads, Quality Control cost, Research and Development cost, Packing cost, Administrative Overheads relating to production. To arrive at cost of production of goods dispatched for captive consumption, adjustment for Stock of work-in0progress, finished goods, recoveries for sales of scrap, wastage etc. shall be made
3. The assessees submission is that the services in dispute have formed part of the cost of production as per CAS-4 which is the cost accounting principle for determination of the cost of production. Since the above submission was not raised by the assessees before the authorities below, I set aside the impugned order in so far it relates to denial of credit on services availed by the assessees and remit the case for fresh decision to the adjudicating authority after accepting their contention that insurance for public and product liabilities is a service in relation to manufacturing activity in the light of Tribunals decision in CCE Guntur Vs CCL Products (India) Ltd. [2009 (16) S.T.R 305] and CCE Raipur Vs Beekay Engg. & Castings Ltd. [2009 (16) STR 709], and also accepting the claim that consultancy services are essential inputs in relation to the manufacturing activity as such services have been availed in obtaining ISO certification of the assessees products.
As regards clearing and forwarding services, I accept the assessees contention that this is an input service which has nexus with manufacturing activity and also accept their contention that banking commission is an input service. Insurance for laptop computer/annual maintenance contract for computer/printer maintenance contract are also input services on which credit is admissible in the light of Tribunals decisions in CCL Products cited supra and Millipore India Ltd. Vs CCE Bangalore [2009 (236) ELT 145] and mediclaim insurance is also an input service in the light of Millipore decision supra as well as decision in H.E.G. Ltd.Vs CCE Raipur [2010 (17) STR 178].
4. The appeal of the assessees is thus allowed by way of remand.
5. As regards the Revenues appeal, services such as maintenance of water coolers within factory premises and house keeping of the area within the factory premises have already been held to be input services eligible to credit in the assessees own case vide Tribunals order No.749/10 dt. 7.7.10 following the decision of Balkrishna Industries Ltd. Vs CCE Aurangabad reported in 2010 (18) STR 600. Following the ratio of the above decisions, I uphold the impugned order in so far it relates to extension of credit on the above mentioned services, and reject the appeal of the Revenue.
(Operative part of the order was pronounced in open court on 4.6.2010) (JYOTI BALASUNDARAM) VICE-PRESIDENT gs 5