TaxTMI 
TaxTMI 
2009 (5) TMI 77
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Commissioner (Appeals) who passed the impugned Order-in-Appeal confirming the recovery of credit but dropping the penalty. The appellants are highly aggrieved over the impugned order. Hence they have come before the Tribunal for relief. 4. The learned Advocate urged the following points:- (i) The appellants are manufacturers of paper boards and speciality papers in their PSPD Division at Sarapaka. The factory located at Sarapaka is in a remote Scheduled Area (Scheduled Area as provided under article 244 of the Indian Constitution). The nearest town with a railway station is 35 Kms. away. In terms of the Regulations made by the Andhra Pradesh Government, transfer of any land located in the specified areas is prohibited. Consequently the employees working in the factory cannot acquire a flat/plot/building either by purchase or lease. Unless the company provides residential accommodation, within its precincts, it is legally impermissible to managers/employees to obtain a residential accommodation in the vicinity of the factory, in view of the said regulation. The factory works round the clock. Hence, all facilities have to be provided at the cost of the company and are accoun....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (v) Our attention was invited to rule 2(l) of the Cenvat Credit Rules, 2004 which defines "input service". It was stated that the expression used is - "Used by manufacture whether directly or indirectly, in or in relation to the manufacture of final products". The scope of the expression 'used by the manufacturer' should be interpreted to contemplate situation where an input service is used and would not mean 'consumed' as held in the following judgments:- "5. Varuna Sulphonators (P.) Ltd v. Union of India 1993 (68) ELT 42 (All.).- The words 'used' and 'consumed' are not identical and synonymous. They have not been defined in the Rules and in the Central Excises and Salt Act, 1944. The verb 'use' as per Chambers English Dictionary means: to put to some purpose: to avail oneself of; to resort to; to make use of; to take or consume...' The verb 'consume' in the same dictionary means: to destroy by wasting, fire, evaporation; to use up; to devour; to waste or spend; to exhaust....' The word 'used' does not indicate that a thing, which is liquid, can be said to be used only when it is spent up to the last drop. The word consumed' may be used in the sense that a thing which is cons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y service received and which is commercially required for the purpose of carrying on the business of the manufacturer, will be covered by the expression 'activities relating to business'. It was urged that the appellants were right in taking credit on the manpower supplied for the packing, housekeeping and other divisions which are integrally connected with its manufacturing business and without which the manufacturing business would be impossible or commercially inexpedient to be carried on. In these circumstances the credit taken by the Noticee on the residential colony, plantation division and ILTD godown are correct and proper in law. (viii) In support of the submissions the following case law was relied on: Manikgarh Cement v. CCE & C [Appeal No. E/694/2007, dated 13-12-2007]. "4. The appellants contention as reflected in the reply to the show-cause notice was that their factory was situated at a remote place where no facilities were available for stay of their engineers and workmen, and it was, therefore, necessary to construct a residential colony for the employees for being available on the spot in order to maintain continuity in the process of cement manufacture, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the business of manufacturing or providing output service: (a) CCE v. Deloitte Tax Services India (P.) Ltd. [2008] 16 STT 449 (Bang.-CESTAT). (b) Keltech Energies Ltd. v. CCE [2008] 14 STT 419 (Bang.-CESTAT). (c) Metro Shoes (P.) Ltd. v. CCE [2008] 14 STT 280 (Mum.-CESTAT). (d) CCE v. Cable Corporation of India Ltd. [Appeal No. E/1618/2007-Mum., dated 27-6-2008]. (e) Parasom Machinery (India) (P.) Ltd. v. CCE [Appeal No. E/271/2008-Mum., dated 23-4-2008]. (f) Indian Rayon & Industries Ltd. v. CCE [2007] 6 STT 372 (Mum.-CESTAT). (g) Universal Cables Ltd. v. CCE, Bhopal [2007] 8 STT 5 (New Delhi-CESTAT). (h) Force Motors Ltd. v. CCE [Appeal No. E/1324/2007, dated 11-7-2008]. (i) CCE v. Hindustan Coca Cola Beverages (P.) Ltd. [2008] [Appeal No. E/1246/2007, dated 29-11-2007]. (j) Vodafone Essar Digilink Ltd. v. CCE [Stay No. ST/2706/2007-SM, dated 12-1-2008]. (k) Ferromatik Milacron India Ltd. v. CCE [Appeal No. E/1177 of 2008, dated 28-11-2008]. (l) CCE (LTU) v. Brakes India Ltd. [2008] TIOL 1993 (Mad.-CESTAT). (m) Capiq Engg. (P.) Ltd. v. CCE [2008] TIOL 1967 (Ahd.-CESTAT). (x) Our attention was invited to the following observations of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the tax liability. 6. We have gone through the records of the case carefully. In broad terms, the appellants availed service pertaining to the maintenance of staff colony and plantation. The service tax paid op input services were taken as credit in terms of the Cenvat Credit Rules, 2004. The actual taxable services are - (i) renovation; (ii) repair and maintenance; (iii) security; (iv) labour supply; (v) advertising services; (vi) plantation works; (vii) rent-a-cab services; (viii) Business Auxiliary Services; and (ix) manpower recruitment service. The definition of 'input service' is reproduced hereinbelow:- "Rule 2(l) of the Cenvat Credit Rules, 2004 defines 'input service as follows: '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 from the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of factory, premises of provider of output service or an office relating to such factory or premises, adv....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... transportation upto the place of removal;" The use of the expression "as such" indicates that list of activities given therein are only illustrative and not exhaustive. When the appellant is under an obligation to maintain a colony, all the services received in maintaining such a colony would also be covered as input services. In the light of the definition of input service, we do not agree with the Commissioner (Appeals) that the services undertaken like lawn mowing, garbage cleaning, maintenance of swimming pool, collection of household garbage, harvest cutting, weeding, etc. cannot be considered as input services. When a colony has to be maintained, all the above services are to be considered as input services. 7. As regards plantation activities, it is seen that the appellant is a paper manufacturing unit. The major raw materials are different kind to soft wood trees. They have also explained the circumstances under which they had to invest during improvement research. It cannot be said that this activity does not have any nexus with the manufacturing activity. The whole things should be viewed in a broader perspective in the light of the definition of the 'input service....