Custom, Excise & Service Tax Tribunal
M/ Ultratech Cement Ltd vs Cce & St, Indore on 30 September, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 30/09/2016. DATE OF DECISION : 30/09/2016. Excise Appeal Nos. 2165-2167 of 2008 [Arising out of the Order-in-Original No. 04/Commr/ST/IND/08, No. 23/Commr/CEX/IND/08 and No. 22/Commr/CEX/IND/08 all dated 30/07/2008 passed by Commissioner of Central Excise, Indore.] For Approval and signature : Honble Shri S.K. Mohanty, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) 1. Whether Press Reporters 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/ Ultratech Cement Ltd. Appellant Versus CCE & ST, Indore Respondent
Appearance Shri Vipul Aggarwal, Advocate for the appellant.
Shri Yogesh Agarwal, Authorized Representative (DR) for the Respondent.
CORAM: Honble Shri S.K. Mohanty, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Final Order No. 53937-53939/2016 Dated : 30/09/2016 Per. B. Ravichandran :-
These three appeals deal with the same subject of appellants eligibility for credit on various input services and are accordingly taken up together for disposal. The appellants are engaged in the manufacture of cement and clinker liable for Central Excise duty. They were availing credit of duty paid on inputs, capital goods and services. The present proceedings are with reference to credit availed by the appellants during the period April 2006 to December 2007 on various input services. These credits were availed on the basis of distribution of credit by their head office or on direct receipt of tax paid documents in their manufacturing unit. The input services involved in these proceedings are testing, handling and commission, mobile phone, machine and maintenance, management consultant, courier service, banking and finance [distributed by their head office], services received directly by insurance of plant and machinery consultancy for fly ash project, R&D services, mobile phone services, municipal solid waste, management etc.
2. We have heard both the sides and perused the appeal records. The denial of credit on all these input services is mainly on the ground that they do not come under the category of input service in terms of Rule 2(l) of Cenvat Credit Rules, 2004. The Original Authority held that these services have no connection to manufacture and clearance of goods upto the place of removal and, as such, denied the credit. The learned Counsel for the appellants submitted that the eligibility of all the services now involved in the present proceedings was already settled in their favour by the Tribunal in their own case vide final order No. A/51932/2016 EX (DB) dated 02/6/16 and by the Tribunals order in Ultratech Cement Ltd. vs. CCE, Indore reported in 2016 TIOL 373 CESTAT DEL. In respect of individual input services now disputed, the learned Counsel submitted a list of case law to support their plea regarding their eligibility for credit.
3. We have examined the final order dated 02/6/16 of the Tribunal in the appellants own case, relevant portion of the order is as below :-
3. We have heard both sides and perused the records. We have examined the admissibility of credit on various services under dispute. These services include, Testing, Handling & Commission, Telephone, Machine maintenance, Insurance relating to depot, Courier, Mobile van, Tax, Hotel rent, Air Travel, Catering, Banking (distributed by ISD) Services used at the depot/C&F agent premises and in relation to the manufacturing activity of the appellant. We now proceed to examine the admissibility of these services for cenvat credit.
We find that credit has been taken as distributed by the ISD and pertains to various activities intimately connected with the manufacture and sale of cement through depots, C&F agents etc. Such services have been allowed as input services and are squarely covered by several decisions, some of which are cited below:
(i) CCE, Jallandhar vs. Ambika Overseas reported in 2012 (278) E.L.T. 524 (Tri. - Del.) = 2012 (25) S.T.R. 348 (P&H) ;
(ii) Birla Corporation Ltd. vs. CCE, Lucknow reported in 2013 (288) E.L.T. 427 (Tri. Del.) ;
(iii) Essar Steel India Ltd. vs. CCE & ST, Surat-I reported in 2016 TIOL 520 CESTAT AHM;&
(iv) CCE, Noida vs. HCL Technologies Ltd. reported in 2016 (42) S.T.R. 48 (Tri. Del.).
4. Insurance: Credit on these services has been sought to be disallowed on service tax paid for insuring the plant and machinery, mining equipments, store material and company vehicles. The credit cannot be denied on the ground that these services are not used in or in relation to the manufacture of cement since insuring the plant and machinery, building etc. would form part of the normal business activity to make sure that they get compensation in the unfortunate event of fire, theft etc. These services have also been held to be permissible as input services in the following cases:
i) Ultratech Cement vs. CCE, Indore reported in 2016 TIOL 373 CESTAT DEL ;
(ii) Hindustan Zinc vs. CCE, Jaipur reported in 2015 (37) S.T.R. 608 (Tri. Del.) ; and
(iii) Oudh Sugar Mills Ltd. vs. CCE, Lucknow reported in 2012 (282) E.L.T. 541 (Tri. Del.).
5. R&D Services: Credit on these services has been disallowed on the ground that it has been incurred towards development of re-active belaite cement which is not the product of the appellant. This has been shown to be an R&D activity undertaken by the respondent in pursuance of introduction of new varieties of their final product and hence cannot be denied. In fact, similar issue has been examined by the Tribunal in the case of Cadila Healthcare Ltd. vs. CCE, Ahmedabad reported in 2010 (17) S.T.R. 134 (Tri. Ahmd.) where technical testing and analyses services were sought to be denied in respect of medicine which never reached the market. However, it was held that the service will be allowable on the ground that all products taken up by the company for R&D may not reach the customer as a commercial product. We see no reason to take a different view in respect of R&D services of the respondent.
4. Regarding service tax paid on consultancy for fly ash or coal handling, we find that same are relatable to the appellants main activity in their claim. We also note the credit of these services have been considered and allowed by the Tribunal in ULtratech Cement Ltd. (supra).
5. Regarding service tax paid on mobile phone services, the appellants clarified that the services are availed and the bills are borne by the appellants. We find that the tax on phone services are available to the assessee. Reference can be made to the decision of Honble Gujarat High Court in CCE vs. Excel Crop Care Ltd. reported in 2008 (12) S.T.R. 436 (Guj.). Regarding services provided on Municipal Solid Waste, Jaipur it is submitted by the appellant that the said solid waste processing plant situated at Jaipur was set up by them to generate fuel which is used by them in the manufacture of cement and clinker. The tax paid on the insurance taken on the said plant. We find services used for procurement of input is specifically included in the input service and hence credit is admissible on the same.
6. Considering the decided cases including appellants own case and on examining the nature of input services, we find the impugned orders denying credit on above services are not sustainable and accordingly to that extent they are set aside. Appeals are allowed.
(Dictated and pronounced in the open court.) (S.K. Mohanty) Member (Judicial) (B. Ravichandran) Member (Technical) PK ??
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