TaxTMI 
TaxTMI 
2010 (3) TMI 356
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.... Central Excise Tariff Act, 1985. The Appellants sell their final products at the factory gate as well as at various Branch Sales Offices (BSOs) located all over the country. The Appellants avail the credit of duty paid on inputs and capital goods and credit of the service tax paid in terms of the Cenvat Credit Rules, 2004. The Appellants avail the services of Clearing and Forwarding Agents for receiving their final products at various BSOs, stocking therein and dispatching the same to customers from BSOs. One of the final products i.e., Rebar coils which is used in the construction industry is sent to various BSOs by the Appellants. At the time of clearing the Rebar coils from the factory, the Appellants pay central excise duty at the factory gate after considering the various expenses like transport, storage and handling of the goods incurred at the depots. Rebar coils are sold as such or after straightening, cutting and bending. The Appellants entrusted the processing of cutting, bending and straightening etc., of the Rebar coils to their clearing and forwarding agents at the respective BSOs. By undertaking this process the Rebar can be transported in trucks easil....
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....cussed the basic principle of 'commercial expediency'. The courts laid down the law that if an expenditure is commercially required to be incurred with a view to benefit the trade and to facilitate the carrying on the business, such expenditure will be allowed as deduction under Section 37 of the Income Tax Act, 1961. In this regard, reliance is placed on the following judgments: (i) CIT v. Malayalam Plantations Ltd. 53 ITR 140 (S.C.) (ii) CIT v. Mysore Iron 115 ITR 219 (iii) CIT v. Nainital Bank 62 ITR 638 (S.C.) (iv) Commissioner of Income Tax v. Rajasthan Spg. And Wvg. Mills Ltd. (2005) 198 CTR (Raj) 96 A. 4 Thus, it is submitted any service received and which is commercially required for the purpose of carrying on the business of the service provider, will be covered by the expression 'activities relating to business'. As a result, it is submitted that the Appellants are entitled to take Cenvat credit on the input services in question in as much the activity of bending cutting and straightening are part of C&F activity and which are integrally connected with its business. A. 5 In support of the above view the Appellants place reliance on the decision of the....
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....based on the returns and the information furnished by the Appellants and there is no suppression on the part of the Appellants to invoke extended period of limitation. It is well settled that suppression or fraud cannot be alleged when the assessee filed monthly returns regularly, extended period cannot be invoked. Reliance is placed on the following decisions: Sarabhai M. Chemicals v. CCE -2005 (179) E.L.T. 3 (S.C.). Gopal Zarda Udyog. v. CCE 2001 -(128) E.L.T. 409 (Tri-Del.). C. 2 Further the department themselves have relied on the decision in the Appellants own case [2005 (175) E.L.T. 65] wherein the Tribunal had held that the value of cutting and bending need not be added to the assessable value. This being the case the department was aware that the Appellants was paying this amount to the clearing and forwarding agent and the same was not added to the assessable value. D. Proposal to Impose Penalty and Levy of Interest is not Sustainable. D. 1 The Ld. Commissioner imposed a penalty of Rs. 93,95,239/- under Rule 15 (4) of Cenvat Credit Rules, 2004 in respect of the show cause notice dated 2-2-2007, penalty of Rs. 10,000/- under Rule 15 (3) of Cenvat Credit Rules....
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....ide Final Orders Nos. 1320 & 1321/04 dated 30th July 2004 [2005 (179) E.L.T. 65 (T)]. It is her submission that the goods are cleared from the factory gate on payment of central excise duty on completion of the manufacture and merely an act of cutting and bending, what was cleared from the stockyards would not amount to manufacture and hence any services rendered for the purpose of cutting, bending and straightenting should not be considered, as in relation to the manufacturing of final products. It is her submission that the service tax paid on the said services is not in relation to the manufacturing of the final product and hence, credit availed is irregular. She would also read the findings of the adjudicating authority in both the orders. In addition, she would rely upon the decision of the Single Member Bench of the Tribunal in the case of Chemplast Sanmar Ltd. v. CCE [2010 (17) S.T.R. 253 (Tri. - Chennai) = 2010 (250) E.L.T. 46 (Tri.) = 2010-TIOL-180-CESTAT-Mad) for the proposition that provisions of Section 37(2) of the Central Excise Act allows the Govt to make rules granting credit of duty paid on goods and credit of service tax paid on services used in or in relation to ....
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....licable CST & S.T. From the mere perusal of the said specimen invoices, it is clear that the appellants have been doing this only on the specific request of his customers, due to the business requirement. We find that these invoices are not disputed by the revenue. 12. On this factual matrix, we find that the provisions of Rule 2(l) of Cenvat Credit Rules are very important which we may read: (l) "input service" 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 upto the place of removal,] and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto 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 s....
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....aid. 3. The relevant rule which is under consideration is Rule 2(l) of the Cenvat Credit Rules, 2004 (hereinafter referred to as the said Rules) which define' the word input service as under: (l) "input service" means any service,- (i) used by a provider of taxable service for providing an output Sevice; 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 upto the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto 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, in-ward transportation of inputs or capital goods and outward transportation upto the place of removal; 25. The expression Business is an integrated/continuous activity and is not confined restricted....
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....pression in relation to (so also pertaining to), isa very broad expression which pre-supposes another subject matter. These are words of comprehensiveness which, might both have a direct significance as well as an indirect significance depending on the context, see State Wakf Board v. Abdul Aziz (A.I.R. 1968 Madras 79, 81 paragraphs 8 and 10, following and approving Nitai Charon Bagchi v. Suresh Chandra Paul (66 C.W.N. 767), Shyam Lat v. M. Shayamlal (AIR 1933 All. 649) and 76 Corpus Juris Secundum 621. Assuming that the investments in shares and in lands do not form part of the undertakings but are different subject matters, even then these would be brought within the purview of the vesting by reason of the above expressions. In this connection reference may be made to 76 Corpus Juris Secundum at pages 620 and 621 where it is stated that the term relate is also defined as meaning to bring into association or connection with. It has been clearly mentioned that relating to has been held to be equivalent to or synonymous with as to concerning with and pertaining to. The expression pertaining to is an expression of expansion and not of contraction. The expression Relating o thus wi....
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....al tax as well as destination based consumption tax leviable on services provided within the country. 34. It is therefore, clear that the burden of service tax must be borne by the ultimate consumer and not by any intermediary i.e. manufacturer, or service provider. In order to avoid the cascading effect, the benefit of cenvat credit on input stage goods and services must be ordinarily allowed as long as a connection between the input stage goods and services is established. Conceptually as well as a matter of policy, any input service that forms a part of the value of the final product should be eligible for the benefit of Cenvat Credit. Revenues contention, if accepted as in the present case, would go against the very core and genesis of Cenvat credit scheme. In our opinion, such an interpretation would be plainly unacceptable. 37. A consumption tax derives its name from the fact that tax burden is ultimately borne by the final consumer and business does not bear the burden of the tax, since the business are allowed to take credit of tax paid on inputs supplied/received by them. If therefore Cenvat is denied to the input service received by the assessee as in the present....
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....ala State Co-operative Marketing Federation Ltd. and Ors. v. Commissioner of Income-tax - 1998 (5) SCC 48, which is as under: 7. We may notice that the provision is introduced with a view to encouraging and promoting growth of co-operative sector in the economic life of the country and in pursuance of the declared policy of the Government. The correct way of reading the different heads of exemption enumerated in the section would be to treat each as a separate and distinct head of exemption. Whenever a question arises as to whether any particular category of an income of a cooperative society is exempt from tax what has to be seen is whether income fell within any of the several heads of exemption. If it fell within any one head of exemption, it would be free from tax notwithstanding that the conditions of another head of exemption are not satisfied and such income is not free from tax under that head of exemption. 43. What follows from the above discussion is that the credit is availed on the tax paid on the input service, which is advertisement and not on the contents of the advertisement. Thus it is not necessary that the contents of the advertisement must be that of th....