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M/s India Cement Ltd. Versus Commissioner C.C.E & ST, Guntur

2016 (8) TMI 846 - CESTAT HYDERABAD

Cenvat credit - various input services - whether the captive mines of appellants can be considered as integrated with the main factory premises - Held that:- none of the input services on which credit has been availed by the appellant are excluded or barred by the provisions of the said Rule 2(l) as amended w.e.f. 01-03-2011. I also find that the said input services are very much in the nature of services directly or indirectly required in relation to the manufacturing /production activities car .....

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to ₹ 1,27,283/- and are ineligible to avail credit on Formation of New Gravel road for the reason that the said road has been laid outside the perimeter of the captive mines and hence cannot be considered as service in relation to manufacture of final products etc. in the factory. Regarding Conveyor Extension, shed extending work at Packing Plant and wagon loading, Borewell works, Providing Drain in railway siding, these are services in relation to construction or execution of works contra .....

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e of credits relating to civil works etc and also noting that the appellant had filed ER-I returns all along, the penalty imposed under Section 11 AC of Central Excise Act read with Rule 15 of Cenvat Credit Rules, 2004, and the penalty imposed under Rule 25 of the Central Excise Rules, 2002, imposed by the adjudicating authority and upheld by the Commissioner (Appeals) cannot be sustained and will require to be set aside. - Appeal disposed of - E/ 20553/2015 & 20555/2015 - Final Order No. A/3061 .....

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allegation that the following services do not fall within the definition of input services. S. No. Description of input service Cenvat Credit availed ( in Rs) 1. Maintenance & Cleaning work at mines namely, Electrical Maintenance charges at mines, Mechanical Maintenance charges at Mines, Maintenance Charges at Mines, Maintenance Charge at Mines Garage, Cleaning Work at Garage Mine, Sanitation work in Mines. 1,11,234/- 2. Mines Garage Attendants works 4, 142/- 3. Formation of New Gravel road .....

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-2013, the lower authority confirmed the proposals in the show cause notice, ordered demand of service tax amount of ₹ 2,35,906/- with interest thereon and also imposed penalties. 3. Appellants were also issued with a show cause notice dated 17-10-2013 (for the period October 2012 to March 2013) inter alia proposing to demand an amount of ₹ 83,823/-, on the allegation that the appellants had wrongly availed/utilized the Cenvat Credit of Service Tax paid in respect of the following in .....

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rges towards overhaul of dumper & heavy Earth Movers, Retreading of dumper Tyre. 39,371/- 5. Electrical Maintenance charges at other places 7,467/- Total 83,823/- On adjudication, vide order dated 26-03-2014, the Dy.Commissioner confirmed the proposal in the show cause notice, ordered demand of service tax amount of ₹ 83,823/- with interest thereon and also imposed penalties. 4. Aggrieved by both these orders, appellants preferred appeals before the Commissioner(AppeaIs). 5 Commissione .....

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d maintenance of dumpers, the credit on such items is specifically excluded in respect of manufacturers, hence the credit on the said services in relation to maintenance or repair of vehicles cannot be treated as input service in respect of the appellants. 6. During the hearing, learned Advocate for the Appellant, Shri G.Prahlad, reiterated the grounds of appeal and in particular stressed on the following submissions. 7.1 The definition of 'input services' as applicable to manufacturer u .....

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Ltd 2008(12) STR 598 (Tri. Mumbai). "from the above definition, it is very clear that the input services besides being used in or in relation to the manufacture of final products and clearances of final products from the place of removal includes a plethora of other services such as service used in relation to settingup, modernization, renovation or repairs of factory, premises of provider of input service or an office relating to such factory or premises, advertisement or sales, activities .....

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p; Industries Ltd. Vs CCE,Bhavnagar 2006 (4) STR 310(Tri-Del) Universal Cables Ltd. vs CCE, Bhopal 2007 (7) STR 310(Tri-del) CCE, Goa Vs M/s Hindustan coca cola Beverages Pvt. Ltd 2008-TIOL-270-CESTAT-Mum. Force Motors Ltd vs CCE Pune 2009 (13) STR692(Tri.- Mumbai) Vodafone Essar Digilink Ltd CCE Jaipur 2008(10) STR 139(Tri-Del) Ferromatik Milacron India Ltd Vs CCE, Ahmedabad 2009(246) ELT 243( Tri-Ahmd) CCE, (LTU) Chennai vs Brakes India Ltd. 2009 (13) STR, 684(Tri-Chennai) Capiq Engineering Pv .....

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that Cenvat credit on explosives could not be denied on the ground that the explosives were not used as inputs within the factory. Since the mines form a part of the factory of the appellant, they are also to be treated as the factory of the appellant. 7.4 Further, the definition of 'input service' includes services used in relation to modernization, renovation or repairs of a factory. Since the mines form a part of the factory of the appellants, the input services used in the maintenan .....

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ne of these services availed by the appellant are in or in relation with manufacture of final products; that formation of gravel road, conveyor extension works, borewell works, concrete pavement works and work of providing drain in railway siding relates to construction or execution of works contract of a building or civil structure or part thereof and hence will be excluded from the ambit of input service, as defined in 2( l) of Cenvat Credit Rules, 2004. 9. Heard both sides and have gone throu .....

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es services used in relation to modernisation, renovation or repairs of a factory, premises of the provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage up to 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 .....

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apital goods, except for the provision of one or more of the specified services; or (B) services provided by way of renting of a motor vehicle, in so far as they relate to a motor vehicle which is not a capital good; or (BA) service of general insurance business, servicing, repair and maintenance, in so far as they relate to a motor vehicle which is not a capita/ goods, except when used by - (a) a manufacturer of a motor vehicle in respect of a motor vehicle manufactured by such person ; or (b) .....

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I find that the question whether the captive mines of such appellants can be considered as integrated with the main factory premises is no longer res integra. The Hon'ble Supreme Court has settled the matter in favour of the appellant in the case of M/s Vikram Cements Vs CCE, Indore, reported in 3(SC), which ratio has been followed in a plethora of subsequent judgments. This being so, I only propose to adjudge, whether input services on which credit has been disputed are satisfying the lega .....

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ircumstances, I hold that the disputed credits amounting to the ₹ 83,823/- availed by the appellants on the aforesaid input services are eligible and correct in law. In consequence, the portion of impugned Order-in-Appeal No.01 and 02/2014 upholding the order dated 26-03-2014 of adjudicating authority, who inter-alia disallowed the aforesaid amount, will required to be set aside, which I hereby do. Appeal No.20555/2015 is thus allowed in toto. 12.1 In respect of the second Appeal No.20553/ .....

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works 4, 142/- 7. Concrete pavement at Bulk Loading Area 2,234/- 8. Lab Modification work 4,070/- 10. Electrical Maintenance charges at other places 5,603/- Total 1,27,283/- 12.2. However, in respect to the following services, I hold that the appellants are ineligible to avail credit for the reasons mentioned below: S. No. Description of input service Cenvat Credit availed (in Rs.) 3. Formation of New Gravel road, 69,256/- 5. Conveyor Extension , shed extending work at Packing Plant and wagon l .....

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, SL.No.6 (Borewell works- ₹ 589/-) and S.I.No.9 (Providing Drain in railway siding- ₹ 19,391/-), these are services in relation to construction or execution of works contract of the building or a civil structure or a part thereof or laying of foundation or making of structure for support of capital goods, hence they will be disbarred by the exclusion provision of the said Rule 2( l), as applicable during the relevant period. Total credit involved in the aforesaid four services found .....

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