TMI Blog2016 (11) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... o promote the sales and for efficient running of the business for which they are entitled to avail CENVAT credit as the rent-a-cab service has been excluded from the definition of 'input service' by the 2011 amendment w.e.f., 1.4.2011, it has to be held that prior to the amendment, rent-a-cab service came within the definition of input service. As the assessment years in issue in the present case are 2009-10 and 2010-11, both prior to the amendment, the respondent is entitled to CENVAT credit on this service. - Revenue Appeal dismissed. - CEA No.9 of 2016 (O&M) - - - Dated:- 21-10-2016 - Mr. Rajesh Bindal and Mr. Harinder Singh Sidhu, JJ. For The Appellant : Mr.Ish Puneet Singh and Mr.Tajender K. Joshi, Advocate For The Respondent : Mr.Amrinder Singh Advocate HARINDER SINGH SIDHU, J. This order shall dispose of above mentioned two appeals bearing Nos.CEA 9 of 2016 and CEA 73 of 2015 as identical issues of fact and law are involved therein. However, the facts are being taken from CEA No.9 of 2016. 2. The appeal was admitted for consideration of the following substantial questions of law arising out of the order dated 14.05.2015 passed by the Customs Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the respondent M/s MSIL for each financial year. 5. In the financial years 2009-10 and 2010-11, to which the present appeals pertain, respondent- assessee had availed CENVAT credit amounting to ₹ 15,40,628/- (Rs. 4,82,197.83 + ₹ 10,58,430.19) ₹ 41,49,437/- (Rs. 33,82,845/- + ₹ 7,66,592/-) on Mandap Keeper Service and Rent-a-Cab Service for its Gurgaon and Manesar Plants. The Commissioner, Central Excise, Delhi-III was of the opinion that the Mandap Keeper Service used by the assessee to organize meetings and events for promotion of their product such as launch of new vehicles, business needs, conferences, etc. had no nexus with the manufacture of final product and accordingly, it was not 'input service'. Similarly, the Rent-a-Cab service used for the purpose of travelling required for business meetings, visit to dealers, vender sites, dealers meets, business promotion activities etc. had no nexus with the manufacture of the final product. It was accordingly held vide Order- in- Original dated 16.08.2012 (Annexure A-3) that the credit of service tax in respect of Mandap Keeper Service and Rent-a-Cab service was not admissible to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the cost of services of Rent-a-Cab and Mandap Keeper received, become a part of the assessable value of the final product, on which excise duty is paid, therefore, the respondent is entitled to avail the CENVAT credit on the service tax paid on such services. He argued that this ground was specifically pleaded before the Tribunal and there is no rebuttal thereof by the appellant. 10. With respect to Rent-a-Cab service, it was additionally argued that it was only in the definition of 'input service' as incorporated by the CENVAT Credit (Amendment) Rules, 2011 which came into force w.e.f. 01.04.2011 that a Rent-a-Cab service was specifically excluded from the definition of Rs. input service . He accordingly contended, that the necessary implication is that before this amendment, CENVAT credit was admissible in respect of Rent-a-Cab service. In this regard, he pointedly made a reference to circular dated 29.04.2011 issued by the Government of India to clarify certain issues relating to CENVAT Credit Rules. At Sr.No.12 of the said Circular, the question for clarification was : 'Is the credit available on services received before 01.04.2011 on which credit is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (l) of Rule 2 was amended, whereby, for the words Rs. clearance of final product from the place of removal the words Rs. clearance of final product upto the place of removal were substituted.) 14. By the CENVAT Credit (Amendment) Rules, 2011, which came into effect from 01.04.2011, the CENVAT Credit Rules, 2004 were again amended. Thereafter, the definition of Rs. input service reads as under:- (l) input service means any service, - (i) used by a provider of taxable service for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to modernisation, 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, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w? e.g. Rent-a-service? The credit on such service shall be available if its provision has been completed before 1-4-2011 Scope of definition of 'input service' 17. The scope of the definition of 'input services' was considered in detail by a Division Bench of Bombay High Court in Coca Cola India Pvt. Ltd. Vs. Commissioner of C. Ex., Pune-III, 2009 (15) STR 657 (Bom.). The appellants therein manufactured non-alcoholic beverage bases also known as concentrates. These concentrates were sold under the respective brand names such as Coca Cola, Fanta etc. The concentrate was sold by the appellants to bottling companies who in turn sold the aerated beverages manufactured from the concentrates to distributors who in turn sold it to retailers for ultimate sale to the customers. The question for consideration was whether the Appellants therein, were eligible to avail credit of the service tax paid on advertising services, sales promotion, market research and the like availed by them and utilize such credit towards payment of excise duty on the concentrate. Credit had been denied on the ground that the advertisements did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (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.). 27. Similarly, the use of the word activities in the phrase activities relating to business further signifies the wide import of the phrase activities relating to business. The Rule making authority has not employed any qualifying words before the word activities, like main activities or essential activities etc. Therefore, it must follow that all and any activity relating to business falls within the definition of input service provided there is a relation between the manufacturer of concentrate and the activity. Therefore, the phrase activities relating to business are words of wide import. 20. Further, in view of the fact that the advertisement and sales promotion expenses of the bottled product formed part of the sales price of the concentrate on which duty was charged and paid it was held the Revenue could not contend that availing credit of service tax was not allowable. The Court emphasized that where any input service forms a part of the value of the final product, it should, both conceptually and as a matter of policy, be eligible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the manufacture of final products but also includes various services used in relation to the business of manufacture of final products, whether, prior to the manufacture of final products or after the manufacture of final products. It was observed as under: 28 . In the present case the question is whether outdoor catering services are covered under the inclusive part of the definition of input service The services covered under the inclusive part of the definition of input service are services which are rendered prior to the commencement of manufacturing activity (such as services for setting up, modernization, renovation or repairs of a factory) as well as services rendered after the manufacture of final products (such as advertisement, sales promotion, market research etc.) and includes services rendered in relation to business such as auditing, financing etc. Thus, the substantive part of the definition input service covers services used directly or indirectly in or in relation to the manufacture of final products, whereas the inclusive part of the definition of input service covers various services used in relation to the business of manufacturing the final pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restrict the definition of Rs. input service to any particular class or category of services used in the business, it would be reasonable to construe that the expression Rs. such as in the inclusive part of the definition of input service is only illustrative and not exhaustive. Accordingly, we hold that all services used in relation to the business of manufacture of cement, credit of service tax paid out on catering services has been rightly allowed by the Tribunal. 36 . The argument of the Revenue that the expression Rs. such as in Rule 2(l) of 2004 Rules is restricted to the categories specified theein, runs counter to the C.B.E.C. Circular No.97 dated 23rd August, 2007. In that circular, the C.B.E.C. (vide para 8.3) has held that the credit of service tax paid in respect of mobile phone service is admissible provided the mobile phone is used for providing output service or used in or in relation to manufacture of finished goods. Mobile phone service is neither used in the manufacture of final product nor it is specifically included in the definition of input service. Even then, the C.B.E.C. has construed the definition of input service widely so as to cover not only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transportation of the employees from their residence to the factory premises is related to their manufacturing activities and without coming to the factory, the production cannot be started. The provision of transportation facilities increases efficiency and increases the production capacity of the manufacturing unit itself. 28. In Commr. of C. Ex., Bangalore-III vs. Stanzen Toyotetsu India (P) Ltd., 2011(23) S.T.R. 444 (Kar.) . the Karnataka High Court held that Rent-a-Cab service provided by the assessee to the workers to reach the factory premises constituted input service for availing CENVAT Credit. It observed:- 10. As is clear from the definition any service used by the manufacturer whether directly or indirectly in or in relation to the manufacture of final products constitutes input service. Various services are set out in the definition expressly, as constituting input service. It also includes transportation of inputs or capital goods and outward transportation upto the place of removal. Therefore, the test is whether the service utilized by the assessee is for the manufacture of final product. Such service may be utilized directly or indirectly. Such may be in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an input service under Rule 2(l) of the CENVAT Credit Rules, 2004, though such service had no relation to the manufacturing process or any business activity of the assessees who were manufactures of metal sheets components for motor vehicles. They had availed CENVAT credit for service tax paid on civil work of constructing a plant/factory in the premises, namely for the manufacturing and for rental value of the immovable property leased by them on which the plant was erected. The Revenue contended that though the definition of input service was wide, it did not cover services that remotely or in a roundabout way contribute to the manufacture of the final product. It was contended that each and every connection, however remote and indirect, could not be contemplated by the definition of 'input service' and that a line had to be drawn somewhere to avoid undue extension of the phrases 'directly or indirectly' and 'in or in relation to' by adopting a common sense approach. Immovable property, being neither service nor goods, input credit thereof could not be taken. Although civil construction work is a taxable service under the Finance Act, 1994, it is basical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e.f., 1.4.2011, it has to be held that prior to the amendment, rent-a-cab service came within the definition of input service. As the assessment years in issue in the present case are 2009-10 and 2010-11, both prior to the amendment, the respondent is entitled to CENVAT credit on this service. 33. This aspect has also been clarified by circular dated 29.04.2011 issued by the Government of India, where at Sr.No.12 the question was :Rs. Is the credit available on services received before 01.04.2011 on which credit is not allowed now, example, Rent-a-Cab service? . It was clarified that Rs. The credit on such service shall be available if its provision had been completed before 01.04.2011 Mandap Keeper Services : 34. In Endurance Technologies Pvt. Ltd. Vs. Commr of C.Ex., Aurangabad, 2013(32) S.T.R. 95 (Tri. Mumbai) CESTAT, (Western Zonal Bench Mumbai), the Mandap keeper services availed by the assessee to celebrate the annual day function of the Company, which was attended by employees and their family members as well as their sister units were held entitled to input service credit as the annual day function is an integral part of the business activity of the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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