TaxTMI 
TaxTMI 
2025 (11) TMI 119
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.... 2.2. Audit conducted on the appellant's unit observed that the appellant has availed and utilised ineligible Cenvat credit on various input services. On the basis of the audit observations, four show-causenotices were issued by the Department disputing availment of input service credit on Rent-a-Cab, Travel Agency, Courier Services, Banking and Financial Services availed during the period 2007-08 to August 2014. 2.3. The Department alleged that the said services do not qualify as "input services" under Rule 2(l) of CENVAT Credit Rules, 2004 as they lack direct nexus with manufacturing activities and proposed recovery of the ineligible credit availed by the appellant under Rule 14 read with Section 11A(1)/11A(4) and 11AB/11AA of Central Excise Act, 1944 along with penalty under Rule 15(2) read with Section 11AC. 2.4. The said show-cause-notices were adjudicated by the Joint Commissioner who confirmed the entire demand of Rs.83,78,004/- along with interest and imposed equal amount as penalty vide Order-in-Original No. 27-30/Joint Commr./C.Ex/RKL/2017-18 dated 31.01.2018, holding that services have no nexus with business activities. 2.5. On appeal, the Ld. Commissioner (Appe....
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....inition provided under Clauses (A), (B), (BA) and (C), specifically provide for certain services or portion of such services, which are not included in the above definition of 'input service'. However, there are certain exceptions to this exclusion which are also given in the form of 'except for provision of certain services', 'except when used by certain category of persons', 'when such services are not primarily used for specified use' etc. Therefore, in order to come to the conclusion that a particular service is covered as 'input service', either it could be covered under category (i) or (ii) of the definition of input service as explained above, and such input service should not fall under the exclusion clauses mentioned in the third category (iii) above. 3.4. In the present case, the CENVAT Credit has been denied for the following services post 01.04.2011. The appellant relied on certain decisions in support of their claim of eligibility of the said services as 'input services. The decisions relied upon by the appellant in respect of each input service is mentioned below: (i) Rent-a-cab services - Reliance in this regard is placed on CLASSIC MARBLE COMPANY PVT. LT....
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....nder the eligible category since these are used in or in relation to manufacture of final products, and therefore these services qualify as eligible 'input service' under Rule 2(l) ibid. 6.2. In support of this view, we place our reliance on the decision of the Hon'ble Bombay High Court in the case of CCE v. Ultratech Cement Ltd. 2010 (10) TMI 13 - Bombay HC, wherein it has been held as under: "29. The expression "activities in relation to business" in the definition of "input service" postulates activities which are integrally connected with the business of the assessee. If the activity is not integrally connected with the business of the manufacture of final product, the service would not qualify to be a input service under Rule 2(1) of the 2004 Rules. 30. The Apex Court in the case of Maruti Suzuki Ltd. (supra) has considered the expression used in or in relation to the manufacture of final product' in the definition of "input" under Rule 2(k) of 2004 Rules and held as follows: "14. Moreover, the said expression, viz, "used in or in relation to the manufacture of the final product" in the specific/substantive part of the definition is so wide th....
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....the manufacture of sodium cyanide is an eligible input, since it has a significant role to play in the manufacturing process and since the final product cannot emerge without the use of gas. Similarly, Heat Transfer Oil used as a heating medium in the manufacture of LAB is an eligible input since it has a persuasive role in the manufacturing process and without its use it is impossible to manufacture the final product. Therefore, none of the categories in the inclusive part of the definition would constitute relevant consideration per se. They become relevant only when the above crucial requirement of being "used in or in relation to the manufacture" stands complied with. In our view, one has to therefore read the definition in its entirety." 31. In our opinion, the ratio laid down by the Apex Court in the case of Maruti Suzuki Ltd. (supra) in the context of the definition of 'input' in Rule 2(k) of 2004 Rules would equally apply while interpreting the expression "activities relating to business" in Rule 2(1) of 2004 Rules. No doubt that the inclusive part of the definition of 'input' is restricted to the inputs used in or in relation to the manufacture of ....
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....vices used in relation to the business of manufacturing the final products. Therefore, while interpreting the words used in the definition of 'input service', the ratio laid down by the Apex Court in the context of the definition of 'input' alone would apply and not the judgment in its entirety. In other words, by applying the ratio laid down by the Apex Court in the case of Maruti Suzuki Ltd. (supra), it cannot be said that the definition of input service' is restricted to the services used in relation to the manufacture of final products, because the definition of input service' is wider than the definition of 'input'. 34. Therefore, the definition of input service read as a whole makes it clear that the said definition not only covers services, which are used directly or indirectly in or in relation to the manufacture of final product, but also includes other services, which have direct nexus or which are integrally connected with the business of manufacturing the final product. In the facts of the present case, use of the outdoor catering services is integrally connected with the business of manufacturing cement and therefore, credit of ....
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....obile phone service is neither used in the manufacture of final product nor it is specifically included in the definition of input service. Even then, the C.B.E.C. has construed the definition of input service widely so as to cover not only the services specifically enumerated in the definition of 'input service' but also cover all services which are used in relation to the business of manufacturing the final products. Therefore, the argument of the revenue which runs counter to stand taken by the C.B.E.C. cannot be accepted. 37. In the case of Coca Cola India Pvt. Ltd. (Supra) a Division Bench of this Court has considered scope of the expression "input service' as defined in rule 2(1) of 2004 Rules. In that case, the question for consideration was, whether a manufacturer of non alcoholic beverage bases (concentrates) is eligible to avail credit of service tax paid on advertisement, sales promotion, market research etc. The argument of the revenue in that case was that the advertisements are not relatable to the concentrate manufactured by Coco Cola India Pvt. Ltd. (supra) and hence, the credit in respect thereof cannot be allowed. Considering the Finance Minis....
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....taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India where service tax is paid by the manufacturer 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, leg....
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....urther, the third category, viz., (iii) 'exclusion' part of the definition provided under Clauses (A), (B), (BA) and (C), specifically provide for certain services or portion of such services, which are not included in the above definition of 'input service'. 7.2. We have gone through the input services on which CENVAT Credit has been denied in the impugned order. On perusal, we find that the input service namely, Rent-a-cab services has been specifically excluded from the definition of 'input service'. In view of the specific exclusion, we observe that the appellant is not eligible for the credit availed on the input services namely, Rent-a-cab services. We observe that the disallowance of CENVAT Credit on rent-a-cab service has been upheld by the Hon'ble Apex Court in the case of Solar Industries Industries India Ltd. Vs. Commissioner of Central Excise, Customs & Service Tax, Nagpur-II, 2022 (64) G.S.T.L. 257 (S.C.), wherein it has been held as under: "[Order]. - Delay condoned. 2. Providing transportation service to the employees cannot be said to be "input service" as it has nothing to do with the manufacture of the goods. 3. In that view of the ma....
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....y provided certain activities/services used for specified purposes cannot treated as an 'input service' for the purpose of CENVAT Credit Rules, 2004, as mentioned in the exclusion portion of the said Rule 2 (l) of CCR. The subject services viz., Air Travel Agency Service and Convention Service are not forming a part of the exclusion clause of the definition under Rule 2 (l) of CCR. For this reason also, I opine, that Air Travel Service being not exclusively excluded but being covered under inclusive part of the definition, is the service eligible for Cenvat Credit. 7.6. With respect to the credit availed on Courier services, we rely on the decision of the Tribunal at Ahmedabad in the case of HALDYN GLASS LTD VERSUS C.C.E. & S.T. -VADODARA-I 2025 (4) TMI 104 - CESTAT AHMEDABAD, wherein it has been observed as under: 4. This Court has considered the rival submission. This Court finds that the decision as contained in final order of Dynaflex Pvt. Ltd. Vs. CCE and ST Vadodara- ii, in which, inter alia, the present appellant was also a party, was concerned with the period post amendment of year 2011 and was considered by the Bench, while dealing with the matter. The followin....
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....ivity, being not used inside the factory premises, but continued to remain in the said definition of input service. Needless to mention that these services are even though not directly linked to the manufacturing activity in the factory premises of the assessee but connected or related to the business of manufacturing activity which also involve marketing/sale of the manufactured goods. Therefore, the contention of the Revenue that unless the activity has a direct nexus with the manufacturing of goods in the factory premises, post deletion of the expression activities relating to business, could not entitle the assessee to avail credit on the Service Tax paid on services, including 'Courier Services' which are not directly connected with the manufacturing activity. It cannot be denied that 'Courier Service Involves a host of uses relating to the activity of manufacture and sale of goods. For example, the documents relating to technical expert's opinion, sample testing report, sending of samples, machine catalogue etc. are received and dispatched by utilizing the services of 'Courier' and it cannot be said that these are de hors of the activities of manufactu....