TMI Blog2008 (8) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... be levied. Appeal allowed - decided in favor of appellant. - PII/PAP/155/2008 - - - Dated:- 14-8-2008 - Shri P. Ayyam Perumal, J. Shri N.P. Dhurandar, Dy. General Manager and Prasad Hardikar, Manager (Commercial Warehousing), for the Appellant. ORDER This is an appeal from M/s. Raymond Zambaiti Pvt. Ltd. (hereinafter referred as the appellant) against Order-in-Original No. 54/DC/ CEX/2007 dated 3-12-2007. The issue involved, in the appeal, briefly stated are that the appellant, who is engaged in the manufacture of cotton fabrics, was availing facility of Cenvat credit of duty paid on input service as well as capital goods and input service credit; that the appellant availed credit of service tax of Rs. 9,78,547/- on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e summarized as under :- (i) that Cenvat credit is a piece of benevolent legislation and the same has to be construed liberally. That the respondent erred in not appreciating and following the ratios laid down by the Hon ble Apex Court in the case of South Eastern Coalfields and Rajasthan State Chemical Works; (ii) that in view of the binding ratios laid down by the above two judgments of the Apex Court in the above two cases, the respondent should have allowed cenvat credit of service tax on the construction of compound wall; (iii) that the excise registration for appellant s factory was granted for the entire area including compound wall of the factory and the compound wall is a part of the factory and therefore, included in the Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factory which includes the compound wall as well. 3.1 As agreed, they submitted copy of registration along with the ground plan of the factory under their letter dated 9-8-2008. 4. I have gone through the case records including the record of PH. The lone issue to be decided in the appeal is that whether the appellant is entitled to avail input service credit paid on the construction of compound wall or not. The lower authority has held that since the construction of compound wall cannot be input service under Rule 2(l) of the Cenvat Credit Rules, the same cannot be allowed as input service to the appellant. Whereas the appellant claims that the input service includes services used in relation to setting up, modernization, renova ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods only . 4.1 Therefore, the first and foremost, which has to be seen, is that about the definition of input service given under Rule 2(l) of the Cenvat Credit Rules 2004. 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 form the place of removal, and includes services used in relating to setting up, 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 upto the place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngle, we are of the opinion that the words precincts has to be given the broader meaning and not the narrower meaning . 4.3 Though the above decision was rendered while interpreting Notification granting exemption to mining industry, the ratio laid down by the Apex Court can be directly applied to the issue on hand. It is a matter of common knowledge that without compound wall, no factory can function due to various problems such as security, environmental protection etc. It is also to be seen that the Central Excise Registration was granted for the manufacture of excisable goods at Raymond Zambaiti Private Limited, Plot No. T-1, Kagal - Hatkanangale Indl. Area, Kagal, Kolhapur, Maharashtra - 416 216 . Under Condition No. 1, it has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... According to the Apex Court decision, each step towards such production would be a process in relation to the manufacture. In the instant case, the construction of the factory and compound wall are the starting processes for manufacture of final products. The inclusive definition also support the ratio of the Apex Court laid down in the above case. 5. In relation to imposition of penalty, the appellant claims that where in a case, the interpretation is involved the question of imposing penalty does not arise. The appellant is very correct that according to the inclusive definition available under input service definition, the services in relation to setting up of a factory, modernization, renovation or repairs of factory are specif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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