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TMI Blog2015 (5) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... nure to the cane growers and for transportation of cane seeds and bio manure they paid transportation charges. On this transportation charges whatever service tax was accrued the appellant took the Cenvat Credit on the said service tax. The Revenue is of the view that for transportation of bio manure and cane seeds upto the place of the farmers have no nexus with the activity of manufacturing of sugarcane by the appellant. Therefore, they are not entitled to take Cenvat Credit under Rule 2(L) of the Cenvat Credit Rules 2004. In these set of facts proceedings were initiated against the appellant to deny Cenvat Credit for the period Nov 2006 - July 2011. Both the lower authorities denied the Cenvat Credit and confirmed the demand on duty equi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... growers. Cane seed and Bio-manure are used in cane cultivation and not in any way goes into the use in the manufacture of sugar. Even if it is presumed that the party had to supply free of cost Cane seeds and Manure to the Cane Growers as a sugarcane development measure, it is not going to help the case of the party. It is not even case of the party that they themselves were growing sugar cane. In view of the above input service credit for GTA availed in supply of cane seed / bio-manure does not link directly or indirectly with the manufacture of final product of the said industry. Hence, on merit, the submissions of the party have no force and therefore the demand sustains." 5. She further submitted that issue was further examined by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e grower is not bound to sell all his produce to the appellant as it is mentioned in the UP sugarcane Act 1953 submitted by the appellant which inter-alia states that where any area has been declared as assigned area for a factory, such factory shall purchase such quantity of cane grown in that area offered for sale to the factory. It means the sugar cane grower may or may not offer its sugarcane for sale to the factory. Thus, it is not certain the quantum of the sugarcane received back by the appellant for the seeds and manure supplied by them to the cane grower. In the definition the phrase 'service related to procurement of input' means the services in relation to procurement of input i.e. sugarcane for sugar factory not for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has availed Cenvat Credit on transportation services availed by them for transportation of cane seeds and bio manure to the place of the farmers. Both the sides disputed that whether the farmer who is growing sugarcane is supplying to the appellant or not. This fact has not been disputed in the show cause notice. The show cause notice only alleged that this transportation services have no nexus with the manufacturing activity of the appellant. Therefore, they are not entitled to take Cenvat Credit for these services. I have gone through the definition of Rule 2(L) of the Cenvat Credit Rules 2004 which is reproduced as under: "The term input services is defined under Rule 2(l) of the Cenvat Credit Rules, 2004, according to which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of cigarettes for which the main raw-material is tobacco. In order to ensure high quality of their product, the appellant has a scheme of having tobacco of good quality produced by a select group of farmers. Under this scheme, they supply tobacco seeds free of cost to the farmers and also arrange necessary advice to be given to them by experts. This advisory arrangement during the period of dispute (February to July 2009) was made under an agreement between the appellant and M/s. Supreme Detective and Security Services. Under this agreement dated 18.04.2006 between the appellant and M/s. Supreme Detective and Security Services (SDSS for short), the annexure to the agreement, to the farmers within the prescribed time. One of the scheduled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ately utilized for producing good quality tobacco which was required for the manufacture of good quality cigarettes and also by including the cost of services in the cost of production of cigarettes. The services thus fit in the definition of 'input services' under Rule 2(l) of the Cenvat Credit Rules, 2004. Hence the appellant rightly availed CENVAT credit of the service tax paid on the services in question." 11. As in the case of VST Industries Ltd. this Tribunal held that the supply of tobacco seeds free of cost to the farmers and also necessary advice to be given to them by experts. These advisory arrangements were made under agreement between appellant and the services provider. In those circumstances, this Tribunal has held t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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