TMI Blog2011 (11) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... d in relation to the setting up of the factory or office or premises, including its modernization, renovation, repair etc., and also services used in relation to advertisement, sales promotion, market research, procurement of inputs and all activities relating to the business would also fall within the ambit of ‘input services'. The staff colony, provided by the respondent Company, being directly and intrinsically linked to its manufacturing activity could not therefore be excluded from consideration. Consequently, the services which were crucial for maintaining the staff colony, such as lawn mowing, garbage cleaning, maintenance of swimming pool, collection of household garbage, harvest cutting, weeding etc., necessarily had to be consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 15 of the CENVAT Credit Rules, 2004 was also threatened. The respondent Company pointed out in its reply that its factory at Sarapaka, where it was maintaining the staff colony, was located in a remote scheduled area and that the nearest town with a railway station was at a distance of 35 K.Ms. As its factory worked round the clock, it necessarily had to provide residential accommodation to its managers/employees in the vicinity. As a residential colony was established by it due to this reason, it necessarily had to maintain the same so as to create a conducive working/living environment for its employees. The respondent Company therefore justified the availing of CENVAT credit on the input services relating to the maintenance of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts. As the amount had already been paid under protest by the respondent Company, the same was directed to be appropriated. She also imposed a penalty of Rs.10,000/- upon the respondent Company. 6.Aggrieved thereby, the respondent Company filed Appeal Nos.20 and 21 of 2008 before the Commissioner of Customs, Excise and Service Tax (Appeals-III), Hyderabad. The appeals were disposed of by common order dated 27.05.2008 whereby the Commissioner concurred with the lower authority as to the disentitlement of the respondent Company to avail credit on the input services relating to maintenance of its staff colony and plantation. The imposition of penalty was however set aside. Challenging this order, the respondent Company approached the CES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an inclusive one and the words used therein leave no room to doubt that all services used in relation, directly or indirectly, to the manufacture of final products and clearance of such products upto the place of removal are covered. The inclusive part of the definition manifests that services used in relation to the setting up of the factory or office or premises, including its modernization, renovation, repair etc., and also services used in relation to advertisement, sales promotion, market research, procurement of inputs and all activities relating to the business would also fall within the ambit of input services'. 9.The Commissioner's Order-in-Appeal dated 27.05.2008 reflects that he accepted that the efficiency of the employee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 2004. 10.As regards the plantation activity, the same had an obvious nexus with the manufacturing activity of the respondent Company. As pointed out by the CESTAT the matter had to be viewed in a broader perspective given the wide amplitude of the definition of input services in the Rules. It is not in dispute that the respondent Company's factory is in a scheduled area and owing to its situation, the respondent Company could not have acquired land for undertaking its own plantation. In such a scenario, its activity in distributing saplings to the farmers in the vicinity and buying back the fully grown trees from them cannot be said to be an activity unconnected with the manufacture of its final products. No evidence to the contra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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