Custom, Excise & Service Tax Tribunal
M/S. The India Cements Ltd vs Cce, Salem on 5 May, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH
CHENNAI
Appeal Nos. E/40276 - 40277/2015
[Arising out of Order-in-Appeal No. 191 & 192/2014 SLM CEX dated 08.10.2014 passed by the Commissioner of Central Excise (Appeals), Salem].
M/s. The India Cements Ltd. : Appellant
Versus
CCE, Salem : Respondent
Appearance:
Ms. Minchu Mariam Punnoose, Advocate For the Appellant Shri. R. Chandrasekaran, AC (AR) For the Respondent CORAM :
Honble Shri P.K. Choudhary, Judicial Member Date of Hearing : 31.3.2016 Date of Pronouncement: 02.05.2016 FINAL ORDER No. 40682-40683 / 2016 M/s India Cements Ltd hereinafter referred to as the appellants are manufacturers of cements and are availing Cenvat credit on capital goods, inputs and input services. Appellants were issued with Show cause notices dated 22.08.2013 and 03.02.2014 denying the credit availed in respect of Telephone/mobile phone, courier services and construction and repair services( pertaining to the staff quarters) for the period involving April 2011 to December 2012 for a credit involving Rs.95,277/- (Telephone/mobile phone and courier service Rs.81,394/- and Construction and repair service Rs.13,883/-) and January 2013 to July 2013 involving an amount Rs.47,535/- (Telephone and courier service) respectively.
2. The Adjudicating authority vide order in original no 05/2014 and 06/2014 both dated 30.06.2014 had denied the credit availed on the above services, against which the appellants had preferred an appeal and the Commissioner (Appeals) in order in appeal no 191 &192/2014 dated 08.10.2014 had upheld the order of the adjudicating authority. Hence this appeal is preferred by the appellants.
3. Appellant was represented by Ms. Minchu Mariam Punnoose and Shri S. Muthu Venkataraman, Advocates and the department was represented by Shri R. Chandrasekaran, A.C. (AR). The counsel for the appellants submitted that as per the definition of input service under Rule 2(l) of the Cenvat Credit Rules 2004, any services used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, is eligible for the input service credit. Further it was submitted that the appellants had availed the courier service for the despatch of their official communications and purchase order which are essentially in relation to the appellants manufacturing activity. With regard to the credit availed on telephone/mobile, it was submitted that all these connections were taken inside the appellants factory premises and the invoices are raised in the appellants name only. In support of the same, sample invoices were also submitted. Further, with regard to the credit availed on construction and repair service of the appellants staff quarters, it was submitted that the said service was pertaining to the appellants staff quarters, which is also part of the appellants factory and it is the responsibility of the appellant to take proper maintenance of their quarters for the staff welfare. Reliance was placed on the judgement in Servall Engineering Works Pvt Ltd vs. CCE in final order no 41717 41718/2015 dated 18.12.2015 wherein the service tax paid on telephone and courier services were held to be eligible for credit.
On the other hand, learned DR had reiterated the findings of the Commissioner (Appeals) and further submitted that the credit on the repairs and maintenance of the appellants staff quarters are not eligible since the same are excluded from the purview of the input service definition exclusion clause.
4. Heard both sides.
5. Short issue to be decided in the present appeal is as to whether the appellants are eligible for the credit availed in respect of Telephone/mobile phone and courier services and construction and repair services (pertaining to the staff quarters).
6. With regard to the credit availed in respect of Telephone/mobile phone and courier services, the judgement in the case of Servall Engineering Works Pvt Ltd, cited supra is squarely applicable to the appellants case, wherein it was held that the services related to cell phone , courier agency, it is quite possible as to the use of those services for the purpose of manufacturing and commercial activity of the appellant and therefore, Cenvat credit claimed in respect of service tax paid thereon was allowed. Following the above ratio, the credit availed on the Telephone/mobile phone and courier services are allowed.
7. With respect to the repair and maintenance service pertaining to the appellants staff quarters, I find that the services are in the nature of welfare activity and from 01.04.2011 onwards the credit availed on such welfare activities are not eligible for the credit under Rule 2(l) of the CCR 2004. Since the credit is held to be eligible on Telephone/mobile phone and courier services, penalty is set aside and with regard to the repair and maintenance service in view of the fact that the issue involved is interpretative in nature and the appellants were under the bonafide belief, penalty is set aside.
8. In the result, both the appeals are disposed on the aforesaid terms.
(Order Pronounced in open court on 02.05.2016) (P.K. CHOUDHARY) JUDICIAL MEMBER BB 1