Custom, Excise & Service Tax Tribunal
M/S Reliance Industries Ltd vs Commissioner Of Central Excise & ... on 1 August, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. E/1020, 1021, 1023, 1223 to 1225, 741 to 744/2012, E/2188/2010, E/88023, 88040, 88071, 87998 & 87999/13 (Arising out of Orders-in-Appeal No. YDB/30-36/LTU/MUM/2012 dated 29.3.2012 & No. YDB/11-14/LTU/MUM/2012 dated 30.1.2012 passed by Commissioner of Central Excise (Appeals), Mumbai-II; Orders-in-Original No. 01-03/COMMR(KAP)/LTU-M/2010 dated 29.6.2010; No. 25-29/COMMR(BKS)/LTU-M/EX/2013 dated 10.5.2013, No. 02-10/COMMR(BKS)/LTU-M/EX/2013 dated 7.5.2013; No. 30-36/COMMR(BKS)/LTU-M/EX/2013 dated 13.5.2013; No. 19-24/COMMR(BKS)/LTU-M/EX/2013 dated 9.5.2013 & No. 11-18COMMR(BKS)/LTU-M/EX/2013 dated 8.5.2013 passed by the Commissioner of Central Excise & Service Tax, LTU, Mumbai). For approval and signature: Honble Shri M.V. Ravindran, Member (Judicial) Honble Shri Raju, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No 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 : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Reliance Industries Ltd. Appellant Vs. Commissioner of Central Excise & Service Tax, LTU, Mumbai Respondent Appearance: Shri V.K. Jain, Advocate Shri J.C. Patel, Advocate Ms. Shilpa Balani, Advocate for Appellant Shri S.V. Nair, Assistant Commissioner (AR) Shri Sanjay Hasija, Supdt. (AR) Shri N.N. Prabhudesai, Supdt. (AR) for Respondent CORAM: SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL) SHRI RAJU, MEMBER (TECHNICAL) Date of Hearing: 06.06.2016 Date of Decision: 01.08.2016 ORDER NO. Per: M.V. Ravindran
These appeals are directed against Orders-in-Appeal No. YDB/30-36/LTU/MUM/2012 dated 29.3.2012 & No. YDB/11-14/LTU/MUM/2012 dated 30.1.2012 passed by Commissioner of Central Excise (Appeals), Mumbai-II; Orders-in-Original No. 01-03/COMMR(KAP)/LTU-M/2010 dated 29.6.2010; No. 25-29/COMMR(BKS)/LTU-M/EX/2013 dated 10.5.2013, No. 02-10/COMMR(BKS)/LTU-M/EX/2013 dated 7.5.2013; No. 30-36/COMMR(BKS)/LTU-M/EX/2013 dated 13.5.2013; No. 19-24/COMMR(BKS)/LTU-M/EX/2013 dated 9.5.2013 & No. 11-18COMMR(BKS)/LTU-M/EX/2013 dated 8.5.2013 passed by the Commissioner of Central Excise & Service Tax, LTU, Mumbai.
2. The relevant facts that arise for consideration are that the appellant herein is a LTU and has availed CENVAT Credit of various input services. The appellants are engaged in the manufacture of excisable goods and cleared the same on payment of appropriate Central Excise duty. During the scrutiny of the monthly returns filed for the year 2008-09 to 2011-12, lower authorities noticed that the CENVAT Credit availed on various input services are not eligible as per the provisions of Rule 2(l) of Cenvat Credit Rules, 2004. Coming to such a conclusion, show-cause notices were issued, which were adjudicated upon. The appellants contested the issue on merit as well as on limitation. The adjudicating authority after following the due process of law held against the appellant and confirmed the demands raised with interest and also imposed penalties.
3. Heard both sides and perused the records.
4. Learned Counsel brings to our notice the various input services on which CENVAT Credit was availed. He would submit that on the services on which CENVAT Credit was availed were in relation to the activity of manufacturing of the final products and hence CENVAT Credit should not be denied. He relied upon the various judgments which are reproduced herein below: -
(a) John Deree India Pvt. Ltd. 2016 (41) STR 990
(b) Force Motors Ltd. 2009 (16) STR 591
(c) Force Motors Ltd. 2009 (13) STR 692
(d) Mangalore Refinery & Petrochemicals Ltd. 2016 (42) STR 6
(e) J.P. Morgan Services (I) Pvt. Ltd. 2016 (42) STR 196
(f) Solaris Chemtech Ltd. 2008-TIOL-253-ITAT-HYD
(g) Verizon Data Services India Pvt. Ltd. 2015 (39) STR 522
(h) Dell International Services India P. Ltd. 2010 (17) STR 540
(i) Castrol India Ltd. 2013 (30) STR 214
(j) Reliance Industries Ltd. Order No. A/225/14/CSTB/C-I dated 7.3.2014
(k) Toyota Kirloskar Motors 2011 (24) STR 645
(l) Finecare Biosystems 2009 (244) ELT 372
(m) Bharat Fritz Werner Ltd. 2011 (22) STR 429
(n) Ultratech Cement Ltd. 2010 (260) ELT 369 (Bom)
(o) Stanzen Toytetsu India P. Ltd. 2011 (23) STR 444 (Kar)
(p) Federal Mogul Goetze (India) Ltd. 2015 (39) STR 735
(q) Cadmach Machinery Order No. A/1933-1934/WZB/AHD/ 2011 dated 14.10.2011
(r) Reliance Industries Ltd. Order No. A/3412-3419/15/STB dated 26.8.2015
(s) Savita Oil Technologies Ltd. 2014-TIOL-114-CESTAT-MUM
(t) Delta Energy Systems Ltd. 2013 (31) STR 684 (Tri-Del) (u) Reliance Inds. Ltd. Order No. A/11576/2013 dated 1.11.2013
(v) Lupin Ltd. 2012 (28) STR 291 4.1 He would also submit that the appellant has included the cost of the services in the final product manufactured by them which entitled them to avail the CENVAT Credit of Service Tax paid on these services. He would submit that in their own case as reported in 2015 (35) STR 217 and Final Order No. A/3412-3419/15/STB dated 15.10.2015, this Bench has held that when the cost of the services is included in the final product manufactured by the assessee, CENVAT Credit cannot be allowed, relying upon the decision of Hon'ble High Court of Bombay in the case of Hindustan Coca Cola. He would urge that the appeals may be allowed.
5. Learned DR, on the other hand, would submit that the definition of input services under Rule 2(l) has undergone a change, which needs to be considered. He would draw our attention to the said notification and submit that prior to 1.4.2011, the definition clearly indicates that the same should be used in the manufacture of final product in the case of manufacturers and should be used in providing output services in the case of service provider. He would submit that description of services on which CENVAT Credit was availed, the same seems not to be used in the manufacture of final products of the appellant. It is his further submission that post 2.4.2011 the definition & input service has undergone a change, which exclude various input services which are used for personal consumption and employees consumption and such services which are excluded are, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees such as Leave or Home Travel Concession. He would submit that CENVAT Credit has been availed post 1.4.2011 on such services should be denied as they are for the personal consumption of the employees. He would rely upon the decision of the Tribunal in the case of J.K. Paper Mills 2014 (319) ELT 359, Telco Construction Equipment Co. Ltd. 2013 (32) STR 482 (Tri-Bang), Bajaj Motors Ltd. 2015 (39) STR 85 (Tri-Del), Applied Micro Circuits India Pvt. Ltd. 2016-TIOL-403-CESTAT-MUM and Swastik Gases Pvt. Ltd. Vs. Indian Oil Corp. Ltd. in Civil Appeal No. 5006 of 2013 dated 3.7.2013 for the proposition put forth by him.
6. We have considered the submissions made by both sides and perused the records.
6.1 The issue involved in these appeals is the eligibility to avail the CENVAT Credit on various input services which were utilized by the appellants during the course of his business of manufacturing of final products on which undisputedly Central Excise duty is paid. There is no dispute that the appellant is eligible to avail CENVAT Credit. The dispute is relating to whether these services are used in or in relation to the manufacturing of final products. The services which are in dispute are: -
(a) Air Travel Agent and Rail Travel Agents
(b) Airport/Civil Enclave/Airport Operators Service
(c) Authorized Service Stations
(d) Cable Operator Service
(e) Club or Association Service
(f) Health Club & Fitness Centre
(g) Convention Service
(h) Event Management
(i) Mandap Keeper
(j) Pandal & Shamiana
(k) Transportation of passenger on international journey
(l) Interior Decorators Service
(m) Outdoor Catering Service
(n) Rent-a-Cab Operators Service
(o) Tour Operators Service
(p) Video Tape Production Service
(q) Construction of residential complex
(r) Renting of immovable property
(s) Real Estate Agent
(t) Ship Management (u) Dry Cleaning
(v) Commercial & Industrial Construction (w) Management & Repair
(x) Clearing and Forwarding (y) Courier Service (z) Cleaning Services (aa) Insurance of Tugs (ab) Management Consultant (ac) Telephone (ad) Business Exhibition (ae) Cargo Handling (af) Steamer Agent (ag) ATM Operations Recovery It can be seen from the above that all the said services were utilized by the appellant during the course of activity of manufacturing. For example, Airport Operators Services were in respect of examination of packing charges, Import Terminal Charges for import of various capital goods and spares thereof. Convention services for the charges aid for the business conference, seminar and meeting held by the appellant. Interior Decorators services are for the services rendered by the Interior Decorator for industrial commercial decoration of offices, factory, administrative offices for which their business activities are taken. Pandal and Shamiana Services are availed for conducting business meeting of the appellants like AGM etc. Video Tape Production services have been acquired for AGM. It is his submission that holding of AGM etc. are statutory requirement under the Companies Act, quite rightly so.
6.2 On deeper perusal of the rule, we find that on the services on which input service credit were availed were in relation to the business activities undertaken by the appellants. Accordingly, we hold that Service Tax paid on these services are eligible to be availed of CENVAT Credit as per the following judgments: -
(a) John Deree India Pvt. Ltd. 2016 (41) STR 990
(b) Force Motors Ltd. 2009 (16) STR 591
(c) Force Motors Ltd. 2009 (13) STR 692
(d) Mangalore Refinery & Petrochemicals Ltd. 2016 (42) STR 6
(e) J.P. Morgan Services (I) Pvt. Ltd. 2016 (42) STR 196
(f) Solaris Chemtech Ltd. 2008-TIOL-253-ITAT-HYD
(g) Verizon Data Services India Pvt. Ltd. 2015 (39) STR 522
(h) Dell International Services India P. Ltd. 2010 (17) STR 540
(i) Castrol India Ltd. 2013 (30) STR 214
(j) Reliance Industries Ltd. Order No. A/225/14/CSTB/C-I dated 7.3.2014
(k) Toyota Kirloskar Motors 2011 (24) STR 645
(l) Finecare Biosystems 2009 (244) ELT 372
(m) Bharat Fritz Werner Ltd. 2011 (22) STR 429
(n) Ultratech Cement Ltd. 2010 (260) ELT 369 (Bom)
(o) Stanzen Toytetsu India P. Ltd. 2011 (23) STR 444 (Kar)
(p) Federal Mogul Goetze (India) Ltd. 2015 (39) STR 735
(q) Cadmach Machinery Order No. A/1933-1934/WZB/AHD/ 2011 dated 14.10.2011
(r) Reliance Industries Ltd. Order No. A/3412-3419/15/STB dated 26.8.2015
(s) Savita Oil Technologies Ltd. 2014-TIOL-114-CESTAT-MUM
(t) Delta Energy Systems Ltd. 2013 (31) STR 684 (Tri-Del) (u) Reliance Inds. Ltd. Order No. A/11576/2013 dated 1.11.2013
(v) Lupin Ltd. 2012 (28) STR 291 6.3 Now the question that arises is regarding services which were excluded by the amendment after 2.4.2011 to the definition of Rule 2(l) of the Cenvat Credit Rules, 2004. The said services are - outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees such as Leave or Home Travel Concession. The amendment indicates when such services are used purely for personal use for consumption of any employee, the CENVAT Credit cannot be allowed. On perusal of the records, we find that the appellants have been taking a consistent stand that in their case Outdoor Catering services, Club or Association service, Health and Fitness Services are three services on which CENVAT Credit from 1.4.2011 is sought to be denied relying upon the said amendment to Rule 2(l) of the Cenvat Credit Rules, 2004, which is incorrect as these services are utilized for the business meetings held at various places including AGM.
6.4 On perusal of the records, show-cause notices and Orders-in-Original, we find that the appellants have been taking the stand that the charges on Club or Association service, Health and Fitness Centre service and Outdoor Catering Services are paid by the company and said claim of the appellant is not dispelled by the adjudicating authority in their findings. It is not the case of the Revenue that these services used for personal consumption of employees. In the absence of any such dispelling, it is to be held that these services on which CENVAT Credit have been availed are not for personal consumption of the employee but it was billed for service provided for business meetings. In our considered view, the judgment of the Tribunal in the case of J.P. Morgan Services (I) Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai 2016 (42) STR 196 (Tri-Mum), will cover the issue in favour of the appellant in respect of these three services for the period after 1.4.2011.
7. As we have disposed the appeals on merits and factual matrix, we are not recording any findings on other submissions made by both sides.
8. In view of the foregoing, we hold that the impugned orders are unsustainable and liable to be set aside and we do so. The impugned orders are set aside and the appeals are allowed, with consequential relief.
(Pronounced in Court on 29.07.2016)
(Raju) (M.V. Ravindran)
Member (Technical) Member (Judicial)
Sinha
10
Appeal No. E/1020/12 & 15 Others