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2017 (5) TMI 939 - CESTAT MUMBAI

2017 (5) TMI 939 - CESTAT MUMBAI - TMI - CENVAT credit - Banking & Other Financial Services - scope of input services - advisory and placement charges relating to private placement of equity shares - denial on the ground that the services rendered is not fall under the category of input services and they were not in relation to the manufacturing of the final products - Held that: - when the amounts raised by M/s PL Advisory Service Pvt. Ltd. were undisputedly used by appellant for the manufactur .....

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ion includes the activity of financing which would mean that if an assessee pays service tax for the various services received by them for raising the finance, CENVAT credit can be availed. - Credit allowed - decided in favor of appellant. - E/88/10 - A/86776/17/SMB - Dated:- 22-3-2017 - Mr. M.V. Ravindran, Member (Judicial) Ms. Manasi Patil, Advocate, for appellant Shri N.N. Prabhudesai, Supdt. (AR), for respondent ORDER Per: M.V. Ravindran This appeal is directed against order-in-appeal No .....

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dered and also charged service tax of ₹ 47,29,436/- of which the appellant took CENVAT credit. Revenue is of the opinion that such CENVAT credit is not eligible as the services rendered is not fall under the category of input services and they were not in relation to the manufacturing of the final products and were rendered to appellant s head office as also the same has to be distributed to various manufacturing units. 4. Learned Counsel brings to our notice that similar issue has been de .....

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dras in the case of Sundaram Clayton Ltd. - 2016-TIOL-849-CESTAT-MAD; for the proposition that credit cannot be denied based upon the invoices even if it is in the name of the Head Office she relies upon this Tribunal in the case of Star Drugs and Research Labs - 2016 (45) STR 88 (Tri) and DNH Spinners - 2009 (244) ELT 65 (Tri.). 5. Learned D.R. after taking us through the definition of input service under Rule 2(l) of Cenvat Credit Rules, 2004 submits that Banking & Other Financial Services .....

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he submissions made by both sides, I find that the issue is in a narrow compass. 6.1 It is undisputed that M/s PL Advisory Service Pvt. Ltd. have placed preferential equity shares of the appellant for raising of funds/finance for the appellant. It is noticed from the records and more specifically from the order-in-appeal, that appellant had been taking this plea before the adjudicating authority as well as before the first appellate authority that the amounts so raised were used for the manufact .....

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evant period is itself an indicator that the said services rendered by M/s PL Advisory Service Pvt. Ltd. has intrinsic relation to the manufacture of business activity of the appellant. 6.3 I also notice that the decision of the Tribunal in the case of Hinduja Global Solution (supra) would directly apply in the case in hand wherein the Tribunal in paragraph 5.5 and 5.6 held as under:- 5.5 The plain reading of the definition of input services (as hereinabove reproduced) would indicate that the ac .....

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ion of the Service Tax by their head office as input service distributor. We find nothing on record to indicate that head office of the appellant was issued a show cause notice denying them such Cenvat credit. In the absence of any doubt raised as to the eligibility to avail the Cenvat credit at their head office, the recipient unit, cannot be asked to explain the nexus of such credit to the output service provided by them. In our considered view, and is undisputed that the amounts so raised by .....

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business activities as per the definition of the input service under Rule 2(1) of CCR, 2004 has been fortified by the judgment of the Hon ble High Court of Bombay in the case of Deepak Fertilizers and Petrochemicals Corpn. Ltd. v. CCE - 2013 (32) S.T.R. 532 (Bom.) and Commissioner v. Ultractech Cement Ltd. - 2010 (260) E.L.T. 369 (Bom.) = 2010 (20) S.T.R. 577 (Bom.). Relevant paragraphs, containing the ratio are reproduced : In the case of Deepak Fertilizers (supra) : 5. Now at the outset it mus .....

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paid on any input or capital goods received in the factory of manufacture of the final product. Such a restriction, however, is not imposed in regard to input services since the only stipulation in clause (ii) is that the input services should be received by the manufacturer of the final product. Hence, even as a matter of first principle on a plain and literal construction of Rule 3(1) the Tribunal was not justified in holding that the appellant would not be entitled to avail of Cenvat credit .....

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hile defining the expression input service . Rule 2(1) initially provides that input service means any services of the description falling in sub-clauses (i) and (ii). Rule 2(1) then provides an inclusive definition by enumerating certain specified services. Among those services are services pertaining to the procurement of inputs and inward transportation of inputs. The Tribunal, proceeded to interpret the inclusive part of the definition and held that the Legislature restricted the benefit of .....

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certain specified categories of services. However, it would be farfetched to interpret Rule 2(1) to mean that only two categories of services in relation to inputs viz. for the procurement of inputs and for the inward transportation of inputs were intended to be brought within the purview of Rule 2(1). Rule 2(1) must be read in its entirety. The Tribunal has placed an interpretation which runs contrary to the plain and literal meaning of the words used in Rule 2(1). Moreover, as we have noted e .....

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e were used by the appellant whether directly or indirectly, in or in relation to the manufacture of final products. The appellant, it is undisputed, manufactures dutiable final products and the storage and use of ammonia is an intrinsic part of that process . In the case of Ultratech Cement : 27. The definition of input service as per Rule 2(1) of 2004 Rules (insofar as it relates to the manufacture of final product is concerned), consists of three categories of services. The first category, co .....

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age upto the place of removal, procurement of inputs, (d) Activities relating to business such as, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit relating, share registry and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal. Thus, the definition of input service not only covers services, which fall in the substantial part, but also covers services, which are covere .....

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as a whole makes it clear that the said definition not only covers services, which are used directly or indirectly in or in relation to the manufacture of final product, but also includes other services, which have direct nexus or which are integrally connected with the business of manufacturing the final product. It can be seen that in the above case of manufacturers the Hon ble High Court has considered the definition of input services , a ratio which will be applicable in the case of output .....

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