TaxTMI 
TaxTMI 
2025 (1) TMI 1694
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....e (MEK) and Secondary Butyl Alcohol (SBA), and had availed CENVAT credit of duty paid on inputs/capital goods and service tax paid on various services under the CCR. During the course of scrutiny of E.R. 1 Returns filed by the appellant for the months of February 2013 and March 2013, it was noticed that the appellant had availed and utilized CENVAT credit paid on various input services. The appellant were asked to submit invoices and other related documents to prove that the said services were used by them in the manufacture of final products. However as they did not furnish any details/reasons, a show cause notice (SCN in short) was issued alleging that on scrutiny of nature of services consumed, it appeared that they were not eligible to avail CENVAT credit of such service tax paid in as much as the said services were not covered within the scope of input service as defined under Rule 2(l) of the CCR and also for the reason that they have not been used in or in relation to the manufacture of the finished excisable goods as required under the provisions of Rule 3 of CCR and for other reasons as tabulated in para 4 of the SCN. Purusant to the reply filed by the appellant, they were....
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.... Name of Input Service Case law citation Gist of decision COMMERCIAL OR INDUSTRIAL CONSTRUCTION SERVICE 2014 (34) S.T.R. 276 (TRI. - DEL.) HI TECH POWER & STEEL LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR Cenvat credit of Service Tax - Input service - Construction services - Coal shed for storage - Eligible for credit of Service Tax as shed constructed for storage of coal required for manufacture of finished goods - Covered by definition of 'Input service' - Rules 2 and 3 of Cenvat Credit Rules, 2004. [paras 3, 4] Construction Service 2017 (7) GSTL (346) (Tri.Mum) Raymond UCO Denim Pvt. Ltd. Vs. CCE, Nagpur Cenvat credit of Service Tax - Input services - Construction of scrap yard, barbed wire fencing, canteen hall and dining hall, security services at guest house - Credit admissible - Rule 2(l) of Cenvat Credit Rules, 2002. [para 5] BUSINESS AUXILIARY SERVICE COMMISSIONER V. LANCO INDUSTRIES LTD. - 2015 (38) S.T.R. J365 (A.P.)] ALSO CONFIRMED IN 2012 (28) STR J19 (BOMBAY HIGH COURT) Cenvat credit of Service tax - Input service - C....
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.... DYNAMIC INDUSTRIES LTD. Cenvat credit - Input services - Customs House Agent, Shipping Agents and Container Services - Used for export of finished goods by manufacturer thereof - HELD : Where exports are on FOB basis, place of removal is port and not factory gate - Impugned services were utilised for purpose of export of final products and exporters could not do business without them - Hence, Service Tax paid on these services availed till goods reached port, was admissible - Input service cannot be given restrictive meaning in view of "means.... and includes" used in definition in Rule 2(l) of Cenvat Credit Rules, 2004. [paras 6, 7, 8, 10] CLEANING SERVICE 2014 (36) S.T.R. 1089 (TRI. - DEL.) DELPHI AUTOMOTIVE SYSTEM P. LTD. VS COMMR. OF CUS., C.E. & S.T., NOIDA Cenvat credit of Service Tax - Input service - Cleaning service - Credit admissible - Rule 2(l) of Cenvat Credit Rules, 2004. [para 3] CONSULTING ENGINEERING SERVICE 2015 (40) S.T.R. 509 (TRI. - Bangalore) KAKINADA SEAPORTS LTD. Versus C.C.E., S.T. & CUS., VISAKHAPATNAM-II Cenvat credit of Service Tax - Input service credit - Cons....
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....on architect's services and design services - Cenvat credit availed as against output service of appellant i.e. renting of immovable property - Input service not limited to services for providing output service, but also includes service for setting up premises of provider of output service - Services used for setting up stadium are input services squarely covered by definition of input service - C.B.E. & C. Circular No. 98/01/2008-S.T., dated 4-1-2008 travelled absolutely contrary to clear and plain language of definition of input service - Appellant entitled for Cenvat credit - Demand not sustainable - Sections 73 and 75 of Finance Act, 1994. - It is very pertinent that legislators knowing fully that there is no tax or excise duty on constructing premises of output service provider, included services used for setting up of premises of provider of output service, for the simple reason that if the premises are used for providing output service, the credit of input services used for setting up the premises of service provider must be allowed. [paras 8, 9, 10] ERECTION, COMMISSIONING / INSTALLATION SERVICES 2009 (14) S.T.R. 305 (TRI. - AHMD.) COMMR. OF C. E....
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....s of appellant - Rule 3 of Cenvat Credit Rules, 2004. [para 4] 2015 (38) S.T.R. 587 (TRI. - BANG.) CARGILL INDIA PVT. LTD. VERSUS COMMR. OF C. EX., CUS. & S.T., BANGALORE-I Cenvat credit of Service Tax - Input credit - Maintenance and Repair service - Eligibility - Services used in relation to maintenance and repair of factory - Appellant entitled to credit - Rule 3 of Cenvat Credit Rules, 2004. [para 4] TECHNICAL AND ANALYSIS SERVICES 2013 (30) S.T.R. 572 (TRI. - MUMBAI) SEMCO ELECTRIC PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I Cenvat credit - Input service - Technical testing and analysis service to check quality parameters of exported goods - It is service without which export of goods cannot take place - Hence, it is input service on which assessee can take credit of Service Tax paid - Rule 2(l) of Cenvat Credit Rules, 2004. [para 5.5] 2010 (18) S.T.R. 56 (TRI. - DEL.) COMMISSIONER OF CENTRAL EXCISE, RAIPUR VERSUS H.E.G. LIMITED Cenvat credit of Service tax - Input service - Cargo Handling se....
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.... documents to evidence the aforesaid manner of use, issue of show cause notice clearly specifying Rule 2(l) of the CCR and drawing attention to the burden of proof regarding admissibility of the cenvat credit that lies upon the appellant and calling upon the appellant to submit all evidences upon which they intent to rely on as well as intimating that they will be heard in person if they require to do so prior to the matter being adjudicated, cannot in any way be faulted. The impugned order in original after following due process and adjudicating the show cause notice recording reasons upon consideration of the appellant's submission, cannot therefore be said to have gone beyond the notice on this count. The case laws of CCE, Bangalore Vs Brindavan Beverages Pvt. Ltd reported in 2007(213) ELT 487 (S.C.) and Rajasthan Spinning and Weaving Mills Ltd. Vs CCE [1989 (41) ELT 450 (Tribunal) relied on by the appellant are inapplicable in light of the factual circumstances and reasons given above. Hence the preliminary ground raised by the counsel for the Appellant, namely that the notice is bereft of any reasoning for the ineligibility of cenvat credit proposed to be recovered and that th....
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....air and maintenance, in so far as they relate to a motor vehicle which is not a capital goods, except when used by- (a) a manufacturer of a motor vehicle in respect of a motor vehicle manufactured by such a person; or (b) an insurance company in respect of a motor vehicle insured or reinsured by such a person; or (C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits 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. 9. On an analysis of the above definition, it is seen that the same is broadly in three parts; First part, which is the main part, covers input services used for providing output service or used by manufacturer, directly or indirectly, in relation to manufacture or clearance of final product upto the place of removal; Second part is the inclusive part of the definition which expands the scope beyond the coverage of the first part, the word 'includes' enlarging t....
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.... Section 65B(44), which interalia stipulates that service means any activity carried out by a person for another for consideration, and includes a declared service. Section 65 of the Finance Act 1994 also ceased to apply with effect from 01-07-2012 vide Notification No.12/2012-ST dated 05.06.2012. However, for manufacture of the final product, it continues to be stipulated in Rule 2(l) that the input service be used either directly or indirectly, in or in relation to the manufacture of the final product. On a plain reading of the same it is evident that in order for a service to qualify as an input service vis a vis an output service provider, it has to be shown that the said service is used for providing the output service, while in the case of a manufacturer, it would suffice to show that the same is used in relation to the manufacture of the final product. The expression 'used for' is relatively narrow in its scope when compared to the expression 'in relation to', which is far wider. 11. To understand the Second part/inclusive part of the definition, it would also be beneficial to advert to the decision of the Honourable Supreme Court in the case of Ramala Sah....
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....sion 'in relation to' are words of comprehensiveness, which might both have a direct significance as well as an indirect significance, depending on the context in which it is used and they are not words of restrictive content and ought not be so construed." 15. In the inclusive portion of the definition, the legislature has omitted the words/phrases, "setting up", "activities relating to business, such as" thereby confining the services allowable to those specified in the inclusive part. Therefore, by virtue of this omission and in view of the first part allowing the manufacturer the leeway of treating services used, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, as input services, apart from the services listed in the inclusive part, only those services having nexus or integral connection with the manufacture of final products would qualify as input service for the appellant. 16. However, given that the legislature has categorically provided for certain services when used for specified activities to be excluded from the definition of 'input services', such specific exclusions, ....
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....Rule 2(l) in the aforementioned form as reproduced supra, which substitution was made vide. notification No.28/2012-CE(N.T) dated 20-06-2012 w.e.f 01-07-2012, sub-clause A provided for excluding specified services, namely, services specified in sub-clauses (p)-Service provided by an architect in his professional capacity, in any manner, (zn)- service provided by any other person in relation to port services in a port, in any manner, (zzl)-service provided by a technical inspection and certification agency, in relation to technical inspection and certification, (zzm)- service provided by airports authority or by any other person in any airport or a civil enclave, (zzq)- service provided by any other person in relation to commercial or industrial construction, (zzzh)- service provided by any other person in relation to construction of complex and (zzzza)- service provided by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams, of clause (105) of Section 65 of the Finance Act (hereinafter referred as specified services), in so far as they are used for- ....
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.... machinery, equipment or structures, whether pre-fabricated or otherwise or works contract for the purposes of turnkey projects including engineering, procurement and construction or commissioning (EPC) projects etc;. 22. Given the above nature of exclusion specified in sub-clause (A), it would appear that the omission of the words "setting up" in the inclusive part of the definition of input services is only by way of abundant caution to avoid any interpretational incongruity since the exclusion is of specified services, including works contract in so far as they are used for (a) construction of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for support of capital goods, which services are bound to be used in the course of setting up of a factory. 23. That is to say, in so far as the services of works contract as defined in sub-clause (zzzza) of clause (105) of Section 65 of Finance Act ibid was concerned, it was only service provided by any other person in relation to the execution of a works contract, in so far as they are used for construction of a building or a civil structure or a part thereof or laying of foundati....
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....e definition of 'input services', have not come up for discussion in these cases relied upon by the appellant, and hence they are of little aid to the appellant nor of much assistance to us in deciding the present dispute. 27. In light of the aforesaid position in law, we proceed to examine the correctness of the denial of cenvat credit by the adjudicating authority in the impugned order in original in the appellant's fact situation, for which purpose, the reasons for denial as per the impugned order, juxtaposed with the contentions of the appellant in appeal, is tabulated as under. Description of input services for which credit was denied. Amount of Cenvat denied (Rs) Reason for denial as per Impugned order Contention of the Appellant as reflected in the technical write up and reply to SCN 1. Commercial or Industrial Construction services 4,50,882 Excluded from the purview of the definition of input services. [Para 11(iv)] It is related to the maintenance and modification for the plant and machinery and storage tanks, and such availment is inevitable as the products manufactured are highly inflammable 2. Management, Maintenance or Repair service 3,....
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....on of inputs into the factory and actual transportation of finished goods upto the place of delivery/exportation 8. Cleaning Services 13,127 As these are for upkeep of factory premises and its surroundings and may have been used consequent to statutory requirement of pollution control board, factory's Act etc, credit not allowable, yet are not directly or indirectly connected with manufacture of goods. [Para 11(xi)] Being an industry of petroleum products governed by strict pollution control norms besides product norms. The manufacturing area has to be kept clean from the point of safety and the service also involves cleaning production equipments, keeping fire and safety devices clean etc is a regulatory requirement and hence an integral part of manufacturing operations 9. Man power recruitment or supply service 12,42,825 Manpower supply included supply of labour for upkeep of gardening and their engagement in maintenance or repair service involving construction of civil structure or part thereof, these are excluded from "input services". [Para 11(xii)] These services provide the necessary technically skilled manpower that is needed to support the....
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....sioning or installation of plant, machinery, equipment and structures relating thereto, pertain to the Appellant's MEK expansion plant, SBA plant and Cogen Biomass Power plant. These are distinct and different from works contract and construction services used for construction or execution of works contract of a building or a civil structure or a part thereof or laying of foundation or making of structures for support of capital goods, which fall under the specific exclusion under sub-clause A of the exclusions listed in the definition of 'input service', as elucidated supra. Further, these are services having nexus or integral connection with the manufacture of final products of the Appellant, namely Methyl Ethyl Ketone (MEK) and Secondary Butyl Alcohol (SBA). We are therefore of the view that the denial of cenvat credit by the Adjudicating Authority in respect of Sl.No.1,3,4,5 and 12 of the table in the previous paragraph, namely, commercial or industrial constructions services, designing services, consulting engineer service, Erection, Commissioning and Installation service respectively, is incorrect and accordingly set aside findings of the Adjudicating Authority in this regard....
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....r clearance from the factory whereas the Appellant has contended that the services were used for receiving the raw materials and chemicals used in production, to dispatch finished goods to export customers thereby involving actual transportation of inputs into the factory and actual transportation of finished goods upto the place of delivery/exportation. In as much as these services were used during the period February 2013 and March 2013 prior to the definition of place of removal being included in CCR, by virtue of Rule 2(qa) of CCR vide notification No.21/2014-CE dated 11.07.2014, which came into effect only from 11.07.2014, the appellant cannot be faulted for treating the same as input services when they have a clear nexus with the manufacture of the final product given their aforementioned uses by the appellant. In any event, prior to the inclusion of this definition of place of removal, in a catena of decisions judicial forums have taken a view that in case of exports, the place of removal is port of export where export documents are presented, Central excise v Inductotherm India P Ltd, 2014 (36) STR 994 (Guj) refers, being one such decision. Therefore, the denial of cenvat c....