AI Drafter 
TaxTMI 
TaxTMI 
2017 (8) TMI 1467
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....bove excisable goods, the assessee availed credit of duty paid on inputs, capital goods and service tax on input services, as per Cenvat Credit Rules, 2004 and utilized the said credit to discharge the duty liability on their final products. 3. During the period from July' 2006 to August' 2009, the assessee availed Cenvat credit of Rs. 21,93,734/-, in their cenvat credit account, on service tax paid on the "Man Power Recruitment or Supply Agency" services provided by M/s.Industrial Canteen Services, Coimbatore. According to the Commissioner of Central Excise, Coimbatore, appellant herein, the input service tax credit in respect of service tax paid, cannot be availed, inasmuch as the said service is, neither an input service, for the assessee, in the manufacture of excisable goods, considering the fact that catering service is not used by them, either directly or indirectly or in relation to the manufacture of final products, and clearance of final products, nor for providing, output service. 4. In this regard, a Show Cause Notice Sl.No.16/2009 (ADC), dated 30.09.2009, was issued to the assessee, demanding the wrongly availed and utilized Cenvat Credit, amounting to Rs....
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....nt Civil Miscellaneous Appeal has been filed by the Commissioner of Central Excise, Coimbatore, on the following substantial questions of law, "(i) Whether the Hon'ble CESTAT, Chennai was correct in holding that the respondent is entitled to avail the CENVAT Credit on service used for operating Canteen as input service with respect of which the cost is borne by the assessee, despite the fact that the above service does not fall under the ambit of the definition of "Input service" specified under Rule 2(l) of the Cenvat Credit Rules, 2004, as the above service are neither used in or in relation to the manufacture or clearance of final product nor can it be said, to be an activity relating to business? (ii) Whether the Tribunal was right in allowing the CENVAT Credit of service tax paid on service used for operating Canteen, as input service, since the question of eligibility of 'outdoor catering services in the Cenvat Credit issue is pending before the Hon'ble Supreme Court in the case of M/s.Ultra Tech Cement Ltd v. Commissioner of C. Ex, Nagpur?" Heard Mr.A.P.Srinivas, learned counsel appearing for the appellant, and perused the materials ava....
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....sive part of the definition. 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 products, whereas the inclusive part of the definition of "input service" covers various services used in relation to the business of manufacturing the final products. In other words, the definition of "input service" is very wide and covers not only services, which are directly or indirectly used in or in relation to the manufacture of final products but also includes various s....
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....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 the factory of production, the said item would not become an eligible input. The said expression "used in or in relation to the manufacture' have many shades and would cover various situations based on the purpose for which the input is used. However, the specified input would become eligible for credit only when used in or in rela....
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....actories 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 services are used in relation to the manufacture of final products. That argument cannot be accepted because unlike the definition of input, which is restricted to the inputs used directly or indirectly in or in relation to the manufacture of final products, the definition of 'input service' not only means services used directly or indirectly in or ....
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....ature 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. 36........... 37........... 38. We concur with the above decision of this Court in the case of Coca Cola India (P.) Ltd. (supra). However, in that case, this Court has also held that the cost of any input service that forms part of value of final products would be eligible for CENVAT credit. That observation of the Division Bench is made in the context of a service w....