Custom, Excise & Service Tax Tribunal
Hinduja Foundries Ltd vs Commissioner Of Central Excise on 19 November, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.E/42194/2014
[Arising out of Order-in-Appeal No.64/2014 (M-I) dated 23.6.2014 passed by the Commissioner of Central Excise (Appeals), Chennai]
Hinduja Foundries Ltd.
Appellant
Versus
Commissioner of Central Excise,
Chennai-I Respondent
Appearance:
Shri M. Kannan, Advocate For the Appellant Shri, K.P.Muralidharan, AC (AR) For the Respondent CORAM:
Honble Shri P.K. Choudhary, Judicial Member Date of hearing/decision :19.11.2015 FINAL ORDER No.41732/2015 The appellant-company M/s.Hinduja Foundries Ltd. have filed this appeal against the Order-in-Appeal No.64/2015 dt. 23.6.2014.
2. The brief facts of the case are that the appellant-assessee are engaged in the manufacture of excisable goods falling under Chapter 73 and 87 of CETA 1985. They have availed cenvat credit for excise duty paid on inputs and capital goods and they have availed cenvat credit of service tax paid on input services. The appellants were issued with show cause notice dt. 4.7.2012 requiring them to reverse credit of Rs.16,17,360/- availed by their Ennore unit. Assessee has stated that these services are input services as per definition in rule 2(l) of CCR. Hence appellants are eligible to avail credit of the services. The Additional Commissioner disallowed the credit on inputs services to the extent of Rs.27,495 as per chart given under and also imposed penalty of Rs.2000/- :-
ISD Inv.No. RG 23A Part I Sl.No. Date Input Service Provider Description of input Service Value Service Tax Credit 5 3
03.01.11 Confederation of Indian Industry Membership of clubs 80000 8240 4 23 03.11.10 T.N Electricity Consumer Assn. Membership of clubs 9000 927 4 45 29.12.10 United Insurance Co.Ltd.
Group Mediclaim Policy 114000 11742 4&5 2, 20& 38 10,24&35 06.01.11 08.02.11 09.03.11 13.10.10 09.11.10 09.12.10 Anusha Enterprises Housekeeping charges 63,941 6,586 TOTAL 266941 27495 The Commissioner (Appeals) upheld the order of the adjudicating authority. Hence this appeal.
3. Ld. Counsel Shri M. Kannan, appearing on behalf of the appellant submitted that the input services are essential for the assessee and the same are eligible for cenvat credit. He further submitted that lower adjudicating authority and the Commissioner (Appeals) have erred in not appreciating the facts of the case. He also relied on the following citation :-
(1) CCE & ST Bangalore Vs Micro Labs Ltd.
2011 (24) STR 272 (Kar.) (2) CCE& ST LTU Chennai Vs Rane TRW Steering Systems Ltd. - 2015 (39) STR 13 (Mad.) (3) CCE Nagpur Vs Ultratech Cement Ltd.
2010 (20) STR 577 (Bom.)
4. Ld. A.R Shri K.P. Muralidharan, AC submitted that the Commissioner (Appeals) has discussed the issue in detail in his OIA (page 20, 21 of paper book) and also submitted that the input services must have nexus with the manufacture of final product and all the parts of the definition should be satisfied so as that input services becomes an eligible input.
5. Heard both sides.
6. On going through the records, I find that expenses incurred on services at the factory premises of the appellant-assessee are eligible as input service. It has also been upheld by Hon'ble High Court of Madras in CCE& ST LTU Chennai Vs Rane TRW Steering Systems Ltd. (supra). Similarly policy taken to provide medical coverage to the employees is also an eligible input service under rule 2 (l) of CCR 2004. This issue is also discussed by Hon'ble High Court of Karnataka in CCE ITU Bangalore Vs Micro Labs Ltd. (supra) and Hon'ble High Court has held that assessees are entitled to avail cenvat credit of the service tax paid for group medical policy and group insurance policy. Para 4 & 5 of the orders of the Hon'ble High Court are reproduced as under :-
"4.?Therefore, merely because these services are not expressly mentioned in the definition of input service it cannot be said that they do not constitute input service and the assessees are not entitled to the benefit of CENVAT credit. Infact, Rule 3 of the Cenvat Rules, 2004, specifically provides that the manufacturer of final products shall be allowed to take credit. The service tax is leviable under Section 66 of the Finance Act and paid on any input service received by the manufacturer of a final product. Therefore under the scheme of the Cenvat Credit Rules, 2004, the service tax paid on all those services which the assessee has utilized directly or indirectly in or in relation to the final product is entitled to claim the credit. Therefore, the judgment of the Tribunal is legal and valid and is in accordance with law and does not suffer from any legal infirmity which calls for any interference.
5.?Therefore it is evident that the assessees are entitled to avail Cenvat credit of the service tax on Group Medical Policy and Group Insurance Health Policy. Under these circumstances, the question of law that arises for consideration in this appeal having since been answered by the Division Bench as mentioned hereinabove, this appeal is dismissed in view of the aforesaid reasons."
7. Regarding Membership fee paid to CII, I find that the assessee is required to associate with these associations in order to be updated on issues relating to advancement of his business activities. Hence the payments made to these trade and business associations are eligible input service. The Hon'ble High Court of Bombay has rejected the contention of Revenue that services qualifying as an input service must be used in or in relation to the manufacture of final products and held that any service used in relation to business of manufacture of the final product would be an eligible input.
7. As regards, subscription to Tamil Nadu Electricity Consumer Associations, the counsel is not pressing for the relief. In respect of subscription of appellant to TN Electricity Consumer Associations, I agree with Commissioner (Appeals). By respectfully following the ratio laid down by the Hon'ble High Courts as mentioned above, I allow the assessee's appeal in respect of cenvat credit on input services, such as, house keeping services, group medical insurance policy and subscription to CII. Taking into overall facts and circumstances of the case, I set aside the penalty imposed on the appellant.
8. In view of the discussions above, the appeal is partly allowed.
(Dictated and pronounced in open court) (P.K.CHOUDHARY) JUDICIAL MEMBER gs 5