Custom, Excise & Service Tax Tribunal
M/S Binani Cement Ltd vs Cce, Jaipur on 16 November, 2012
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Date of Hearing : 16.11.2012 Excise Appeal No. 3545 of 2010-SM [Arising out of Order-in-Appeal No. 318(CB)CE/JPR-II/2010 dated 12.8.2010 passed by the Commissioner, Central Excise (Appeals), Jaipur) For Approval & signature : Honble Shri Mathew John, Member (Technical) 1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy of the order? 4. Whether order is to be circulated to the Department Authorities? M/s Binani Cement Ltd. Appellants Vs. CCE, Jaipur Respondent
Appearance:
Appeared for Appellant : Ms. Sukriti Das, Advocate
Appeared for Respondent : Ms. Shweta Bector, A.R.
CORAM: Honble Shri Mathew John, Member (Technical)
Order No.dated.
Per Mathew John :
The appellants are manufacturers of cement. They are running a hospital in their factory premises. They had availed the service of a manpower supply agency for carrying out certain functions in the hospital by hiring manpower from them. On such services they paid service tax and took Cenvat credit. Revenue was of the view that such service has no nexus with manufacturing activity and therefore Cenvat credit could not have been taken. Based on such reasoning, a Show Cause Notice was issued for recovery of Cenvat credit taken which has been adjudicated confirming demand of Rs.93,770/- along with interest and penalties.
2. The ld. Counsel submits that there is a clear finding by the Commissioner (Appeals) that there is a statutory obligation on manufacturers of cement under the Rajasthan Factories Rules 1991 to maintain hospitals in factory premises and without complying with that rule they could not have been carrying out manufacturing activity and therefore whatever was necessary to comply with such statutory provisions is to be considered as a necessary input service for manufacturing cement.
3. The counsel points out that Commissioner (Appeals) has denied the credit relying on the decision of Apex Court in the case of Maruti Suzuki Ltd. 2009 (240) ELT 641 (SC). However, she argues that the nexus to be established in the case of inputs and input services cannot be put at par because the definition of input services takes into account a wide range of activities which are connected with running an industry like auditing, financing, credit rating etc . and the decision of Apex Court in the matter of inputs cannot be applied to input services. She points out that it has been held that whenever an obligation under a statute is carried out and service tax is paid while undertaking such activity Cenvat credit should be allowed on tax paid on such activity. She relies on the decision in the case of CCE Vs, GTC Industries 2008 (12) STR 468 and also the decision in CCE Vs. Ultratech - 2010 (20) STR 577. The Bombay High Court has made such observations while allowing credit in respect of outdoor catering services provided by a manufacturer of cement in their factory premises. She submits that the medical care for employees also is on a similar footing and credit should be allowed.
4. Opposing the prayer, ld. AR for Revenue submits that medical care is basically a welfare activity and it cannot be considered as input services.
5. Considered arguments on both the sides I find that already various courts have taken a view that services like outdoor catering services provided in a factory to comply with statutory requirements, Cenvat credit of service tax paid has to be allowed. The case of hospital run in the factory premises also is on identical footing and therefore I allow the appeal by setting aside the impugned order.
(Dictated & pronounced in open Court) (Mathew John) Member (Technical) RM