TaxTMI 
TaxTMI 
2009 (11) TMI 142
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....side the purview of the definition of "input service" given under Rule 2(l) of the CENVAT Credit Rules and disallowed the credit in question to the respondent. But the appellate authority held otherwise and consequently the appeal filed by the respondent came to be allowed. In the present appeal, the department refers to the definition of "input service" and submits that none of the above services can be recognised as input service for want of nexus with the activities of manufacture and clearance of excisable goods. According to the appellant, only those services which are used in or in relation to the manufacture and/or clearance of excisable goods could be held to be "input services". It is also submitted that the Tribunal's decision dated 4-12-2007 which went in favour of the respondent in an earlier case involving identical issue has not been accepted by the department and that an appeal against the same is under consideration. Today, the ld. DR submits that the appeal filed by the department against the Tribunal's order dated 4-12-2007 has since been admitted by the Hon'ble High Court as Central Excise Appeal No. 22/2008. However, it is fairly conceded the Hon'ble High Court ....
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....he definition of 'inputs service' is much broader when compared to the nexus between the corresponding parts of the definition of 'input'. By way of illustration, the ld. counsel refers to instances of 'use' given in the definition of input service. The main part of the definition contains the expression 'used in or in relation to the manufacture of final product.' The inclusive part of the definition contains expressions like 'used in relation to setting up, modernisation etc.' and 'used in relation to activities relating to business'. According to the ld. counsel, in the inclusive part of definition of 'input service', any expression of the kind 'in or in relation to the manufacture of final products' is conspicuously absent and expressions like 'in relation to setting up,' and 'in relation to activities relating to business' are significantly present and therefore it is not necessary to show any nexus between any of the services mentioned in the inclusive part of the definition and the manufacture/clearance of final products referred to in the main part. It is argued that the inclusive part should be independently considered. Ld. counsel argues that every activity or group of ac....
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.... means any service,— (i) used by a provider of taxable service for providing an output service; or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products up to the place of removal, and includes services used in relation to setting up, modernisation, renovation or repairs of a factory, premises of provider of output service or any office relating to such factory or premises, advertisement, or sales promotion, market research, storage up to the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation up to the place of removal." 4. The Hon'ble High Court, in the case of Coca-Cola India (P.) Ltd. (supra), examined the scope of the above definition. It held that the definition could be divided into five categories and that each category/limb of the definition could be considered as an independent benefit or concession/exemption. ....
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....words 'whether directly or indirectly' and 'whether contained in the final product or not' indicates the intention of the Legislature. What the Legislature intends to say is that even if the use of input (like electricity) in the manufacturing process is not direct but indirect still such an item would stand covered by the definition of 'input'. In the past, there was a controversy as to what is the meaning of the word 'input' conceptually. It was argued by the Department in a number of cases that if the identity of the input is not contained in the final product then such an item would not qualify as input. In order to get over this controversy in the above definition of 'input', the Legislature has clarified that even if an item is not contained in the final product still it would be classifiable as an 'input' under the above definition. In other words, it has been clarified by the definition of 'input' that the following considerations will not be relevant :— (a) use of input in the manufacturing process be it direct or indirect; (b) even if the input is not contained in the final product, it would still be covered by the definition. These considerations have been made i....
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....rvice was used, directly or indirectly, in or in relation to the manufacture of his final products or the clearance of such products from his factory. 5. I am not impressed with the way the ld. counsel has sought to distinguish Maruti Suzuki Ltd.'s case (supra) from Coca-Cola India (P.) Ltd.'s case (supra). He argued that the Apex Court's decision relating to 'input' could not be applied to 'input service'. This argument is not acceptable, given the definitions of 'input' and 'input service'. Whether it be input or input service, the main part of the definition contains the quintessential ingredients and the inclusive part provides a non-exhaustive list of items each of which should satisfy the requirements of the main part. Ld. counsel has pointed out that, in the case of input, 'place of use' is a third part of the definition, which is conspicuously absent in the definition of 'input service'. It has been argued that an input service need not necessarily be rendered within the factory premises whereas an input should normally be used within the factory. Broadly, this distinction sounds valid. But, again, it doesn't offer an answer to the question whether the service (which is ....