Custom, Excise & Service Tax Tribunal
Sun Pharmaceuticals Industries Ltd vs Commissioner Of Gst&Amp;Cce(Chennai ... on 25 July, 2019
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CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT NO. I
Excise Appeal No. 41622 of 2018
(Arising out of Order-in-Appeal No. 502/2017 (CTA-II) dated 29.12.2017 passed by
the Commissioner of Central Tax (Appeals-II), C.G.S.T. & Central Excise, Newry
Towers, 3rd Floor, Plot No. 2054, I Block, II Avenue, Anna Nagar, Chennai - 600 040)
M/s. Sun Pharmaceuticals Industries Ltd., : Appellant
Sathammai Village, Karunkuzhi Post,
Madurantangam Taluk,
Kanchipuram Dist. - 603 309
VERSUS
The Commissioner of G.S.T. & Central Excise, : Respondent
Chennai Outer Commissionerate, Newry Towers, No. 2054/1, II Avenue, 12th Main Road, Anna Nagar, Chennai - 600 040 APPEARANCE:
Ms. Mithela Shelar, Advocate for the Appellant Shri. M. Jagan Babu, Authorized Representative for the Respondent CORAM:
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL) FINAL ORDER NO. 40962 / 2019 DATE OF HEARING: 14.06.2019 DATE OF DECISION: 25.07.2019 By this appeal, the assessee has challenged the denial of CENVAT Credit.
2.1 The facts relevant for disposing of the above appeal are as under :
(i) The appellant had availed input service credit on the basis of invoices/bills issued by the service providers on the services viz. Insurance Agency Service, Telephone Service, Business Auxiliary 2 Service, Travel Agency Service, Cost Accountant Service, Courier Service, Construction Service, Repairs and Maintenance Service, Air Travel Agency Service, etc., amounting to Rs. 70,69,012/-
during the period from October 2010 to March 2011;
(ii) Since it appeared to the Revenue that the above said services were not used by the appellants directly or indirectly in the manufacture of final products and also not used by them in relation to the activities as enumerated in the provisions of Rule 2 (l) (ii) of the CENVAT Credit Rules, 2004, a Show Cause Notice dated 28.10.2011 was issued;
(iii) After due process of law, the CENVAT Credit to the tune of Rs. 57,59,747/- was allowed and Rs. 13,09,265/- was disallowed pertaining to Business Auxiliary Services vide Order-in-Original dated 26.04.2017.
2.2 Being aggrieved by the above disallowance, the appellant filed first appeal inter alia on the ground that the definition of 'input service' was wide enough to cover all the impugned services; that they have stated that various services have been availed under the category of Business Auxiliary Serivce viz., Courier/Transportation Service, Annual Maintenance of equipment, Security Service, Training Service, Technical Consultancy, Pest Control Service, Employees Medical Maintenance Service, Maintenance and Repair Service, Clearing and Forwarding Service, Warehouse Service, Hotel Service and Civil Service; that CENVAT Credit cannot be rejected if cost of input service forms a part of the value of final product; that the principles of natural justice have not been followed; etc. 2.3 The Ld. First Appellate Authority summarized the arguments of the appellant to the effect that various services on which CENVAT Credit was rejected, were covered in the definition of Business Auxiliary Services 3 (BAS) during the period from October 2010 to March 2011; however, after discussing in respect of each of the services, concluded as under :
(a) Courier/Transportation Service: holds that since the factory gate is the place of removal, the credit beyond the factory gate is not eligible;
(b) Pest Control Service: The same is not specifically covered under the definition of input services;
(c) Employee Medical Maintenance Service and Hotel Service: Both are not related directly or indirectly to the manufacture as these are only welfare measures;
2.4 Further, with regard to the following services, the Ld. First Appellate Authority holds that the appellant is eligible :
(a) Annual Maintenance;
(b) Security Services and Training Services;
(c) Technical Consultancy Services;
(d) Maintenance and Repair Services;
(e) Clearing and Forwarding Services and Warehouse
Services;
With regard to Civil Service, the Ld. First Appellate Authority however observes that the same was not contested.
2.5 Aggrieved by the above partial disallowance, the present appeal is filed by the assessee.
3. When the matter was taken up for hearing, Ms. Mithila Shelar, Ld. Advocate, appeared for the assessee and Shri. M. Jagan Babu, Ld. AR, appeared for the Revenue.
4. Ld. Advocate, at the threshold, submitted that all the issues have been considered by various fora and laid 4 to rest and therefore, they are no more res integra. In this regard, she relied on the following judgements/orders:
Sl. Issue Judgement(s) No. 1. Wide Scope of Heildelberg Cement India Ltd. Vs.
the definition of C.C.E., Bangalore - 2017 (47) S.T.R. input service 98 (Tri. - Bang.)
2. Commr. of Cus.,S.T., Bangalore Vs. GE Medical System Pvt. Ltd. - 2015 (40) S.T.R. 697 (Tri. - Bang.)
3. Manglore Refinery & Petrochemicals Ltd. Vs. C.C.E. & S.T., Manglore - 2015 (319) E.L.T. 121 (Tri. - Bang.)
4. KPMG Vs. C.C.E., New Delhi - 2014 (33) S.T.R. 96 (Tri. - Del.)
5. C.C.E. & S.T., LTU, Bangalore Vs. Micro Labs Ltd. - 2011 (24) S.T.R. 272 (Kar.)
6. CENVAT Credit Rane TRW Steering System Ltd. Vs. on Garden Commissioner - 2018 (11) G.S.T.L. Maintenance J187 (Mad.)
7. Nhava Sheva Intl. Container Terminal (P) Ltd. Vs. C.C.E., Raigad
- 2017 (3) G.S.T.L. 509 (Tri. -
Mum.)
8. Toyoto Kirloskar Motor Pvt. Ltd. Vs. C.C.E., LTU, Bangalore - 2016 (46) S.T.R. 69 (Tri. - Bang.)
9. C.C.E., Nagpur Vs. International Combustion (I) Ltd. - 2016 (44) S.T.R. 110 (Tri. - Mum.)
10. Mukand Ltd. Vs. C.C.E., Belapur -
2016 (42) S.T.R. 88 (Tri. - Mum.)
11. JBM Auto System Pvt. Ltd. Vs. C.C.E., Chennai - 2012 (27) S.T.R. 170 (Tri. - Chennai)
12. C.C.E., Chennai Vs. Rotork Control (I) Pvt. Ltd. - 2012 (277) E.L.T. 217 (Tri. - Chennai)
13. Millipore India Ltd. Vs. C.C.E., Bangalore - 2009 (236) E.L.T. 145 (Tri. - Bang.)
14. CENVAT Credit Wipro Ltd. Vs. C.C.E., Pondicherry -
on 2018 (10) G.S.T.L. 172 (Mad.)
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15. Housekeeping C.C.E. & S.T., LTU, Chennai Vs. Rane
Services TRW Steering Systems Ltd. - 2015
(39) S.T.R. 13 (Mad.)
16. Indian Additives Ltd. Vs. C.C.E., Chennai - 2016 (44) S.T.R. 611 (Tri.
- Chennai)
17. CENVAT Credit Madras Cement Ltd. Vs. Assistant on Commissioner of C.Ex. - 2015-TIOL-
1682-HC-KAR-CX GTA Services
18. C.C.E., Dehradun Vs. Forace Polymers Pvt. Ltd. - 2016 (45) S.T.R. 198 (Tri. - Del.)
19. Eveready Industries India Ltd. Vs. C.C.E., Noida - 2015 (315) E.L.T. 288 (Tri. - Del.)
20. C.C.E., Beglaum Vs. Vasavadatta Cements Ltd. - 2018 (11) G.S.T.L. 3 (S.C.)
21. C.C.E., Rohtak Vs. Haryana Sheet Glass Ltd. - 2015 (39) S.T.R. 392 (P&H)
22. Time Technoplast Ltd. Vs. C.C.E. & S.T., Chandigarh-I - 2015 (39) S.T.R. 690 (Tri. - Del.)
23. C.C.E. & Cus., Raipur Vs. Century Cement - 2015-TIOL-2172-CESTAT- DEL
24. Principal Commissioner of C.Ex. & Cus., Vadodara-II Vs. Anasonic Battery India Co. Ltd. - 2015-TIOL- 2778-HC-AHM-ST
25. CENVAT Credit Sundaram Fasteners Ltd. Vs. C.C.E., on Pest Control Chennai-II - 2016 (43) S.T.R. 454 Services (Tri. - Chennai)
26. C.S.T., Bangalore Vs. Jubilant Biosys Ltd. - 2016 (42) S.T.R. 729 (Tri. - Bang.)
27. DCW Ltd. Vs. C.C.E., Tirunelveli -
2015 (40) S.T.R. 774 (Tri. -
Chennai)
28. Pharmal Enterprises Ltd. Vs. C.C.E, Raigad - 2015 (40) S.T.R. 301 (Tri.
- Mum.)
29. Nirma Ltd. Vs. C.C.E. & S.T., Vadodara-I - 2013 (32) S.T.R. 622 (Tri. - Ahmd.)
30. C.C.E. & Cus., Guntur Vs. Hindustan Coca-Cola Beverages Pvt. Ltd. -
62010 (18) S.T.R. 500 (Tri. - Bang.)
31. CENVAT Credit Warburg Pincus India Pvt. Ltd. Vs. on Hotel C.S.T., Mumbai - 2018 (364) E.L.T. Accommodation 159 (Tri. - Mum.)
32. Adobe Systems India Pvt. Ltd. Vs. C.C.E. & S.T., Noida - 2015 (38) S.T.R. 998 (Tri. - Del.) 5.1 Per contra, Ld. AR resisting the contentions of the Ld. Advocate, however, drew support from the findings of the lower authorities. He also submitted that in respect of GTA Services, the matters are being remanded back to the file of the Original Authority to ascertain the nature of agreement/contract in the light of the C.B.I.C. Circular No. 1065/4/2018-CX dated 08.06.2018 issued and the decisions of the Hon'ble Supreme Court in the case of Commissioner of Central Excise & Service Tax Vs. M/s. Ultra Tech Cement Ltd. reported in 2018 (9) G.S.T.L. 337 (S.C.) and Commissioner of Cus. & C.Ex., Aurangabad Vs. M/s. Roofit Industries Ltd. reported in 2015 (319) E.L.T. 221 (S.C.).
5.2 But for this, the Ld. AR was unable to distinguish the applicability of the orders/decisions relied on by the Ld. Advocate for the appellant.
6. I have considered the rival contentions and have gone through the orders/decisions referred to during the course of arguments.
7.1 In respect of the CENVAT Credit on Courier/Transportation (GTA) Service, I do not find any agreement/contract on record and hence, in all fairness, both the assessee as well as the Revenue should have the benefit of the same and therefore, the issue requires re- adjudication.
7.2 Hence, this issue alone is remanded to the Adjudicating Authority to pass a de novo adjudication order in the light of the C.B.I.C. Circular dated 08.06.2018 (supra) and the decisions of the Hon'ble 7 Supreme Court in the cases of M/s. Ultra Tech Cement Ltd. (supra) and M/s. Roofit Industries Ltd. (supra).
8.1 With regard to the CENVAT Credit in respect of Pest Control service, I note that the order of this Bench in the case of M/s. Hindustan Coca-Cola Beverages Pvt. Ltd. Vs. Commissioner of G.S.T. & Central Excise reported in 2019 (2) T.M.I. 404 - CESTAT Chennai covers the issue on hand wherein the following observations are made :
"5.1 The first issue is with regard to disallowance of credit on pest control services. The appellant has taken the premises on rent outside the factory to store the inputs namely sugar. The pest control services have been availed by the appellant to make these premises pest free. The product stored by the appellant being sugar and is being used as input for aerated beverages which are used for human consumption, it is essential that the premises are to be kept pest free. For this reason, I am of the view that the pest control services availed by the appellant are input services and therefore the same are eligible for credit. The disallowance of credit is unjustified and requires to be set aside, which I hereby do."
8.2 Following the order of the co-ordinate Bench, the denial of CENVAT Credit is incorrect and the impugned order to this extent is set aside.
9.1 With regard to Employee Medical Maintenance Service, the appellant enables its employees to undergo medical examination twice in a year keeping in mind the health of its employees, which is also in tune with the Factories Act, 1948 which makes it mandatory for an employer to take care of the health, safety and welfare of each of its employees.
9.2 The above issue has been considered by various Benches like the Delhi Bench of the Tribunal in the case of M/s. HCL Technologies Ltd. Vs. Commissioner of Cus., C.Ex. & S.T., Noida reported in 2015 (40) S.T.R. 1124 (Tri. - Del.). I also note that the same view has been expressed in the following decisions:
8(i) C.C.E. & S.T. (LTU) Vs. Lupin Ltd. - 2012 (28) S.T.R. 291 (Tri. - Mum.);
(ii) Mukand Ltd. Vs. C.C.E., Belapur - 2016 (42) S.T.R. 88 (Tri. - Mum.);
(iii) Sterlite Industries India Ltd. Vs. C.C.E., Madurai - 2016 (41) S.T.R. 867 (Tri. - Chennai);
Following the above ratio, I set aside the impugned order to this extent as the denial of CENVAT Credit is incorrect.
10. In respect of Hotel Service, I find that the order of the Mumbai bench of the Tribunal in the case of M/s. Warburg Pincus India Pvt. Ltd. (supra) and that of the Delhi Bench of the Tribunal in the case of M/s. Adobe Systems India Pvt. Ltd. (supra) squarely apply and following the ratio laid down in those orders, the denial of credit as also the impugned order is set aside.
11. In the result :
(i) In respect of Courier/Transportation (GTA) Service, the matter is remanded to the Adjudicating Authority;
(ii) In respect of Pest Control Service, Employee Medical Maintenance Service and Hotel Service, the denial of credit is set aside;
12. The appeal stands partly allowed and partly remanded.
(Order pronounced in the open court on 25.07.2019) (P. DINESHA) MEMBER (JUDICIAL) Sdd