Custom, Excise & Service Tax Tribunal
Jaypee Sidhi Cement Plant vs C.C.E & S.T., Jabalpur on 22 June, 2016
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R.K.Puram, New Delhi COURT-I Date of hearing/decision:22.6.2016 Central Excise Appeal No.53562 of 2015 EX(SM) Arising out of the order-in-appeal No.BHO-Excus-002-APP-142-15-16 dated 28.7.2015 passed by the Commissioner (Appeals), Customs, Central Excise & Service Tax, Raipur (CG). For approval and signature: Honble Mr. M.V. Ravindran, Judicial Member 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Jaypee Sidhi Cement Plant .. Appellant Vs. C.C.E & S.T., Jabalpur . Respondent
Appearance:
Present Shri Bipul Agarwal,Advoate for the appellant Present Shri M.R. Sharma, A.R for the Respondent/Revenue Coram: Honble Mr. M.V. Ravindran, Judicial Member Final Order No. 52165/2016 Per M.V. Ravindran:
This appeal is directed against the Order-in-Appeal No. BHO-Excus-002-APP-142-15-16 dated 28.7.2015.
2. The issue involved in this case is regarding eligibility to avail cenvat credit of the service tax paid on Manpower Recruitment and Supply Agency service during the period January 2013 to June 2013 as the appellant has availed cenvat credit of such services paid by the service provider. The Revenue is of the view that manpower that has been supplied by the service provider, consists of Nurses and Doctors and hence it falls under Exclusion Clause category of the definition of Rule 2(l)(C) of the Cenvat Credit Rule, 2004. Both the lower authorities have held that appellant is not eligible to avail cenvat credit, accordingly the demand is upheld by the adjudicating authority and penalty has been imposed.
3. Ld. Counsel for the appellant draws my attention to the fact that posting of the medical profession in the factory is mandatory as per the provisions of the Factories Act, 1948 and Mines Act, 1952. It is his submission that in order to follow the mandated provisions they had sought services of manpower recruitment and supply agency provide the persons to provide Doctors and Nurses, their service liability was paid. These persons were working in the factory and their services were utilized in the manufacture of final product i.e. cement. He would rely upon the Tribunals decision in their own case where this Bench vide Final Order No.A/53199/2014-SM(BR) dated 4.8.2014 for the period December 2008 to November 2009 upheld their contentions for the eligibility to avail cenvat credit. He would draw my attention to paragraph 5 of the said order. He would submit that lower authorities have deviated from the decision of the Tribunal only on the ground that the period involved in this case is covered by the Exclusion Clause under Rule 2(l)(C) of the Cenvat Credit Rules, 2004. He would submit that this issue has been decided by this Tribunal in AET Laboratories Pvt. Ltd. vs. Commissioner of Central Excise, Customs and Service Tax, Hyderabad I 2015 TIOL -2828 CESTAT BANG. It is his submission that exclusion clause is for health services and is not for personal consumption of the employees. He would submit that these Doctors and Nurses are posted at the factories in order to comply with the mandated provisions of the Factories Act, 1948 and Mines Act, 1952 and hence they were not personal consumption of the employees but for the factories in order to comply with the statutory obligation.
4. Ld. A.R. for Revenue reiterates the findings of the lower authorities.
5. After considering the submissions made at length by both sides and perusal of the records I find that the issue involved in this case is regarding eligibility of avail cenvat credit of service tax paid on the services received in respect of manpower recruitment and supply agency services. It is undisputed fact that the appellant had hired service provider for supply of manpower services which has recruited posting of Doctors and Nursing staff in the appellants factory.
6. The entire issue revolves on the Exclusion Claus as per term of Rule 2(l)(C) of Cenvat Credit Rules, 2004 which are reproduced:
(C) such as those provided in relation to 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 on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;
7. It is can be seen from the above reproduced clause both the authorities are relying Exclusion clause which provides for excluding cenvat credit in respect of health services; in the entire provisions of the Finance Act, 1994.There is no definition of health services. At the same time, it is also being undisputed that the posting of Doctors and Nursing staff is at the behest of the appellant in order to comply with statutory obligation under the Factories Act, 1948 and Mines Act 1952, the same cannot be considered as the procurement from personal consumption of the workers. This is the tenor of the judgment of the Tribunal in the case of AET Laboratories Pvt. Ltd. (supra) wherein this Tribunal held as under:
3. As is seen in terms of the said amended Rule, the definition of input service does not cover outdoor catering and life insurance etc. inasmuch as there is a specific exclusion to the same.The contention of the learned Advocate appearing for the appellant is that sub-para (C) of the exclusion clause excludes the services provided in relation to outdoor catering and insurance etc., when such services are used primarily for personal use or consumption of any employee.This means that when the cost is borne by the company and the company is under a legal obligation to provide outdoor catering service to its employees or to provide insurance service to its employees , the said exclusion clause would not apply. However on being questioned as to what would be the interpretation of the expression used primarily for personal use or consumption of any employee, learned Advocate failed to give any such circumstances in which case the outdoor catering service provided by a manufacturer would not be for personal use or consumption of any employee.
5. I have considered the submissions made by both the sides. There is no dispute about the factual or the legal position. The period involved in the present appeal is admittedly after 01/04/2011 and the amendment to the provisions of Rule 2(i) defining the input service came into existence w.e.f. 01/04/2011 only. The definition is extended by providing the inclusive as well as exclusive clauses. The exclusion clause was effective w.e.f. 01/04/2011 and Clause (C) of the said exclusion specifically excludes the services provided in relation to outdoor catering and health insurance or life insurance etc. Admittedly such services, prior to 01/04/2011, have been held to be covered by the definition of input services. In fact, the need for exclusion would arise only when the services are otherwise covered by the definition. Legislation, in its wisdom, has excluded certain services from the availlment of CENVAT credit w.e.f. 01/04/2011, when such services are otherwise covered by the main definition clause of input service. To interpret the said exclusion clause, in such a manner, so as to hold that such services have direct or indirect nexus with the assessees business and thus would be covered by the definition, would amount to defeat the legislative intent. It is well settled that the legislative intent cannot be defeated by adopting an interpretation which is clearly against such intent. As such, I find no justifiable reason to allow the credit in respect of the two disputed services and I uphold the confirmation of denial of CENVAT credit and demand of interest thereon.
8. In view of the foregoing I hold that impugned order is unsustainable and liable to set aside. The impugned order is set and the appeal is allowed.
(M.V. Ravindran) Judicial Member scd/ 1