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M/s Carrier Airconditioning And Refrigeration Ltd. Versus Commissioner of Central Excise, Delhi-IV

2016 (4) TMI 103 - CESTAT CHANDIGARH

Cenvat credit disallowed - recovery of interest on the said amount and penalty of an equivalent amount - denial of claim as the appellant had taken cenvat credit of service tax paid on Renting of Immovable Property Service, Insurance Services, Construction Service, Travel Agent Service, Interior Decorator Service and Architect Service but the same did not qualify to be input services in respect of the appellant - Held that:- On cenvat credit in respect of renting of immovable property the adjudi .....

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maintenance service has not been adverted to by it. Thus, having regard to the nature of the use for which these branch offices were taken on rent, we are of the view that the said service clearly qualifies to be covered within the scope of input service as defined in Rule 2(l) of the Cenvat Credit Rules, 2004.

Regarding the insurance services perusal of the nature of insurance policies and the risks covered by them make it obvious that these were used in or in relation to the manufa .....

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ance of final products upto the place of removal. Thus the insurance policies except to the extent they cover journey of goods from the place of removal onwards would be covered within the scope of input service.

The input credit in respect of construction service in the case of NTF (India) Pvt Ltd. vs. CCE - (2013 (6) TMI 618 - CESTAT NEW DELHI ) it was held that construction of office rooms in factory premises relates to setting up, modernization, renovation or repairs of a factory .....

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As regards Interior Decorator and Architect Service ervices relating to interior decoration of sales and branch offices and show rooms clearly fall under the definition of input service being, inter alia in the nature of modernisation/ renovation or repair of factory or premises of provider of output service or an office relating to such factory or premises, and credit in respect of such services was allowed by CESTAT in the case of CCE, Bhavanagar vs. Nirma Ltd.(2010 (6) TMI 315 - C .....

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01/-) was also imposed on the ground that the appellant had taken cenvat credit of service tax paid on Renting of Immovable Property Service, Insurance Services, Construction Service, Travel Agent Service, Interior Decorator Service and Architect Service but the same did not qualify to be input services in respect of the appellant. 2. The appellant has pleaded / contended as under: (a) The break-up of various input service credits disallowed is given below: Sl. No. Service Amount (Rs.) (Pre1.4.2 .....

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ffices were also used for provision of erection commissioning and installation service and repair and maintenance service and therefore renting of immovable property service clearly fell within the scope of input service as per the definition given in Rule 2(l) of the Cenvat Credit Rules, 2004. He cited the following judgments in support of his contention: (i) M/s Oracle Granito Ltd. vs. CCE, Ahmedabad - 2013-TIOL-822-CESTAT-AHM (ii) M/s National Engineering Industries Ltd. vs. CCE - 2012-TIOL-2 .....

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, rail, road, air or courier due to chipping, denting or scratching. Fidelity Guarantee Insurance Policy Fidelity Guarantee insurance is an insurance policy designed to indemnify the Insured (the employer) for the loss of money or property sustained as a direct result of acts of fraud, theft or dishonesty by an employee in the course of employment. All Risks Insurance Policy Complete policy to give insurance against all perils, natural or man-made except for petrochemical risks. It includes elec .....

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nsurance etc. extended to employees. On query, ld. Advocate conceded that insurance policy relating to insurance of goods beyond the place of removal would not be admissible. (f) Regarding Construction Service, the service was in relation to dismantling of building for construction of storage shed and was clearly covered within the scope of input service. (g) The service of insurance in relation to employees' who travel for the purpose of business meetings, sales, advertisement, campaigns, r .....

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of the factory premises and therefore qualified to be input service. It cited the following judgments in its support. (i) CCE, Bhavanagar vs. Nirma Limited - 2012 (277) ELT 207 (Tri. Ahmd.) (ii) CCE&ST, LTU vs. Lupin Ltd - 2012 (285) ELT 221 (Tri. Mum.) (iii) Pepsico India Holdings Pvt. Ltd. vs. CCE - 2012-TIOL-2045-CESTAT-BANG 3. Ld. DR on the other hand essentially reiterated the contents of the impugned order and stated that the insurance services in respect of goods beyond the place of .....

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e contention of the appellant that the branch offices which were taken on rent were used not only for procuring orders and delivery of the goods but also for provision of erection commissioning and installation service and repair and maintenance service. The definition of input service prior to 01.03.2011 and after 01.03.2011 as given in Rule 2(1) of Cenvat Credit Rules which is reproduced below: Prior to 01.03.2011 "Input service " means any service, - (i) Used by a provider of taxabl .....

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moval, 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 and outward transportation upto the place of removal". W.e.f. 01.03.2011 "Input service " means any service, - (i) used by a provider of taxable service for providing an output service; or (ii) used by the manu .....

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ty 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-clause(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 .....

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mbership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;" 5. The aforesaid definitions clearly state that input service inter-alia means any service used by provider of taxable service for providing an output service. The appellant contended that it used the branch offices which were taken .....

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case of Wipro Limited -Final Order Nos. 25798 & 25799 / 2013 CESTAT held that such service is eligible for input service credit. Seen in this light, denial of cenvat credit by the adjudicating authority is clearly untenable specially when the other ground pleaded by the appellant that the branch offices were also used for provision of ECIS and repair and maintenance service has not been adverted to by it. Thus, having regard to the nature of the use for which these branch offices were taken .....

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ate. In the case of CCE, Bangalore-III vs. Stamen Toyotetsu India (P) Ltd. -2011 (23) STR 444 (Kar.) involving period prior to 01.03.2011 it was held by Karnataka High Court that insurance/ health policy in respect of employees would be covered within the scope of input service. In the cases of Hindustan Zinc Ltd. vs. CCE Jaipur - 2014-TIOL-855-CESTAT-DEL and CCE, Bangalore-II vs. Millipore India Pvt. Ltd. - 2012 (26) STR 514 (Kar.) similar view was held. The insurance services availed of by the .....

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e definition of input service clearly states that input services inter alia means any service used by the manufacturer in or in relation to the manufacture of final products and clearance of final products upto the place of removal. Thus the insurance policies except to the extent they cover journey of goods from the place of removal onwards would be covered within the scope of input service. 7. The input credit in respect of construction service has been denied on the ground that the same is no .....

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CESTAT-DEL it was held that service used in relation to construction of office premises within the factory would be covered under the definition of input service as the definition is wide enough to do so. Revenue's appeal against this order was set-aside by Punjab and Haryana High Court - 2015-TIOL-300-P&H-ST. In the case of CCE, Delhi-III vs. Mark Exhaust Systems Ltd. - 2015 (39) STR 351 (Tri. Del.) CESTAT held that setting up, modernization, renovation or repairs of factory premises wo .....

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ority with regard to denial of cenvat credit on construction service is unsustainable. 8. In the case of Travel Agent Service, it is pleaded that these were in relation to travel for the purpose of business meetings, sales, advertisement, recruitment, training etc. It does not come out from the impugned order as to how it was not covered under the definition of BAS. In the case of Goodluck Steel Tubes Ltd. vs. CCE -2013 (32) STR 123 (Tri Del.), Jindal Pipes Ltd. vs. CCE - 2013 (31) STR 588 (Tri. .....

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