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2015 (12) TMI 1060 - CESTAT AHMEDABAD

2015 (12) TMI 1060 - CESTAT AHMEDABAD - 2016 (42) S.T.R. 1010 (Tri. - Ahmd.) - CENVAT Credit - scope of input services - Rule 2(l) - Credit on inputs, capital goods and input services used in various output services - Held that:- input Cement and Steel used in the factory of manufacturer shall not be eligible input credit. This explanation is applicable only to the manufacturer and not the service provider. It is to be read strictly as per plain meaning of the statute. There is no indication in .....

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The definition of Port service under Section 65 (82) of the said Act, 1994 covers any service rendered by a port in any manner in relation to a vessel or goods. Thus, jetty is used within the port for loading and unloading of the goods from the vessel. Port cannot function without jetty. So, CENVAT credit on the inputs and capital goods used in the construction of jetty is eligible for output service namely port service. It is noticed from the above decisions that the test of input and capital .....

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of Port or other Port provided service to any person exempted from the whole of service tax leviable thereon. In the present case, the Port was constructed by the contractor appointed by the Appellant for construction of Jetty, the exemption is applicable to the contractor. The contractors are not eligible to avail CENVAT credit. On the other hand, the appellant paid service tax on Port service. Hence, the Appellants are entitled to avail CENVAT credit on the inputs used for taxable output serv .....

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to business activities . The nexus of inputs Service used in the business related activities would be established by the narration of the services in their accounts. In any event, all the services were duly recorded in the books of accounts, which were audited under the companies Act and other authorities. Further, the services coming under Professional Services (0.67%) and Construction Services (0.10%) are evidently eligible for CENVAT Credit, as observed herein earlier. - Appellants have .....

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ious services as detailed mentioned in reply to the show cause notice are also placed before the Tribunal. The nexus between the Input and Output services is clearly evident from the records except for items namely Air Travel Agency, Airport Service, Mandap Keeper Service, Membership of Clubs, Passenger Embarking for Foreigner and Sponsorship Service which requires to be examined by the Adjudicating authority. So, there is no reason to deny CENVAT Credit on the input services except the items me .....

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, Shri A.R. Choudhary And Shri Hardik Modh, Shri Amit Laddha - Advocates For the Respondent: Dr. J. Nagori, Authorised Representative ORDER Per: P.K. Das A common issue is involved in these appeals and therefore all are taken up together for disposal. 2. The Appellants M/s. Adani Port And Special Economic Zone Limited (formerly known as Mundra Port and Special Economic Zone Limited), Mundra Port, Mundra, are holding Service Tax Registration Certificate No.AR/GIM/PS-01/2003-04, and providing Port .....

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e storing of the goods and subsequent dispatch to customers. The Appellants are engaged in the business of running of private Ports. The Appellants do not carryout all the activities in the Port and have appointed various service providers for carrying out specific activities such as CHAs, Surveyors, Transporters etc. The Appellants provide the various taxable services as output services as under:- (a) Port Service (b) Other port service (c) Storage and warehousing service (d) Cargo handling s .....

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ed penalties, on input, capital goods and input services, against which, the appellants filed these appeals. 4. Heard both the sides and perused the records. 5. Both the sides, in addition to their arguments, submitted the written submissions with compilation of case laws. Both sides framed the common issue, for denial of CENVAT Credit in three counts:- (A) Inputs Cement and Steels. (B) Other inputs and Capital Goods, (C) Input services. The learned Advocate on behalf of the Appellant had summar .....

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High Court set-aside the order of the Tribunal as reported in 2015-TIOL-1288-HC-AHM-ST (Mundra Port & SEZ Limited vs. Commissioner). The Hon'ble High Court held that the Explanation 2 as amended by Notification No.16/2009-C.E. (NT), dt.07.07.2009 in Rule 2(k) of the CENVAT Credit Rules 2004 is not clarificatory in nature and is not applicable in the case of the service provider. It is applicable only to manufacturer and factory and not to the service provider and in the present case, the .....

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Rule 2(l) are wide to cover all or any input without use of which, the output service cannot be rendered. The Honble Supreme Court in the case of State of Punjab & Another Vs British India Corporation Ltd (1964) 2 SCR 114 = AIR-1963-SC-1459 observed that the words like directly or indirectly wide and liberal meaning can be given to the words used for, depending upon the object and the purpose of the legislature. (e) In the present case, jetty and other buildings situated within port area .....

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i Airtel Ltd Vs CCE 2013 (29) STR 401 (Tri-Mum), has clearly held that Explanation 2 to the definition of input under Rule 2(k) of the said Rules, would not be applicable to service provider and would be applicable to manufacturer. The decision of the Honble Orissa High Court in the case of Jindal Stainless Ltd Vs UoI 2010 (257) ELT 401 (Ori.), as relied upon by the Adjudicating authority, is also not applicable, as in that case, the petitioner challenged the Circular F.No.267/1/2010-CX.8, dt .....

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repair and maintenance of the capital goods and used for providing output service, were allowed by the Tribunal as under:- (i) Ambuja Cement Eastern Ltd Vs CCE -2010 (256) ELT 690 (HC) (ii) UoI Vs Hindustan Zinc Ltd -2007 (214) ELT 541 (Raj.) (iii) Birla Corporation Ltd Vs CCE 2002 (276) ELT 376 (T) (b) Notification No.25/2007-ST, dt.22.05.2007 exempted commercial or industrial construction service provided by a person in relation to construction of port from the whole of the service tax leviab .....

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Tribunal in the case of M/s Reliance Infratel Ltd Vs CST - 2015-TIOL-516-CESTAT-MUM. The Tribunal held that the CENVAT credit is available on Tower parts, without which the Business Support Service in the form of Passive Telecom Infrastructure could not have been provided. (C) Input services:- The Adjudicating authority denied the credit mainly on the ground that the Appellants had not provided documentary evidences to prove that the input services were used for providing output taxable service .....

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already been decided by the Tribunal in the Appellants own case as reported in 2009 (13) STR 178 (Tri-Ahmd)/ 2008-TIOL-1691-CESTAT-AHM. However, he fairly concedes that this decision has been set aside by the Hon'ble High Court of Gujarat (supra). (ii) The Tribunal in the case of Gujarat State Petronet Ltd (GSPL) Vs CCE Ahmedabad 2013 (32) STR 510 (Tri-Ahmd), denied the credit of pipes as capital goods, procured by the contractor for laying of pipeline system for GSPL. (iii) Explanation 2 a .....

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the CENVAT Credit on Welding Electrodes used for repairs of the capital goods. (b) The term used directly or indirectly mentioned in Clause (i) of Rule 2(k) of CENVAT Credit Rules, 2004 do not find mention in Clause (ii). The Tribunal in the Appellants own case vide Order dt.30.09.2008, as referred above, had not given the benefit of input credit on cement and steel used in the manufacture of jetty as the jetty is used not for providing port service. (This decision is set aside by Hon'bl .....

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Bom.) has held that only the activities integrally connected to the business of the Assessee qualify as input services. (b) The Hon ble Gujarat High Court in the case of Cadila Healthcare Ltd - 2013 (30) STR 3 (Guj.) has held that any activity to qualify as an activity related to business has to be analogous to the illustrated activity mentioned in Rule 2(l) of CENVAT Credit Rules, 2004. In the present case, the Appellants failed to establish the nexus of the input service with the output servic .....

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;ble Gujarat High Court. By the judgment dated 29.04.2015 in Tax Appeal No. 15 of 2009 as reported in 2015-TIOL-1288-HC-AHM-ST (Mundra Port & Special Economic Zone Limited vs. CCE, Rajkot), the Hon'ble High Court allowed the appeal of the Appellant. The Appellant would be entitled to avail input credit on Cement and Steel. The relevant portions of the decision of the Hon'ble Gujarat High Court (2015-1288-HC-AHM-ST) are reproduced below:- 7. It is not disputed that jetty was construct .....

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der of port. We need not go into this question as to whether the Appellant is a factory or manufacturer or service provider in view of the fact that it is not disputed by Mr.Y.N.Ravani, learned counsel appearing for the revenue in this Tax Appeal that the Appellant provides service on port for which he is getting jetty constructed through the contractor and the Appellant has claimed input credit on cement and steel. The cement and steel were not included in Explanation 2 from 2004 upto March 200 .....

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Appellant was neither factory nor manufacturer and he has only constructed jetty by use of cement and steel for which he was entitled for input credit as jetty was constructed by the contractor, but the jetty is situated within the port area and the Appellant is a service provider. According to the Appellant, his case is squarely covered by the judgment of the Division Bench of the Andhra Pradesh High Court in Commissioner of Central Excise, Visakhapatnam-II Vs Sai Sahmita Storages (P) Limited, .....

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ellant was entitled for input credit and the decision of the Division Bench of the Andhra Pradesh High Court squarely applies to the facts of the case and answered the question on which the appeal has been admitted. 8. Mr. Y.N. Ravani, learned counsel for the revenue has placed reliance on the decision of the Larger Bench of the Tribunal in Vandana Global Limited Vs Commissioner of Central Excise, Raipur, 2010 (253) E.L.T. 440 - [2010-TIOL-624-CESTAT-DEL-LB]. We have carefully gone through the d .....

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endment and cannot be treated to be clarification of particular thing or goods and/or input and as such, the amendment could operate only prospectively. In our opinion, the view taken by the Tribunal is based on conjectures and surmises as the Larger Bench of the Tribunal used the expression that intention behind amendment was to clarify. The coverage under the input from where this intention has been gathered by the Tribunal has not been mentioned in the judgment. There is no material to suppor .....

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ot be available to the Appellant as construction of jetty is exempted service. The argument though attractive cannot be accepted. The jetty is constructed by the Appellant by purchasing iron, cement, grid etc. which are used in construction of jetty. The contractor has constructed jetty. There are two methods, one is that the Appellant would have given entire contract to the contractor for making jetty by giving material on his end and then make the payment, the other method was that the Appella .....

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ative for the Revenue submits that as per amendment to explanation 2 of the definition inputs under Rule 2(k) of the CENVAT Credit Rules, by Notification No. 16/2009-CE (NT) dated 07.07.2009, the Appellant is not eligible to avail CENVAT credit on cement and steel items after 07.07.2009. We reproduce below the Explanation 2 of Rule 2(k) of the CENVAT Credit Rules, as amended on 07.07.2009:- Explanation 2. Input include goods used in the manufacture of capital goods which are further used in th .....

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which are further used in the factory of the manufacturer. Thus, it is clear that input Cement and Steel used in the factory of manufacturer shall not be eligible input credit. This explanation is applicable only to the manufacturer and not the service provider. It is to be read strictly as per plain meaning of the statute. There is no indication in the Explanation that it would apply to the service provider. The Hon'ble Gujarat High Court in the appellants own case held that amendment in .....

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Port Jetty, Port buildings and Warehouse services, which are not output service i.e. Port services. It has also observed that inputs and capital goods were used for maintenance repair of machines used in the Port area and for other general use in the Port area. It is further observed that construction of Port is exempted service in view of the Notification No. 25/2007-ST dated 22.05.2007 and no CENVAT credit is eligible on exempted services. It has referred to the Tribunal decision in the case B .....

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6805, grinding wheels and the like, and parts thereof falling under heading 6804] of the First Schedule to the Excise Tariff Act; (ii) pollution control equipment; (iii) components, spares and accessories of the goods specified at (i) and (ii); (iv) moulds and dies, jigs and fixtures; (v) refractories and refractory materials; (vi) tubes and pipes and fittings thereof; and (vii) storage tank, used (1) in the factory of the manufacturer of the final products, but does not include any equipment o .....

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ectly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting-oils, coolants, accessories of the final products cleared along with the final product; goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production; (ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, c .....

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r (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services used in relation 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 of removal, procurement of inputs, activities relati .....

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e of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting-oils, coolants, accessories of the final products cleared along with the final product; goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production; (ii) all goods, except light diesel oil, high sp .....

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Thermo Mechanically Treated and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods; [Note : Explanation 2 as above was amended by Notification No. 16/2009-Central Excise (NT) dated 07.07.2009] 11. On close reading of input definition under Rule 2(k) of the Rules as above, it is clear that Clause (i) covers all goods, except as specified, used in or in relation to the manufacture of final product. On the othe .....

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Rules 2004, make it clear that any goods other than specified in the said Clause, used for providing any output service, would be treated as input and covered under the said definition. Further, the particular expression used for providing any output service in the said Clause (ii) in Rule 2(k) have widened the scope of definition of input in respect of output service. The definition of capital goods under Rule 2(a) of the Rules provides the goods, specified in sub-Clause (i) to (vii) of Claus .....

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service in respect of output service provider. It is well settled that literal interpretation would prevail, where the plain words of statute are clear, unambiguous and not absurd or unjust. An attempt was made by the learned Authorised Representative for the Revenue, to read the above definitions in respect of output service provider with the help of words as referred in the context of manufacturer, supported by the earlier decision of the Tribunal in the appellants own case by Final Order dat .....

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CCE, Vishakhapatnam vs. Sai Samhita Storages (P) Limited - 2011 (270) ELT 33 (AP) allowed CENVAT credit on cement and steel for construction of warehouse. It has been observed that the assessee could not provide storage and warehousing services without constructing by cement and steel and the Central Excise duty was paid on these items. The Hon'ble High Court, on plain reading of definition of input and input services under Rule 2(k) and 2(l) of the said Rules, observed that both the defini .....

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word input in Rule 2(g) in the CENVAT Credit Rules, 2002, it may be noted that the said definition of the word input can be divided into three parts, namely: (i) specific part (ii) inclusive part (iii) place of use 10. Coming to the specific part, one finds that the word input is defined to mean all goods, except light diesel oil, high speed diesel oil and petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final p .....

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ion. In each case it has to be established that inputs mentioned in the inclusive part is used in or in relation to the manufacture of final product. It is the functional utility of the said item which would constitute the relevant consideration. Unless and until the said input is used in or in relation to the manufacture of final product within the factory of production, the said item would not become an eligible input. The said expression used in or in relation to the manufacture have many sha .....

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cture 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. 9. There .....

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m of CENVAT credit, the question of levying penalty under Rule 15(2) of the Rules docs not arise. In that view of the matter, the order levying penalty was rightly set aside by the CESTAT. 13. In the case of Reliance Infratel Ltd Vs CST, Mumbai-II 2015-TIOL-516-CESTAT-MUM, the Tribunal allowed the appeal of the Assessee. In that case, it has been alleged that the Assessee had wrongly availed and utilised CENVAT Credit on goods viz. Bracket, Mounting Pole, Mount Clamps, Cable, Pre-fabricated Buil .....

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of Bharti Airtel Limited vs. CCE - 2014-TIOL-1452-HC-MUM-ST. The Tribunal observed that the Hon ble Bombay High Court was examining the issue on a different platform of facts. Hon ble High Court was concerned with admissibility of Cenvat credit of duty paid on tower and parts for providing telecom services. The towers and parts were held to be immovable, hence not goods and not excisable and therefore, not considered as input for providing telecom service. But in the present case the question of .....

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motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, wi .....

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at the appellant is also not relying on Explanation 2. The contention of ld. Counsel is that all goods used for providing output service are eligible for Cenvat credit. There is no denying the fact that the resultant output service provided by them is a Passive Telecom Infrastructure i.e. Business Support Service. Therefore, there is direct nexus of the output services and the credit taken on the goods procured such as steel, racks, bolts, etc. which are excisable and were cleared under Centra .....

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lant received inputs such as structural steel for providing Passive Telecom Infrastructure . In fact, in Rule 2(k)(ii) there is no restriction on the coverage of inputs except for oil and petrol. In the present case the inputs namely tower parts are cleared as goods from the supplier. Therefore, credit on them is admissible under Rule 2(k)(ii) for providing output service i.e. Business Support Service. The inputs are not immovable when they are purchased and then brought to the site for creation .....

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TAT-MUM, in which it was held that Excise duty paid on parts of components would be admissible even if they are assembled into goods which are immovable or exempted. By analogy in the present case Cenvat credit would be admissible under Rule 2(k)(ii) ibid. Ld. AR contended that the appellant had claimed Cenvat credit on capital goods in their returns. We note that if law provides credit on inputs under Rule 2(k)(ii) they cannot be precluded from availing this statutory right. As analysed above, .....

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ting of immovable property services will be admissible or not. The Tribunal allowed the appeal following the decision in the case of Navratna S.G. Highways Prop. Pvt. Ltd Vs CCE Ahmedabad - 2012 (28) STR 166 (Tri-Ahmd). 15. In the case of Navratna S.G. Highways Prop. Pvt. Ltd Vs CST Ahmedabad - 2012 (28) STR 166 (Tri-Ahmd), the Appellant was engaged in the business of constructing malls and renting of space in those malls in the market and also in the busines of providing space for Advertisement .....

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(ix) Professional fees against Environmental Clearance Certificate (x) Event Management Service (xi) Rent-a-cab Operator Service (xii) Food Expenses (xiii) Chartered Accountants Service (xiv) Real Estate Agency Service (xv) Advertising Agency Service (xvi) General Insurance Service (xvii) Construction Service (xviii) Repair and Maintenance Service (xix) Business Auxiliary Service (xx) Courier Service (xxi) Erection and Commissioning Service used for elevators and CCTV. (xxii) Airtime Charges (x .....

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he mall. Since mall is not an excisable product or is a service, credit is not admissible. As submitted by the learned counsel, the issue which was before the Honble High Court of Andhra Pradesh was similar to the present one. The Honble High Court of Andhra Pradesh considered the definition of the input and input service and took a view that using cement and TMT bars for construction of warehouse, the CENVAT credit on cement and TMT bars would be admissible. The Honble High Court observe .....

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n service provided by cold storage. As per Section 65(105)(zza), read with Section 66 of the Finance Act, there shall be levied tax on storage and warehousing services at 12% of the value of taxable service. The service tax payable is determined in accordance with Section 67(4) read with the Service Tax Rules, 1994 made in exercise of the powers under Section 94 of the Finance Act. There is no dispute that every provider of taxable service is entitled to claim CENVAT credit in relation to input .....

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ed as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production; all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service; Explanation 1. - The light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input .....

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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 of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods .....

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tutory definition of the word input in Rule 2(g) in the CENVAT Credit Rules, 2002, it may be noted that the said definition of the word input can be divided into three parts namely : (i) specific part (ii) inclusive part (iii) place of use Coming to the specific part, one finds that the word input is defined to mean all goods, except light diesel oil, high speed diesel oil and petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether con .....

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e inputs have been used for providing an output service. In the case of input service, the definition includes input services used by a provider of taxable service for providing an output service. Therefore the definition of input and input service are pari materia as far as the service providers are concerned. That being the position, the decision of the Hon ble High Court of Andhra Pradesh would be applicable to the present case. In that case also, the Hon ble High Court took the view that wit .....

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ise. The appeal is allowed with consequential relief to the appellants. 16. In the present case, the main contention of the learned Authorised Representative is that the inputs and capital goods were used for construction of jetty, which has no nexus with Port service. Section 65 (82) of the Finance Act, 1994 defined port service. Port Service means any service provided or to be provided to any person, by a port or any person authorised by the port, in relation to goods or vessels, in any ma .....

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ection of duties or customs upon imports and exports. [Blacks Law Dictionary, 5th Ed.]. A port is a place intended for loading or unloading goods; hence includes the natural shelter surrounding water, as also sheltered water produced by artificial jetties, etc. [The Baldhill CCANY, 42 F 2d 123, 125]. A port is a place where a vessel can lie in a position of more or less shelter from the elements, with a view to the loading or discharge of cargo. [Hunter v Northern Marine Insurance Co. Ltd. (188 .....

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trol or divert a current, protect a harbour or the like, or as a wharfor pier; a projection of stone or other material serving as a protection against the waves; a kind of pier for loading and unloading cargo from a vessel. Jetty is used for loading and unloading of goods. The definition of Port service under Section 65 (82) of the said Act, 1994 covers any service rendered by a port in any manner in relation to a vessel or goods. Thus, jetty is used within the port for loading and unloading o .....

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. There is no reason to deny CENVAT credit on such input and capital goods. 18. We find that the Notification No. 25/2007-ST (supra) exempts from payment of service tax on the Commercial or Industrial construction services. It would apply to a Commercial concern in relation to construction of Port or other Port provided service to any person exempted from the whole of service tax leviable thereon. In the present case, the Port was constructed by the contractor appointed by the Appellant for cons .....

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was exempted. So, the findings of the adjudicating authority on this issue, is not sustainable. The learned Counsel has filed a list/statement of various inputs and capital goods used for providing port services vide Annexure B to the initial written submissions. The same is reproduced below, a perusal of which shows that these inputs and capital goods are necessary for providing the output service, and hence CENVAT Credit would be eligible on them. Annexure B Adani Ports And Special Economic .....

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eration & Maintenance of crane 6. BUNK HOUSE, PREFABRICATED For security purpose 7. Cable, PVC Cable Used for bagging machine, power transmission, electrical tower in open area. 8. Cable Tray Cable lying tray (outside lying) 9. CAUSTIC SODA, MFR:GACL Used in Liquid Terminal Tank cleaning 10. CBL ELE ARM, 1.1 KV, APPEAL, XLPE, 4C, 12MM2 Cable for electrical work-Single Point Mooring (SPM) 11. CRANE, MOBILE TOWER, MM:MMTC 2418 Crane for material handling 12. ELECTRD WELD, E7018, 4MM, 450MM For .....

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e 19. FOAM MAKER WITH CHAMBER 450-900 LPM At Liquid Terminal and Terminal 0.1 for fire fighting 20. Forklifts Loading & unloading of steel plates, structural steel cargo 21. Galvanized Rope Used in cranes & Hydra used for handling of cargo 22. GEAR BOX, RATIO:70:1, SIZE:14IN SSM, ELECON Repairs & maintenance of gear box of crane 23. Grease Used in Crane, Excavators, Loaders, Hydra and equipments used for handling of cargo 24. GREASE, MULTIS-EP2,ELF For lubrication purpose in cranes f .....

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O CONN, PTFE, 8IN, 6M Liquid Terminal Maint.Pipeline, valve assembly, pump assembly fitting use 31. HOSE UTIL, BIN, 6M Liquid Terminal Maint.Pipeline, valve assembly, pump assembly fitting use 32. M/s Pipe Used in Tank Farm, Container Terminal 33. OIL COOL, VALVOLINE, 15W40 Used in equipment like, Kalmar, JCB, Forklift, Crane, Hydra & Loaders 34. OIL LUBE, DTE-26, MOBIL Used in equipment like, Kalmar, JCB, Forklift, Crane, Hydra & Loaders 35. OIL LUBE, GADINIA 40, SHELL For lubrication p .....

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erminal operations purpose 42. Plastic Sheet Used for covering bulk cargo lying in open area/ godown i.e. Wheat, Fertilizer, Sugar, etc and covering open wagon of bulk fertilizer 43. PUMP WATER, PN-3800883, MFR:CUMMINS Engine spares - Container Terminal Operations 44. ROPE WIRE, NYLN, 10 MM Used on Tugs for Heaving line for passing Towing rope & Mooring ro9pe 45. ROPE WIRE, SS, 8 MM Wire rope for crane use 46. ROPE, POLY PROPYLENE, 6- CIRCUMFERENCE Used for Tugs Mooring at Tug berth with the .....

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odowns 53. TARPAULIN, HDPE, 60 X 60 FT, 200 GSM For cargo covering in open stake yard 54. THREAD CONE, PROPYLENE, 5000M, 2 PLY For bagging of fertilizer cargo 55. Transformer Transformer used in Tank farms, Container Terminal electrical supply 56. UPS, 120 KVA, MM:IP20 HIPLUSE, MFR:EMERSON UPS for Server 57. WEIGHBRIDGE, MOBILE, CAP:80-100MT, SZ:18 X M For weighment of cargo for handling operations 58. Wire Rope Used in Cranes & Hydra used for handling of cargo. 19. The third issue is denial .....

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& Supply Agency Service, Steamer Agent Services etc. These services have no relationship/nexus with the provisions of output service of Port service inasmuch as the said services had been directly provided to the cargo imported by others. Hence, it does not appear to be an input service within the meaning of Rule (l) of CENVAT Credit Rules, 2004. 20. The Adjudicating authority had denied CENVAT Credit on input service on the ground that the Appellant had not submitted any evidence for use .....

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. It has been further observed that as per Rule 3 of the said Rule 2004, the CENVAT Credit is available only on the inputs, capital goods, input Services as defined under Rule 2 of the Rule 2004 and the credit availed by the appellants on the said Goods and Services are not admissible to them, as it is not covered with the definition under Rule 2 of the said Rule. The Adjudicating Authority observed that the appellant had not submitted any evidences, which proves that these services were used fo .....

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s order. As per Clause (i) of Rule 2(l) of CENVAT Credit Rules, 2004, input service means any service used by a provider of taxable service for providing output service. The words any service and used for providing an output service in the input service definition, make it clear that the use of input service is depending on the scope of an output service . So, it is required to examine the scope of an output service for deciding the input service. In the present case, the main output service is .....

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el or goods. The expressions in any manner and in relation to both tend to expand the scope of such service. The words in any manner would further go to show that the legislature intended to make the definition wide and inclusive and to include range of services which may be provided in relation to a vessel or goods. 22. The Hon'ble Supreme Court in the case of State of Punjab Vs Paper Mills Limited (supra), while dealing with the words used for the purpose of factory in Rule 18 of the Punja .....

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ings were used for the purpose of factory. The Hon'ble Supreme Court dismissed the appeal filed by the Appellant. In the present case, considering the scope of an output service (i.e. Port Service), it may be construed that any service used in relation to Port service in any manner would cover under the definition of input service . In the case of Sai Samhita Storages (P) Ltd (supra), the Hon'ble Andra Pradesh High Court observed that the definitions of Inputs and Input Services would sh .....

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gible on goods viz. Brackets, Mounting Pole, Mount Clamps, Cable, Pre-fabricated Buildings/Shelters/Panels etc used in erection/fabrication of telecommunication tower fixed to earth, used for providing Business Support Service. In the case of the present appellants themselves (supra), the Hon'ble Gujarat High Court has held that credit of duty paid on cement and steel used for construction of Jetty used for providing Port services are eligible for credit. In another case of the present appel .....

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h Courts and the Tribunal, it is evident that any service used by a service provider for providing Port Service in any manner, is eligible for credit. The definition of Input service by way of means and includes also amplify the scope of the same. Further, the definition also mentions certain specific services. The definition also includes services used in relation to activities relating to business . These further enlarge the scope of the input services. The net result of such a wide definition .....

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of hearing before the Adjudicating authority, they had explained the relationship/nexus between input service and output service. In this context, the learned Advocate drew the attention of the Bench to the relevant portion of the reply to show cause notice. He has also shown some of the specimen copies of the documents to substantiate that the Appellant had used the input service for providing output services. The Appellant submitted statement of various service utilised for providing of output .....

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ional highlights and major achievements of The Appellant from time to time which would promote the brand of The Appellant and increase its business. The Appellant further engaged promotions and media agency for public relation and media release co-ordination and facilitation purpose. This service is specifically included in third part of the definition of Input Service defined under Rule 2(1) f the CENVAT Credit Rules 2004. 2 Air Port Services The Appellant is having an airstrip at mundra, which .....

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ice which was allowed by the Hon ble Tribunals decision in the Appellants own case on the ground that transport of various personnel and other officials is necessary to provide authorized operation efficiently. 3 Air Travel Agency The Appellant availed the services of air travel agencies for booking of air tickets for various executives, officers and directors for attending various business meetings and conferences related to port business operation and development purpose. 4 Architect The Appel .....

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rges for fund transfer, LC commission and ECB (external commercial borrowings) related bank charges like upfront fees, commitment fees, agency fees, arrangement fees, process agent fees & legal fees for such payment. 6 Business Auxiliary Services The Appellant has availed the following Business Auxiliary Services: 1. procurement of material to be used for providing port services; 2. payroll processing outsourcing i.e. services to facilitate the system of paying salary to the employees of The .....

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ices from various cargo handling agencies for loading and unloading of cargo within the port area, internal transportation of various cargo like fertilizers, minerals, met coke, steam coal, steel plates, steel pipe, steel coil, project cargo, timbers and clinkers from jetty to warehouse built in the port. 9 Chartered Accountant s Services The Appellant availed the services from the Chartered Accountants for carrying out audit of financial statements and others certifications like 15CB required f .....

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. 11 Clearing & Forwarding Agents Services The Appellant availed the services of various clearing and forwarding agencies for custom clearance of various dry cargo and liquid cargo on behalf of various customers. 12 Commercial Coaching & Training Services The Appellant availed the service from various service providers who organized various types of trainings to train mechanical and engineering technicians for better handling of tools, equipments, convey our belts, cranes used in the por .....

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, port building, control room and warehouses used for providing the port service. The wares-houses, control rooms and port building are required for day to day functioning of the port. 14 Consulting Engineer s Services The Appellant availed project management consultancy services for construction projects and import of services (container terminal billing software) in relation to operation and maintenance of port. A modern port is required to offer a rich portfolio of services that requires a so .....

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ervice provider for organizing business/commercial convention and safety related convention required for port industry. These conventions are attended by the employees of the Appellant and required for proper understanding of the port and its safety related aspect which are discussed in this convention. 16 Courier Services The Appellant availed courier agency services for communication and correspondence with various customer, vendors, bankers, government agencies and between the port and the Ah .....

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ion of Input Service defined under Rule 2(1) of the CENVAT Credit Rules 2004. 18 Depository Services The shares and security offered by the Appellant has been listed company in National Stock Exchange (NSE) & Bombay Stock Exchange (BSE). The Company is required to tax depository services of NSE & BSE for securities related information and data required from time to time for publication to public and bankers. 19 Cosmestic / International Journey by Air The Appellant availed Air travel ser .....

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he Appellant availed services for erection, commissioning & Installation of various plants & machinery, equipment, tugs and cranes which enable the port to provide smooth and efficient movement and handling of cargo within the port area and it reduces the turnaround time for Import and Export of cargo and increases the efficiency of the port service. 22 General Insurance Services The Appellant insured their various equipment, machineries, tugs, cranes taken including IAR policy (Industri .....

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ces For effectively running port operations, the port needs to rely upon various software for invoicing, accounting and operating soft-wares for handling cargo, vessels & container terminal efficiently and effectively. Therefore The Appellant availed the service from various service providers to develop, maintain and for up-gradation of various software related to invoicing and accounting needed fro day to day operation of the port. Service defined under Rule 2(1) of the CENVAT Credit Rules .....

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ment for carrying the day to day operations in the port. 26 Legal Consultancy Services The Appellant availed legal services from legal consultants/advocates who were engaged to assist in dealing with statutory compliances and tax related matter w.r.t. direct and indirect taxes in relation to the port services. Service relating to Legal Service is specifically included in third part of the definition of Input Service defined under Rule 2(1) of the CENVAT Credit Rules 2004. 27 Maintenance & Re .....

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s which are needed for the day to day operation to provide port service. 28 Management Consultants Services The Appellant availed management consultantancy service from various service providers in the field of business management and project management for effective and efficient management of port operations and developments. The scope of services included within business management the services of consultancy services to define the desired process model for capital projects, review existing p .....

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ct/construction built within the port area and the impact it can have on the port service. 29 Mandap Keeper Service The Appellant organized various functions in the port premises for port operation related activities like fire & safety day, addressing the meeting by chairman & CEO to port employees etc. Such functional are necessary for proper functioning of the company and to follow a proper decorum/chain of command among the employees. 30 Manpower Recruitment & Supply Agency Servic .....

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abase Access The Appellant availed services from various service provider for providing online information and database access service in relation to handling of cargo within the port and various port operations. Such data base keep a record of the various vessels and cargo coming in and going out of the port at the daily basis which is needed for efficient functioning of the port. The service provider charges for maintaining and providing such database information on cargo and vessel to the the .....

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tions of vessels for berthing and de-berthing of vessels at Mundra port. Such services required for timely movement of vessels coming to Mundra port for import or export of cargo and thus required for providing port service. 35 Port Services The Appellant hired services from various port services providers for providing port services at Mundra port for its own customers. The scope of the port services consisting of port and dock/jetty services, berthing, mooring, towage and anchorage in relation .....

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m the vessels. 37 Renting of Immovable Property Services The Appellant hired its registered office located in Ahmedabad on rent. Various internal departments like secretarial, finance, accounting, commercial, human resource, administration etc are being handled from the Registered office. 38 Scientific & Technical Consultancy Services The Appellant availed scientific and technical services for scientific and technical assessment of various plant & machinery, equipments & cranes requi .....

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; regulations as well as Companies Act. The Appellant has hired services from the Company Secretaries for secretarial audit and certification for compliances of all such acts, rules & regulations. 40 Security Services The Appellant have hired services of various security services provider for protection of various movable and immovable assets and also for protection of plant & machinery situated at various locations within Mundra port. Being bonded custom port area, such services require .....

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& regulations as well as Companies Act and for compliances of all such acts, rules &regulations. For compliances, The Appellant has hired services of share registry services provider. Service relating to share registry is specifically included in third part of the definition of Input Service defined under Rule 2(1) of CENVAT Credit Rules 2004. 42 Ship Management Services Being port services provider, the Appellant hired the services from various ship management services provider for o .....

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ces The Appellant provided sponsorship services to various types of Govt. and Semi-Govt. programmes related to port sector which is needed to promote the brand of the company. 45 Stock Exchange Services The Appellant being listed company on National Stock Exchange (NSE) & Bombay Stock Exchange (BSE), need to comply with SEBI, ROC & Stock exchange regulations as well as Companies Act. For compliances, The Appellant has been listed on NSE and BSE and they need to pay annual listing fees to .....

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and de-berthing of vessels after loading and unloading of cargo from the vessels. Further, some of cargo handling equipments like trailers, tractor, cairns and dumpers taken on hire for providing port services. 48 Technical Inspection & Certification Services The Appellant has availed services for periodical survey, docking survey, air pollution preventive survey & annual survey of various tug Boats required for vessel operations and such technical and certification of tug boats required .....

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rsa. 51 Works Contract Services The Appellant availed work contract services in relation to repair and maintenance of equipment and machineries like tug boats and cairns and other plant & machinery parts required for providing port services 24. The learned Advocate, by random sampling method, demonstrated from the Paper Book Volume 3 & 4 in respect of OIO dt.11.11.2013 and Show Cause Notice dt.14.10.2008 issued to APSEZ Ltd, to substantiate the relationship/nexus of input service and out .....

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ble service (direct nexus). It is observed that since all these input services have direct nexus to the output service, the appellants are eligible for taking credit of the same. The second category of the services includes: Architect Services, Banking and Financial Services, Commercial or Industrial Construction Services, Construction Services, Consulting Engineers, Erection, Commissioning or Installation, General Insurance, Insurance Auxiliary Services, Insurance Services, Life Insurance Servi .....

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cy, Banking and Financial Services, Chartered Accountant, Commercial Training and Coaching, Credit Rating Agency, Goods Transport Agency, Manpower Recruitment Agency, Market Research Agency Services, Scientific and Technical Consultancy, Security Services, Share Registry Services, Steamer Agent s Services, Technical Inspection and Certification, Technical Testing and Analysis and Transport of Goods by Cruise Ship which falls under the inclusive part of the definition of input services, as define .....

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vices, Cleaning Activity Services, Convention Service, Courier Services, Depository Services, Design Services, Erection, Commissioning or Installation, Event Management Service, General Insurance, Health Services, Information Technology Software Services, Insurance Auxiliary Service, Internet Service, Maintenance & Repair Services, Mandap Keeper, Membership of Clubs, Online Information & Database Access, Outdoor Catering Services, Pandal/Shamiana Services, Passenger Embarking For Foreign .....

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ess activities. As regards, Air Travel Agency, Air Port Services, Mandap Keepr Services, Membership of Clubs, Passenger Embarking for Foreign Travel, Sponsorship Service, it is not clear from data to what extent they are in relation to the business activities / output service viz. Port service. Hence, it needs to be examined by the lower Adjudicating authority whether these services are eligible to be treated as input services for providing the output services viz. Port Service. However, all oth .....

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es will be input services. The inclusive part of definition also mentions similar services and says such as. It is, therefore, clear that these services will be eligible to be treated as input services, and credit of the same would be eligible. The Appellant has listed under Category VI, Commercial or Industrial Construction Services and Construction Service. It is observed that in Appellants own case (supra), Hon'ble High Court of Gujarat has held that credit is available on construction .....

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ntative for the Revenue particularly referred the decision of the Hon'ble Bombay High Court in the case of Commissioner of Central Excise, Nagpur Vs Ultratech Cement Ltd - 2010 (260) ELT 369 (Bom). The substantial question of law, in that case, was whether the CESTAT was correct in holding that the respondent is entitled to avail the CENVAT Credit on outdoor catering services provided in the factory for employees of the factory as a input service credit despite the fact that outdoor catering .....

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ture of final product. Hence, this case law is more in favour of the Appellant than Revenue. In fact, the Hon'ble High Court of Bombay, in the said decision, discusses the terms such as and in relation to business activities in the definition of input services and has held that the definition of input service is very wide, and it seek to cover every conceivable service used in business of manufacture (or output service), and categories enunciated after expression such as in the definition of .....

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efore the Hon'ble High Court was whether the CESTAT was right in considering the services namely Technical Testing and Analysis Service, Technical Testing and Certification Service, Business Auxiliary Service (Service rendered by the Commission agent), Service rendered by clearing and Forwarding Agent, Courier Service, Commercial and Industrial Construction Service, Maintenance or Repair service, Interior Decorator Service, Management Consultancy Service, availed by the assessee, as eligible .....

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far as in the instant case, the Appellants are service provider and not manufacturer. 26. Normally, the Appellate authority should dispose of the appeal finally on the basis of available material, either by confirmation or setting aside or by modification of the order. In case, the Appellate authority had examined law in detail and had gone to the facts in depth on the basis of evidence on record, Appellate Authority should not remand the matter to the lower authority, unless absolutely necessa .....

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vices as mentioned above, we are unable to accept the findings of the Adjudicating Authority. In the case of APSEZ Ltd, the learned Advocate submitted the breakup of the denial of Cenvat Credit, precisely as under:- SN Particulars Amount (in Rs) In %age a) List of Input Services used directly for providing Output Taxable Service (Direct nexus) 71,62,93,242.00 61.72 b) Services fall under Rule 6(5) of Cenvat Credit Rules 2005 (Services before 1.4.2011) 31,16,94,922.00 26.86 c) List of Input Servi .....

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ce used directly for providing Output Taxable Services would be 61.72% of the total demand. The nature of such services would clearly indicate that the said services must be used for providing Output Services, viz. Port Services. Further, services fall under Rule 6(5) of Cenvat Credit Rules 2004 (prior to 1.4.2011) would be 26.86% of the total demand. It is contended that the appellants earned income from Port Services and services were provided within SEZ. The appellant had been paying Service .....

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e, Mandap Keeper Service, Membership of Clubs, Passenger Embarking for Foreign Travel, and Sponsorship service, it is not clear from data to what extent they are in relation to the business activities of output services viz. Port service. Hence, the issue of whether these six services can be treated as input services for providing output services namely Port services and whether the Appellant is eligible to avail CENVAT Credit of Service Tax paid on these six services have to be examined by the .....

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accounts, which were audited under the companies Act and other authorities. Further, the services coming under Professional Services (0.67%) and Construction Services (0.10%) are evidently eligible for CENVAT Credit, as observed herein earlier. 27. In the case of Coca Cola India Pvt. Ltd Vs CCE, Pune-III - 2009 (242) ELT 168 (Bom.), the question before the Hon ble Bombay Court was whether the services of Advertising and Marketing procured by the Appellant in respect of advertisements for aerated .....

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ith the manufacturer of concentrate but with the sale of aerated water manufactured out of the concentrate by the Bottlers and not by Appellant. As such, this will not be covered by the definition of input service whether directly or indirectly in or in relation to manufacture of final product. The Hon ble High Court, after discussing the definition of input and input service had observed as under:- 25. The expression Business is an integrated/continuous activity and is not confined restricted t .....

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g use of brand name by bottlers promotion of brand name, etc. the expression will have to be seen in that context See (i) Pepsi Foods Ltd. v. Collector - 1996 (82) E.L.T. 33, (ii) Pepsi Foods Ltd. v. Collector - 2003 (158) E.L.T. 552 (S.C.). The Hon ble Supreme Court in State of Karnataka v. Shreyas Paper Pvt. Ltd. 2006 SCC affirmed the view taken by the Hon ble Karnataka High Court reported at 2001 (121) STC 738, which, inter alia, held as under : Business comprises of the regular and systemati .....

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4. The word business is, as has often been said, one of the wide import and in fiscal statutes, it must be construed in a broad rather than a restricted sense. 15. The word business connotes , it was observed by this court in Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits Tax, 1955 1 SCR 952 some real, substantial and systematic or organised course of activity or conduct with a set purpose. The term business therefore, particularly in fiscal statutes, is of wide import. 26. The .....

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ords of comprehensiveness which might both have a direct significance as well as an indirect significance depending on the context, see State Wakf Board v. Abdul Aziz (A.I.R. 1968 Madras 79, 81 paragraphs 8 and 10, following and approving Nitai Charan Bagchi v. Suresh Chandra Paul (66 C.W.N. 767), Shyam Lal v. M. Shayamlal (AIR 1933 All. 649) and 76 Corpus Juris Secundum 621. Assuming that the investments in shares and in lands do not form part of the undertakings but are different subject matte .....

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expansion and not of contraction. The expression relating to thus widens the scope of the definition. xxx xxx xxx 38. Service tax therefore, paid on expenditure incurred by the assessee on advertisements sales promotion, market research will have to be allowed as input stage credit more particularly if the same forms a part of the price of final product of the assessee on which excise duty is paid. In other words, credit of input service must be allowed on expenditure incurred by the assessee wh .....

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product manufactured by the person advertising, as long as the manufacturer can demonstrate that the advertisement services availed have an effect of or impact on the manufacture of the final product and establish the relationship between the input service and the manufacture of the final product. The manufacturer thereby can avail the credit of the service tax paid by him. Once the cost incurred by the service has to be added to the cost, and is so assessed, it is a recognition by Revenue of t .....

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against Revenue and question (b) again answered in the affirmative in favour of the assessee and against revenue. 28. The other aspect of the present case is that the appellants have rendered services within Special Economic Zone (SEZ). In terms of Section Rule 6(6)(i) of the Cenvat Credit Rules, the appellant was not required to reverse the Cenvat Credit used in the Special Economic Zone (SEZ). The appellants would be eligible to avail Cenvat Credit as specified under Rule 6(5) of the Cenvat Cr .....

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