TaxTMI 
TaxTMI 
2017 (11) TMI 1408
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....t Services" within the meaning of the definition of "Input Service" provided under CENVAT Credit Rules, 2004? Appeal No. 23/2017 1. Whether, the learned CESTAT has erred by considering services namely; outdoor catering, GTA (outward transportation from factory to buyer's place/premises) insurance services, rent a cab services and auction services in respect of which the Assessee has availed the CENVAT credit of service tax, as eligible "Input Services" within the meaning of the definition of "Input Service" provided under CENVAT Credit Rules, 2004? Appeal No. 44/2015 admitted on 23.11.2016 1. Whether the impugned services namely outdoor Catering. Rent-a-cab, Auction, Club or Association and the GTA (outward freight upto buyer's place/premises) in respect of which the assessee had availed the Cenvat Credit of service tax during the period from April 2010 to September 2011, are eligible 'input services' within the meaning of 'input services' defined under Cenvat Credit Rules, 2004 and the assessee had availed the Cenvat Credit correctly or not?" Appeal No. 49/2017 admitted on 06.07.2017 1. Whether the impugned services namely Outd....
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....egrally with business or manufacturing final product. Service covered under inclusive part of definition are services rendered prior to commencement of manufacturing activity as well as services rendered after manufacture. Expression 'such as' in the inclusive part of definition is to be construed as illustrative and not exhaustive in the absence of legislative intention to restrict definition to particular class or category of services used in business. Definition of input service is construed widely in CBE & C Circular dt. 23.8.07. Revenue cannot argued against stand taken by CBE & C." 5. He also taken us to the decision of Gujarat High Court in Commissioner of Central Excise and Customs vs. Ultratech Cement Ltd. (2014) 46 taxman.com 180(Guj.) wherein it has been held as under:- To our mind, though there is somewhat difference in the nature of services involved in the present appeals, insofar as all material aspects are concerned, the entire issue has been discussed threadbare and decided in the above-mentioned judgment in the case of Gujarat Heavy Chemicals Ltd. As already noted, in the case of Gujarat Heavy Chemicals Ltd., the Court was considering th....
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....acturer or the provider of output service being importer of goods as the person liable for paying service tax for the said taxable services and the said imported goods are his inputs or capital goods; or (ii) any service used by a provider of output service for providing an output service; or (iii) any service used by a 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 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 up to the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; but excludes,- (A) service portion in the execution of a works contract and construction services....
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....he place of removal as defined on Section (3)(c) (iii) defines depot as place of removal from where the goods are actually sold after their removal from the factory. Sub Section 3 of Section 4 of the Central Excise Act 1944 reads as:- (i) for the purpose of this section (ii) place of removal means It is therefore, clear that the place of removal provided in Sub-section 3 of Section 4 of the Central Excise Act, 1944 has its scope limited only for the purpose of Section 4 of the said Act. The scope of term "place of removal" can not be made applicable for the purpose of Cenvat Credit Rules, 2004 unless it relates to the issues of Section-4 of the Central Excise Act ibid. I agree with the findings of adjudicating authority that the credit of service tax on the services effected after clearance from the place of removal was not available to the appellant. Therefore, credit received on the invoices of persons managing depot and registered under the categories of Business Auxiliary service, Clearing & Forwarding Service and Cargo Handling Service was not available. As regards to reliance placed by the appellants on Circular dated 2.2.2006. I find ....
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.... 9 of Central Excise Rules 2002 which reads as under: Rule 9 Registration. - (1) Every person, who produces, manufactures, carries on trade, holds private store- room or warehouse or otherwise uses excisable goods, shall get registered : Provided that a registration obtained under rule 174 of the Central Excise Rules, 1944 or rule 9 of the Central Excise (No. 2) Rules, 2001 shall be deemed to be as valid as the registration made under this sub-rule for the purpose of these rules. (2) The Board may by notification and subject to such conditions or limitations as may be specified in such notification, specify person or class of persons who may not require such registration. (3) The registration under sub-rule (1) shall be subject to such conditions, safeguards and procedure as may be specified by notification by the Board. 5.10 He has also taken us to the relevant issue where the issue is pending before the Supreme Court in the case of Commissioner vs. Ultra Tech Cement Ltd. (2017) 47 STR J216 (SC) where the decision of Karnataka High Court in 2016 (44) STR 227 (Kar.) Commissioner vs. Ultratech Cement Ltd. decided is subject matter of SLP ....
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....n regard thereto is claimable only with regard to those transports which were made from one place of removal to another place of removal. 5.12 He relied on another decision of Calcutta High Court in Commissioner of Central Excise & Service Tax, Haldia vs. Lumino Industries Ltd. (2013) 40 taxman.com 270 (Cal) wherein it has been held as under:- 5. Views taken by the Karnataka High Court do not appear acceptable for the following reasons: (a) Be that as it may, we are of the opinion that the outward transport service used by the manufacturers for transportation of finished goods from the place of removal upto the premises of the purchaser is covered within the definition of "input service" provided in rule 2(1) of the Cenvat Credit Rules, 2004. The Hon'ble Division Bench expressed their aforesaid opinion, but no reasons or appropriate reasons are ascertainable by us for the purpose of aforesaid proposition. (b) There are more reasons. In paragraph 30, the Hon'ble Division Bench of the Karnataka High Court opined that. The definition of "input service" contains both the word means' and includes, but not 'means and includes&#....
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....trary to the decision taken by different High Courts. 6.1 He also relied upon the decision of Chhattisgarh High Court in Lafrage India Ltd. vs. Commissioner of Central Excise, Raipur 2014 (307) ELT 7 (Chhattisgarh), wherein it has been held as under:- Our conclusions are as follows: (a) In case of sale at the place of destination, an assessee is only enti tled to claim Cenvat credit on service tax paid for the goods transportation agency service provided amount paid was integral part of the price of the goods; (b) In this case, the amount paid for the GTA service was not integral part of the price of the goods; and (c) The assessee was not entitled to claim Cenvat credit of the service tax paid; (d) The question is answered in favour of the Department and against the assessee 6.2 He also relied upon the circular which has been sought to be relied upon by the tribunal in one of the appeals. 6.3 Mr. Pathak has taken us to Insurance Services in appeal no.23/2017 which reads as under:- Insurance Services: (P) That the learned CESTAT has failed to appreciate that the Adjudicating Authority has allo....
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.... may be situations where the manufacturer/consignor may claim that the sale has taken place at the destination poinst because in terms of the sale contract/agreement (i) the ownership of goods and the property in the goods remained with the seller of the goods till the delivery of the goods in acceptable condition to the purchaser at his door step; (ii) the seller bore the risk of loss of or demage to the goods during transit to the destination; and (iii) the freight charges were an integral part of the price of goods. In such cases, the credit of the service tax paid on the transportation up to such place of sale would be admissible if it can be established by the claimant of such credit that the sale and the transfer of property in goods (in terms of the definition as under section 2 of teh Central Excise Act, 1944 as also in terms of the provisions under the sale of Goods Act, 1930) occurred at the said place." The assessee have categorically mentioned in their written reply that: "In their case the Service Tax relates to the freight from factory/ Depot to the place of buyer and since property in goods is getting passed on at destination. It is the case of sale....
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....or outward transportation of goods from factory to customers and from depot to customers is not admissible to them. 16.4 Accodingly, the issue to be decided before me is as to whether CENVAT credit of the service tax paid on outward transportation will be admissible even if the transaction value under section 4 of Central Excise Act, 1944 is not inclusive of outward freight element. 16.5 From the definition of 'input service' as given above it is apparent that the input service includes inward transportation of inputs or capital goods and outward transportation upto place of removal. I fina that admissibility of CENVAT Credit on outward transportation upto the place of removal is unambiguous as is held by the CESTAT in a number of cases. Now the question arises what will be the place of removal of goods. In this regard I would like to refer to the Circular No. 97/8/2007 dated 23.8.2007 issued by the Board. Para 8.2 of the said circular reads as under: "8.2 In this connection, the phrase 'place of removal' needs determination taking into account the facts of an individual case and the applicable provisions. The phrase 'place of removal&....
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....Act, 1930) occurred at the said place." 16.6 I further find that the said circular issued by the Board has also been approved by the Hon'ble Punjab & Haryana High Court in its decision given in the case of Ambuja Cement Ltd. Versus Union of India & Ors. Reported in 2009(02) LCX0015. 16.7 In view of the said Board's Circular which has the approval of the Hon'ble High Court, I find that it is clear that for the goods chargeable to central excise duty on the basis of transaction value under section 4 of Central Excise Act, 1944, the eligibility to avail credit of the service tax paid on outward transportation for removal of excisable goods would depend upon the determination of the place of removal as per the definition given under section 4 of Central Excise Act, 1944. Thus in view of the definition of the place of removal as given under section 4 of Central Excise Act, 1944 read with the Board's Circular dated 23.6.2007, I find that there is no doubt that: i. in cases where the transaction value under section 4 is inclusive of freight charges upto the destination point (customer's place), the destination is to be treated as 'Place o....
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....red. But there is no final order on that service Further, I find that the sale of waste and scrap which is arising out of manufacturing of the final product is a part of the business of manufacturing of cement by the appellant. Therefore, I hold that on auction services, the appellant is entitled to take Cenvat credit. Further, I find that the charges have been paid for availment of club and association services for the officials visiting outside the city and same has been paid in the case of business of appellant. Therefore, I hold that on this auction and club and association services, the appellant is entitled to take Cenvat credit. 4. Outward transportation services, I find that in this case the purchase order shows that goods are to be delivered at the place of buyer on FOR basis and in the invoice, the transportation cost has formed part of the assessable value as the goods are to be delivered at the buyers place. Therefore. The appellant has satisfied the condition of the CBEC circular No.97/08/07 dated 23.8.2007 which has been supported by the decision of this Tribunal in the case of Lumax Automotives Systems Ltd.(supar). Therefore, I hold that appellant is entitle....
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....of final product, within the factory". Therefore, to the extent of the clearance of excess electricity outside the factory to the joint ventures, vendors, grid etc. would not be admissible for CENVAT credit as such wheeled out electricity, cleared for a price, would not fall within the definition of "input" in Rule 2(g) of the CENVAT Credit Rules, 2002. This view is also expressed in para 9 of the judgment of this Court in the case of Collector of Central Excise v. Solaris Chemtech Limited (2007) 214 ELT 481 (SC). Further, our view is supported by the observations of this Court in the case of Vikram Cement v. Commnr. Of Central Excise, Indore 2006 (194) ELT 3 (SC) which is quoted below: It appears to us on a plain reading of the clause that the phrase "within the factory of production" means only such generation of electricity or steam which is used within the factory would qualify as an immediate product. The utilization of inputs in the generation of steam or electricity not being qualified by the phrase "within the factory of production" could be outside the factory. Therefore, whatever goes into generation of electricity or steam which is used within the facto....
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.... 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. Pain reading of the main part of the above definition revealed that only those services come in the ambit of 'input service' which are used directly or indirectly, in or in relation to manufacture of final products and clearance therefo upto the place of removal. Further, the inclusive part of the definition expending the scope of inpur service upto the activities relating to business also restricts the 'outward transportation upto the place of removal' and as such any service tax paid on 'outward transportation beyond the place of removal' do not come in the purview of 'input service' for the purpose of taking credit under the Cenvat Credit Rules, 2004. I find that 'place of removal' has been defined under clause (c) of Sub-section (3) of Section 4 of the Central Excise Act, 1944 as: (i) a factory or any other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods ....
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....ailment of credit and valuation for payment of duty are tow independent issues and cannot be mixed. They also placed reliance on case laws in their favour. I find that the duty on Cement was specific and specific- cum-advolrum based on 'Retail Sale price' and therefore, deduction towards freight has no relevance. In such a situation it can not be established that they have paid Central Excise duty on freight element by including cost of freight in the assessable value. More so the impugned show cause notice only proposes disallowance of input service credit on outward freight availed by the assessee and by raising the valuation issue which is neither under dispute nor relevant also, the assessee is trying to digress from the issue. Therefore, I do not find any of the case laws mentioned by them in Para 3.1.14 above, relevant in this case being relevant to the definition as existed before 1.3.2008. Regarding argument that when two different interpretation are available simultaneously, benefit of doubt be given to the assessee, I do not find two interpretations as the Board's clarification became redundant by change of legal position w.e.f. 1.3.2008. In view of the above ....
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....proceeds to sales made in the canteen run by the particular assessee for the benefit of the its employees on a non-profit basis form part of the taxable turnover of the assessee, the Hon'ble Delhi Hing Court in Delhi Cloth & General Mills Limired (005 CTR 477) held that the assessee cannot be said to be carrying on business within the meaning of the Sales Tax Act so far as the transactions in the canteen are concerned, the reference are answered Accordingly. The above decision shows that in taxation statutes, a business activity is always understood to be such activity, which is carried on by the assessee to earn profit. The statutory obligation, in providing for such Canteen service, would not be an activity integral or connected with the principal activity of manufacture. The expansiveness provided by the inclusive part of the definition under Rule 2(1) of the Cenvat Credit Rules 2004 was to, consequently, include only such activities relating to business, which have such direct or indirect nexus with themanufacture and clearances of the excisable goods. I further find that availment of Cenvat credit on outdoor catering services was dened by the Hon'ble Tribunal in the ca....
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....service as provided under Rule2(1) of the Cenvat Credit Rules, 2004 and credit amounting to Rs. 862/- availed by the assessee on this service is not admissible to them. 7.3 On the other hand counsel for the respondent Mr. Jhanwar has taken us to the definition of Section 4 which has been defined under the Central Excise Act while referring to Cenvat Credit Rules 2004 where under 2(t) it has been clearly provided as under:- Rule 2...... (t) words and expressions used in these rules and not defined but defined in the Excise Act and the Finance Act shall have the meanings respectively assigned to them in these Acts. 7.4 Therefore, 2(t) and Section 4 of Central Excise Act more particularly clause (c) provides as under:- Section 4....... (c) "place of removal" means - (i) a factory or any other place or premises of production or manufacture of the excisable goods;(ii) a warehouse or any other place on premises wherein the excisable goods have been permitted to be deposited without 3[payment of duty;] 4[(iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold ....
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....se in terms of sale contract/agreement (i) the ownership of goods and the property in the goods remained with the seller of the goods till the delivery of the goods in acceptable condition to the purchaser at his door step (ii) the seller bore the risk of loss of or damage to the goods during transit to the destination; and (iii) the freight charges were an integral part of the price of goods. In such cases, the credit of the service tax paid on the transportation up to such place of sale would be admissible if it can be established by the claimant of such credit, that the sale and the transfer of property in goods (in terms of the definition as under Section 2 of the Central Excise Act, 1944 as also in terms of the provisions under the Sale of Goods Act, 1930) occurred at the said place. Therefore if the service tax is paid on transportation charges, in such cases, it fell within the phrase "clearance of final products from the place of removal" and therefore, the Assessee was entitled to CENVAT credit. 30. The definition of 'input service' contains both the word 'means' and 'includes', but not 'means and includes'. The portion of ....
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....rtation. The words used are (a) inward transportation of inputs or capital goods (b) outward transportation upto the place of removal. While dealing with inward transportation, they have specifically used the words 'inputs' or 'capital goods'. But, while dealing with outward transportation those two words are conspicuously missing. The reason being, after inward transportation of inputs or capital goods into the factory premises, if a final product emerges, that final product has to be transported from the factory premises till the godown before it is removed for being delivered to the customer. Therefore, 'input service' includes not only the inward transportation of inputs or capital goods but also includes outward transportation of the final product upto the place of removal. Therefore, in the later portion of the definition, an outer limit is prescribed for outward transportation, i.e., up to the place of removal. 31. The phrase 'activities relating to business' is an omni-bus one and it finds a place in the inclusive definition. The question is, by a judicial interpretation, outward transportation of the final product from the place of ....
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....t is specifically provided. Therefore, the finding recorded by the CESTAT that the phrase and expression 'activities relating to business' admittedly covers transportation upto the customer's place was entirely unnecessary. This interpretation of ours find support from the subsequent conduct on the part of the Central Government, which amended Rule 2(l)(ii). By notification No. 10/2008 -CE. (N.T), dated 1-3-2008, the words 'clearance of final products upto the place of removal' were substituted in the place of the words 'clearance of final products from the place of removal'. The intention of the legislature is thus manifest. Till such amendment, the words 'clearance from the place of removal' included transportation charges from the place of removal till it reached the destination, namely the customer. Therefore, the said input service was included in the early part of the definition 2(l)(ii). Consequently, we cannot read what is expressly provided in the early part of the rule as having been included in the later part of the rule while interpreting the words 'activities relating to business', though it has been amplified by saying it is....
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.... The Central Board of Excise and Customs (CBEC) has issued a circular dated 23.8.2007 dealing with the issue concerning 'up to what stage manufacturer/consigner could take credit on the service tax paid on goods transported by it by road'. The issue, in fact, has emerged out of the order of the Tribunal passed in the case of the appellant itself. The Board has opined that the phrase 'place of removal' has to be determined by taking into account the facts of each case. According to the circular, the expression 'place of removal' has been defined by Section 4 of the 1944 Act and according to Sub-rule (t) of Rule 2 of the CC Rules, if any words or expression used in those rules are not defined but are defined in the 1944 Act or the 1994 Act then they are to be given the same meaning for the CC Rules as assigned to them in those Acts. Accordingly, reliance on Section 4 of the 1944 Act has been made where place of removal has been defined as under: "place of removal" means (i) a factory or any other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods h....
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....ts of this Court that, apart from the fact that the Circulars issued by the Board are binding on the Department, the Department is precluded from challenging the correctness of the said Circulars even on the ground of the same being inconsistent with the statutory provision. The ratio of the judgment of this Court further precludes the right of the Department to file an appeal against the correctness of the binding nature of the Circulars. Therefore, it is clear that so far as the Department is concerned, whatever action it has to take, the same will have to be consistent with the Circular which is in force at the relevant point of time. 10. It is, thus, evident that the revenue is precluded from challenging the correctness of the circular even on the ground of the same being inconsistent with statutory provisions. It goes further to limit the right of the revenue to file an appeal against the correctness of the binding nature of the circular. Therefore, there is no escape from the conclusion that the circular is binding on the revenue. 11. The only question then is whether the appellant fulfills the requirement of circular. The first requirement is that the owner....
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....harges were integral part of the excisable goods also stand fulfilled as the delivery of the goods is "FOR destination' price. This aspect has been specifically pointed out in para 2.2 of the reply dated 12.4.2006 given to the show cause notice. Therefore, we are of the view that the first question is liable to be answered in favour of the assessee and against the revenue. (iii) In CCE vs. Philips Carbon Black Ltd. 2016 (44) STR 253 (Guj.), it has been held as under:- The issue pertains to Cenvat credit on outward goods transportation agency service availed by the assessee for transportation of manufactured goods. This issue is covered by the judgment of Division Bench of this Court in case of Commissioner of Central Excise & Customs v. Parth Poly Wooven Pvt. Ltd. reported in MANU/GJ/1454/2011 : 2012 (25) S.T.R. 4, in which the following observations have been made: 19. When we hold that outward transportation would be an input service as covered in the expression 'means' part of the definition, it would be difficult to exclude such service on the basis of any interpretation that may be offered of the later portion of the definition which is c....
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.... of the final products or even the clearance of final products from the place of removal. 21. We must, however, for our curiosity reconcile the expression "from the place of removal" occurring in the earlier part of the definition with words 'up to the place of removal' used in inclusive part of the definition. Counsel for the assessees submitted that when a manufacturer transports his finished products from the factory without clearance to any other place, such as godown, warehouse etc. from where it would be ultimately removed, such service is covered in the expression 'outward transportation up to the place of removal' since such place other than factory gate would be the place of removal. We do appreciate that this could be one of the areas of the application of the expression 'outward transportation up to the place of removal'. We are unable to see whether this could be the sole reason for using such expression by the Legislature. 22. Be that as it may, we are of the opinion that the outward transport service used by the manufacturer for transportation of finished goods from the place of removal up to the premises of the purchaser is c....
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....s appeal. 6. The specific case of the appellant- assessee is that the sale of cement was completed only after delivery was made to the buyer. Invoices were produced and filed before the assessing officer, copies of which have also been placed before us for our perusal. In the said invoice, the price of cement has been calculated keeping in view that the same was to be delivered at the address of buyer and the price term clearly mentions as "FOR destination". FOR herein stands for Tree On Road', meaning thereby that the buyer need not pay for the transportation as the goods were to be supplied by the seller at the address of the buyer at cost of the seller. 7. The assessing officer as well as the appellate authority both have considered the invoices which were submitted before them. In his order, the assessing officer has recorded "that on perusal of the invoices it is found that the Price Terms mentions as FOR destination" but has proceeded to record as under: "I find that the assessee has not been able to establish the fact that: (i) the ownership of the goods and the property in the goods remained with the seller of the goods till the deliv....
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....rage by the assessee. In our view, who pays for insurance or bears the risk of goods in transit would not be a material consideration. The same has also been made clear by the Central Board of Excise and Customs, Department of Revenue, Ministry of Finance, in its Circular dated 20.10.2014. Outdoor Catering (i) In CCE vs. Ultratech Cement Ltd. (2010) 29 STT 244 (Bom), it has been held as under:-. 28. In the present case, the question is, whether outdoor catering services are covered under the inclusive part of the definition of "input service". The services covered under the inclusive part of the definition of input service are services which are rendered prior to the commencement of manufacturing activity (such as services for setting up, modernization, renovation or repairs of a factory) as well as services rendered after the manufacture of final products (such as advertisement, sales promotion, market research etc.) and includes services rendered in relation to business such as auditing, financing...etc. Thus, the substantive part of the definition "input service" covers services used directly or indirectly in or in relation to the manufacture of final ....
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....alling in the inclusive part must have nexus with the manufacture of the final product. 16. In our earlier discussion, we have referred to two considerations as irrelevant, namely, use of input in the manufacturing process, be it direct or indirect as also absence of the input in the final product on account of the use of the expression "used in or in relation to the manufacture of final product". Similarly, we are of the view that consideration such as input being used as packing material, input used as fuel, input used for generation of electricity or steam, input used as an accessory and input used as paint are per se also not relevant. All these considerations become relevant only when they are read with the expression "used in or in relation to the manufacture of final product" in the substantive/specific part of the definition. In each case it has to be established that inputs mentioned in the inclusive part is "used in or in relation to the manufacture of final product". It is the functional utility of the said item which would constitute the relevant consideration. Unless and until the said input is used in or in relation to the manufacture of final product within ....
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....Shridharan, learned Counsel for the respondent-assessee, in the present case, the assessee carrying on the business of manufacturing cement by employing more than 250 workers is mandatorily required under the provisions of the Factories Act, 1948 to provide canteen facilities to the workers. Failure to do so entails penal consequences under the Factories Act, 1948. To comply with the above statutory provision, the assessee had engaged the services of a outdoor caterer. Thus, in the facts of the present case, use of the services of an outdoor caterer has nexus or integral connection with the business of manufacturing the final product namely, cement. Hence, in our opinion, the Tribunal was justified in following the Larger Bench decision of the Tribunal in the case of GTC Industries Ltd. (supra) and holding that the assessee is entitled to the credit of service tax paid on outdoor catering service. 33. It is argued on behalf of the Revenue that not only the ratio but the decision of the Apex Court in the case of Maruti Suzuki Ltd. (supra) must be applied ipso facto to hold that the credit of service tax paid on outdoor catering services is allowable only if the said service....
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.... the categories of services enumerated after the expression 'such as' in the definition of 'input service' do not relate to any particular class or category of services, but refer to variety of services used in the business of manufacturing the final products. There is nothing in the definition of 'input service' to suggest that the Legislature intended to define that expression restrictively. Therefore, in the absence of any intention of the Legislature to restrict the definition of 'input service' to any particular class or category of services used in the business, it would be reasonable to construe that the expression 'such as' in the inclusive part of the definition of input service is only illustrative and not exhaustive. Accordingly, we hold that all services used in relation to the business of manufacturing the final product are covered under the definition of 'input service' and in the present case, the outdoor catering services being integrally connected with the business of the manufacture of cement, credit of service tax paid out on catering services has been rightly allowed by the Tribunal. (ii) In CCE vs. ACE De....
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.... charity provided by the employer to the employees. It is an onerous legal obligation imposed on him. 11 and 12*..... 13. Therefore, merely because these services are not expressly mentioned in the definition of input service it cannot be said that they do not constitute input service and the assessee is not entitled to the benefit of CENVAT credit. In fact, Rule 3 of the Cenvat Rules, 2004, specifically provides that the manufacturer of final products shall be allowed to take credit. The service tax is leviable under Section 66 of the Finance Act and paid on any input service received by the manufacturer of a final product. Therefore under the scheme of the Cenvat Credit Rules, 2004, the service tax paid on all those services which the assessee has utilized directly or indirectly in or in relation to the final product is entitled to claim the credit. Therefore, the Judgment of the Tribunal is legal and valid and is in accordance with law and does not suffer from any legal infirmity which calls for any interference. Hence, the substantial questions of law framed in these appeals are answered against the revenue and in favour of the assessee. 6. Therefore,....
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....f the Rules insofar as the same is relevant for the present purpose provides that the manufacturer shall be allowed to take credit of the service tax leviable under Section 66 of the Finance Act; paid on any input service received by the manufacturer of final product on or after the 10th day of September, 2004. A plain reading of the said rule makes it clear that the said provision does not qualify the nature of input service availed of by the manufacturer. 8. In the above factual and legal background, the Tribunal was justified in holding that the service tax paid on outdoor catering services by the canteen located in the respondent's manufacturing premises has to be considered as an input service relating to business and that Cenvat credit is admissible in respect of the same. The view taken by the Tribunal being in consonance with the provisions of the Rules does not suffer from any legal infirmity so as to warrant interference. In absence of any question of law, much less any substantial question of law, the appeal is dismissed. (iv) In CCE vs. Stanzen Toyotetsu India Pvt. Ltd. (2011) 32 STT 244 (Kar), it has been held as under:- 12. It is in this....
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....ity is over and after clearance of the final products, that is, after the place of removal, therefore, it does not fall in the main part of the definition of input service and is also not in relation to any of the activities specified in the inclusive part of the definition. It was further submitted that the services rendered by C & F agents can in no manner said to be sales promotion so as to fall within the ambit of the expression input service. On the other hand the learned counsel for the assessee submitted that the respondent appointed C & F agents in different States for the purpose of sale of the respondents final products. The goods are stock transferred to the C & F agents who store the same and thereafter sell them. In these cases there is no sale from the respondents factory gate. The goods are sold from the premises of the C & F agents. Accordingly, in these cases the place of removal is the premises of the C & F agents. As per Section 4(3)(iii) of the Central Excise Act, where goods are sold from the premises of the consignment agent or any other place or premises after clearance from the factory, such premises from where the goods are sold is the place of removal. The....
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....he C & F agent would fall within the purview of sub-clause (iii) of clause (c) of Section 4(3) of the Act and as such would be the place of removal. Viewed from that light the services rendered by the C & F agent of clearing the goods from the factory premises, storing the same and delivering the same to the customer would fall within the ambit of Rule 2(1) of the Rules as it stood prior to its amendment with effect from 1-4-2008, namely clearance of final products from the place of removal. However, this court is not in agreement with the view adopted by the Tribunal that such services would amount to sales promotion and is, therefore, an input service. For the reasons stated while discussing the issue as regards service commission paid to foreign agent, the services rendered by the C & F agents cannot be said to be in the nature of sales promotion. This issue stands answered accordingly, in favour of the assessee and against the revenue. Cargo Handling Services (i) In CCE vs. Inductotherm India Pvt. Ltd. 2014 (36) STR 994 (Guj.), it has been held as under:- 23. Admittedly, cargo handling services are utilized for the purpose of export of final product w....
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....rvice is provided by the assessee to these workers to reach the factory premises in-time which has a direct bearing on the manufacturing activity. In fact the employee is also entitled to conveyance allowance. It also would form part of a condition of service and the amounts spent on the conveyance of the employees is also a factor which will be taken into consideration by the employees in fixing the price of the final product. By no stretch of imagination can it be construed as a welfare measure. It is a basic necessity. To ensure that the work force comes on time at the work place, the employers have taken this measure which has a direct bearing on the manufacturing activity. At any rate it is an activity relating to business." Insurance (I) In CCE vs. Stanzen Toyotetsu India Pvt. Ltd. (2011) 32 STT 244 (Kar), it has been held as under:- "Insofar as Insurance coverage to the employees is concerned in the course of employment if the employees suffer injury or dies, there is a vicarious liability imposed on the employer to compensate the employee. If the employer employs its own transportation facility in order to cover the risk which also includes the ri....
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....expression " used in, or relation to the manufacturer of excisable goods" would have to be followed in respect of input services also. The law permits credit of duty /tax in respect of inputs/ inputs services only when the said are used in, or in relation to manufacturer of excisable goods. The law does not provide any other basis. It does not provide for credit on the basis that the value of input/ input service is included in the value of finished excisable goods. Hence, the tests laid down in Maruti Suzuki (supra) cannot be overlooked. Use of the input service must be integrally connected with the manufacturer of the final product. The input service must have nexus with the process of manufacturer. It has to be necessarily established that the input service is used in or in relation to the manufacturer of the final product. The relevant test would be can the final product emerge without the use of input service in question. When these tests are applied following the decision of the Hon'ble Supreme Court in Maruti Suzuki (supra), one finds that the impugned outdoor catering service does not meet the same in relation to manufacturer of the finished excisable goods listed in the ta....
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....e of removal i.e. Factory gate or Depot as the case may to the buyer's premises on FOR destination basis. While granting the benefit of credit of service tax paid on outward freight till the buyer's premises on FOR destination basis, for the period from April 2010 to September 2011, the Tribunal relied on clarification issued in Para 8.2 of the CBEC Master Circular No. 97/8/2007 dated 23.08.2007 which is as under:- "........ That for a manufacturer/ consignor, the eligibility to avail credit of the service tax paid on the transportation during the removal of excisable goods would depend upon the place of removal as per the definition. In case of a factory gate sale, from a non duty paid warehouse, or from a duty paid depot (from where the excisable goods are sold, after their clearance from the factory ), the determination of the place of removal does not pose much problem. However, there may be situations where the manufacturer/ consignor may claim that the sale has taken place at the destination point because in terms of the said contract /agreement (i) the ownership of goods and the property in the goods remained with the seller of the goods till the delivery of....
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....at on perusal of the bills, it was observed that the taxies were engaged by the persons who were not the employees of the assessee and therefore it cannot be treated to be used directly or indirectly, in or in relation to manufacture of final product. Auction and Club House service may be useful to the assessee but they fail to be an integral part of the business to effect its efficacy and quality. The business of the assessee can function equally well without these services.The contention of the assessee that the expenses pertained to visits of their employee outside city area in relation to business finds no substance as the expenses incurred relates to recreation and entertainment of the employees. 10. We have heard both the sides. 11. Before coming to the issues of services which are anciliary to the activities which are carried out by the assessee is the main core of the argument of the whole appeal. 12. The question come first is whether rule 4 (c) will come into operation or not. In view of Section 2(t), it is very clear that the meaning does not define under the Cenvat Credit Rules, 2004 then the meaning is to be derived from the provisio....