TMI Blog2015 (8) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... was delivered by R. Sudhkar, J.) This Civil Miscellaneous Appeal filed by the Revenue is as against the order of the Customs, Excise and Service Tax Appellate Tribunal in allowing the appeal filed by the assessee so far as denying the benefit of Cenvat credit on the service tax paid on outdoor catering services provided in the factory for employees of the factory. This Court, admitted this appeal on 14.12.2009, on the following substantial questions of law : 1. Whether the canteen services, providied in the factor of M/s. M.M.Forging Limited, Viralimalai through the outdoor caterers was an input service used, whether directly or indirectly, in or in relation to manufacturer or clearance of the final products, within the meaning and comprehension of Rule 2 (1) of the Cenvat Credit Rules, 2004 ? 2. Whether the cenvat credit of the service tax, so paid for receiving the outdoor caterer's services by them for providing canteen services to their employees, was eligible for availment and utilization in terms of Rule 3 read with Rule 2 (1) ? and 3. Whether the Customs, Excise and Srvice Tax Appellate Tribunal, South Regional Bench, Chennai, was correct in relying on the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Service and MRS Catering Service, stands settled in favour of the assessees by the decision of the Larger Bench in Commissioner of Central Excise vs. GTC Industries Ltd. 2008 (12) S.T.R. 468 (Tri.L.B.). Following the decision cited supra, I hold that the appellants are entitled to the credit of the amount in question, set aside the demand together with interest and penalty and allow the appeal. Challenging this order of the Tribunal, the revenue has filed the present appeal. 4. Heard learned Standing Counsel appearing for the Revenue and the learned counsel appearing for the assessee and perused the materials placed before this Court. 5. The core issue involved in this appeal is whether the assessee can utilise the cenvat credit facilities in respect of outdoor catering services, provided in the factory for its employees, as input service. 6. In an identical circumstance, this Court dealt with the issue in a batch of appeals in C.M.A.Nos.2 of 2010 batch and vide judgment dated 13.02.2015 held in favour of the assessee by following the decision of the Bombay High Court in the case of CCE V. Ultratech Cement Ltd. reported in 2010 -TIOL - 745 - HC- MUM - ST, wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 innumerable items as input and to avoid such contingency the Legislature has incorporated the inclusive part after the substantive part qualified by the place of use. For example, one of the categories mentioned in the inclusive part is used as packing material . Packing material by itself would not suffice till it is proved that the item is used in the course of manufacture of final product. Mere fact that the item is a packing material wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclusive 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 inclusive part of the definition of input service extends to services used prior to/during the course of/after the manufacture of the final products. The fact that the definition of 'input service' is wider than the definition of 'input' would make no difference in applying the ratio laid down in the case of Maruti Suzuki Ltd. (supra) while interpreting the scope of 'input service'. Accordingly, in the light of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 paid on outdoor catering services would be allowable. 35. The argument of the revenue, that the expression such as in the definition of input service is exhaustive and is restricted to the services named therein, is also devoid of any merit, because, the substantive part of the definition of 'input service' as well as the inclusive part of the definition of 'input service' purport to cover not only services used pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 been reversed. 40. For all the aforesaid reasons, the question of law framed by the revenue is answered in the affirmative, i.e., in favour of the assessee and against the revenue. However, the CENVAT credit reversed by the assessee, belatedly, having not been verified by the Excise Authorities, the Excise Authorities are directed to verify the same and pass an appropriate order in that behalf. 8. It is relevant to note that var ..... X X X X Extracts X X X X X X X X Extracts X X X X
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