Custom, Excise & Service Tax Tribunal
M/S. Siemens Ltd vs Cc&Ce, Hyderabad-Iv on 25 January, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench SMB Court I Appeal No.E/2611-2612/2011 (Arising out of Order-in-Appeal No.55/2011(H-IV)CE dt. 26/05/2011 & No.55/2011(H-IV)CE dt. 26/05/2011 passed by CC,CE&ST(Appeals-II), Hyderabad) For approval and signature: Honble Ms. Sulekha Beevi, C.S., 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? 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 their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s. Siemens Ltd. ..Appellant(s) Vs. CC&CE, Hyderabad-IV ..Respondent(s)
Appearance Shri Karan Talwar, Advocate for the appellant.
Shri Amish Gupta, Authorised representative for the respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member(Judicial) Date of Hearing:13/01/2016 Date of decision:.
FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The appellant is aggrieved by the disallowance of credit on input services.
2. The appellants are engaged in manufacture of Isolators and Electrical Switchgear Equipments and are registered with the department. They are also availing the facility of CENVAT credit on inputs and input services. During the course of audit, it was observed that the appellants had availed irregular credit on input services during the period April 2008 to March 2009. A show-cause notice was issued to the appellants proposing disallowance of credit and recovery of the same along with interest besides proposing imposition of penalty. After adjudication, the primary authority ordered recovery of ineligible service tax credit along with interest and imposed penalty. The appellants carried the issue in appeal and vide the order impugned herein, the Commissioner(Appeals) upheld the same. Being aggrieved the appellants have filed the present appeal.
3. The learned counsel for the appellant Shri Karana Talwar argued both merits and issue of limitation. He submitted that in E/2611/2011, credit has been denied on the service tax paid on Fabrication services, CHA services, Rent-a-cab services, Air travel and train travel services, pest control and maintenance of immovable property services and training to employees services. The disputed period in the appeal is April 2008 to March 2009. In the appeal E/2612/2011, credit has been denied for fabrication services, clearing agent services and coaching and training of staff members. The period involved is July 2009 to August 2009.
4. The learned counsel adverted to the definition of input services as it stood prior to 01/04/2011 and submitted that the definition had a wide ambit as it included all activities relating to business. With regard to fabrication services, the learned counsel urged that credit has been denied alleging that the services are availed outside the factory premises. The goods manufactured by appellants are bulky and heavy in nature. For convenience of transportation, these are dismantled into various parts. The services were availed for aligning and assembling the dismantled parts at the customers premises. That in the case of input services, there is no restriction that it should be received in the factory premises. The only stipulation is that it should be used directly or indirectly in or in relation to the manufacture of final products. The clearing agent services were availed in connection with export consignment to be shipped at the port of shipment. That all the impugned services were availed for the business of manufacture. He placed reliance on the following cases:-
1. CCE&C, Aurangabad Vs. Endurance Technology (P) Ltd.
[2015-TIOL-1371-H-MUM-ST]
2. CCE Vs. Ultratech Cement Ltd. [2010(260) ELT 369 (Bom.)]
3. Deepak Fertilizers & Petrochemicals Corporation Ltd. Vs. CCE, Bangalore [2013(232) STR 532 (Bom.)]
4. Mawana Sugars Ltd. Vs. CCE&ST LTU, Delhi [2015(38) STR 424 (Tri. Del.)]
5. Coca cola India Pvt. Ltd. Vs. CCE, Pune-III [2009(242) ELT 168 (Bom.)]
5. Per contra, the learned AR Shri Amish Gupta contested that the credit on fabrication services is not admissible. He referred to the purchase order and submitted that the price fixed is Ex-work basis. This means that the place of removal is at the sellers premises. That in the agreement they have shown FOR basis and the fabrication services do not qualify as input services as these services were rendered outside the factory of the appellant. He pleaded that the appeal may be dismissed.
6. I have heard the rival submissions. The main contention raised by Revenue is with regard to fabrication services contending that these services having been availed outside the factory are not eligible for credit as they do not qualify as input services. I am not able to persuade me to accept this contention. By bringing in the amendment vide Notification No.10/2008 dt. 01/03/2008 to the definition of input services w.e.f. 01/04/2008 a radical change was introduced expanding the clearances of final products upto the place of removal. Further in the case of Endurance Technology (P) Ltd. (supra), the Honble High Court of Bombay has categorically held that no such restriction is imposed.
7. In Deepak Fertilizers & Petrochemicals Corporation Ltd. (supra), the Honble High Court held as under:-
5. Now at the outset it must be noted that Rule 3(1) allows a manufacturer of final products to take credit inter alia of service tax which is paid on (i) any input or capital goods received in the factory of manufacturer of the final product; and (ii) Any input service received by the manufacturer of the final product. The subordinate legislation in the present case makes a distinction between inputs or capital goods on the one hand and input services on the other other. Clause (i) above provides that the service tax should be paid on any input or capital goods received in the factory of manufacture of the final product. Such a restriction, however, is not imposed in regard to input services since the only stipulation in clause (ii) is that the input services should be received by the manufacturer of the final product. Hence, even as a matter of first principle on a plain and literal construction of Rule 3(1) the Tribunal was not justified in holding that the Appellant would not be entitled to avail of CENVAT credit in respect of services utilized in relation to ammonia storage tanks on the ground that they were situated outside the factory of production. The definition of the expression 'input service' covers any services used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products. The words 'directly or indirectly' and 'in or in relation to' are words of width and amplitude. The subordinate legislation has advisedly used a broad and comprehensive expression while defining the expression 'input service'.
Therefore the arguments advanced by Revenue regarding fabrication services are untenable. All the other services for which the credit has been denied have been held to be eligible input services in a catena of judgments cited supra as these services would get covered under the activities relating to business.
8. From the foregoing, I am of the view that the denial of credit is unjustified. As the substantial issue is answered in favour of the appellants in both appeals, I do not enter into the issue of limitation.
9. In the result, the impugned orders are set aside and the appeals are allowed with consequential reliefs, if any.
(Pronounced in open court on ..) SULEKHA BEEVI C.S. MEMBER(JUDICIAL) Raja.
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