TMI Blog2015 (3) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturing the final product namely, cement. Hence, in our opinion, the Tribunal was justified in following the Larger Bench decision of the Tribunal in the case of GTC Industries Ltd. (2008 (9) TMI 56 - CESTAT MUMBAI) and holding that the assessee is entitled to the credit of service tax paid on outdoor catering service. 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 service tax paid on outdoor catering services would be allowable. - The issue raised in respect of rent-a-cab services has been considered by the Karnataka High Court in the case of CCe V. Stanzen Toyetetsu India (P) Ltd. reported in [2011 (4) TMI 201 - KARNATAKA HIGH COURT] - Cenvat Credit has been properly availed in respect of outdoor catering services an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erers, then such service is definitely in relation to the manufacture and thus qualify to be called an 'input service'. Similarly, the Adjudicating Authority also held that the cabs were hired for their officials and staff to travel to places in connection with their manufacturing activity and therefore those services were also qualified to be called input services . Aggrieved by the Order-in-Original, the Department pursued the matter before the Commissioner (Appeals), who dismissed the appeals, thereby upheld the order of the Adjudicating Authority. As against the said order of the Commissioner (Appeals), the Department went before the Tribunal. 4. The Tribunal in majority of the cases following the Larger Bench decision of the Tribunal in the case of Commissioner of Central Excise, Mumbai V. GTC Industries Ltd. reported in 2008 (12) STR 468 (Tri.-LB) dismissed the appeals holding that Cenvat credit is admissible on 'outdoor catering service' as the same is an input service relating to business. The Tribunal also following the decision of the Tribunal in the case of Commissioner of Central Excise, Jaipur Vs. M/s.J.K.Cement Works reported in 2009 - TIOL- 411 CE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outdoor catering service will not be available with effect from 01.03.2011. In the present cases, the availment of cenvat credit is prior to 2011. Hence, the Notification will not apply to the facts of the present case. 9. Heard learned Standing Counsel appearing for the Revenue and the learned counsel appearing for the assessee and perused the materials placed before this Court. 10. It is seen from the orders of the Authorities below that the assessees in these cases are availing Cenvat credit of duty paid on inputs, capital goods and service tax paid on services used in or in relation to manufacture of their final products. The Revenue found that the assessee had availed and utilized input service tax credit relating to outdoor catering services and rent-a-cab services. According to the Department, outdoor catering services and rent-a-cab services could not be treated as 'input service' as defined under the Cenvat Credit Rules. 11. Hence, the issue involved in the C.M.A.Nos.157, 358, 2363, 2864 and 2568 of 2010 is whether the assessee can utilise the cenvat credit facilities in respect of outdoor catering services, provided in the factory for its employees, as in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of manufacture of final products, be it prior to the manufacture of final products or after the manufacture of final products. To put it differently, the definition of input service is not restricted to services used in or in relation to manufacture of final products, but extends to all services used in relation to the business of manufacturing the final product. 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(l) 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 that it would cover innumerab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yanide 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(l) 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 final products, whereas the incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 service tax pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the observation of the Division Bench in the case of Coca Cola India (P.) Ltd. (supra) has to be construed to mean that where the input service used is integrally connected with the business of manufacturing the final product and the cost of that input service forms part of the cost of the final product, then credit of service tax paid on such input service would be allowable. 39. The Larger Bench of CESTAT in the case of GTC Industries Ltd. (supra) has also observed that the credit of service tax would be allowable to a manufacturer even in cases where the cost of the food is borne by the worker. That part of the observation made by the Larger Bench cannot be upheld, because, once the service tax is borne by the ultimate consumer of the service, namely the worker, the manufacturer cannot take credit of that part of the service tax which is borne by the consumer. Shri Shridharan, learned Counsel for the assessee fairly conceded to the above position in law and in fact filed an affidavit affirmed by a responsible officer of the assessee wherein it is stated that the proportionate credit to the extent embedded in the cost of food recovered from the employee/worker has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directly, in or in relation to the manufacture of final products, the input service does not have to be used directly in the manufacture of final products, it may be a service which is only indirectly used in relation to the manufacture of final products. In the circumstances, canteen services which are indispensible in relation to manufacture of the final products, would certainly fall within the ambit of input service as defined under the Rules. 18. Following the above-said decision of the Gujarat High Court, the Allahabad High Court in the case of Commissioner of Central Excise V. M/s.HCL Technologies, reported in 2014 - TIOL - 20010HC-ALL-CX held as follows: The next category is Outdoor Catering Services. The Commissioner furnished a cogent justification for allowing the Cenvat Credit save and except for a partial disallowance in respect of the consumption of alcoholic beverages. In this regard, reference may be made to the decision of the Gujarat High Court in Commr. of C. Ex., Ahmedabad Vs Ferromatik Milacron India Ltd. 2011 (211) STR 8 (Guj.) = 2010-TIOL-851-HC-ADM-ST 19. The issue raised in respect of rent-a-cab services has been considered by the Karnataka Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry or premises, advertisement or sales promotion, market research, storage upto 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, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; but excludes services,- (A) specified in sub-clauses (p), (zn), (zzl), (zzm), (zzq), (zzzh) and (zzzza) of clause (105) of section 65 of the Finance Act (hereinafter referred as specified services), 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, except for the provision of one or more of the specified services; or (B) specified in sub-clauses (d), (o), (zo) and (zzzzj) of clause (105) of section 65 of the Finance Act, in so far as they relate to a motor vehicle except when used for the provision of taxable services for which the credit on motor vehicle is available as capital goods; or (C) such as those provided in relation ..... 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