TMI Blog2018 (5) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... gible for credit - The appellant is eligible for credit in respect of construction service used for setting up of residential colony in the factory premises - However, the very same view cannot be applied in the case of guest house and school constructed by the appellant inside the factory premises as the construction of school for providing education to the children of the employees of the factory will fall wholly as a welfare activity and it has no nexus or relation to the activity of manufacture. The credit allowed in respect of construction of residential complex and services relating to vehicle maintenance and repair service and vehicle insurance are eligible for credit whereas the credit availed on construction of school building and guest house cannot be allowed. Appeal allowed in part. - ST/70/2011, ST/114/2011 - Final Order Nos. 41099-41100 / 2018 - Dated:- 13-4-2018 - Hon ble Ms. Sulekha Beevi C.S., Member (Judicial) And Hon ble Shri Madhu Mohan Damodhar, Member (Technical) Shri R. Parthasarathy, Consultant for the Assessee Shri A. Cletus, Addl. Commissioner (AR) for the Respondent ORDER Per Bench The issue involved in these appeals being s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that the guest house is used for providing accommodation to higher officers visiting the factory and therefore is an essential part of the factory premises. The school building is for providing education to the children of the employees. It is also submitted by ld. consultant that in the impugned order, the Commissioner (Appeals) has allowed the credit availed in respect of residential complex. However, he has erred in discussing the said issue as to being credit availed on maintenance and repair of residential colony and not construction of residential colony. The assessee had in fact availed credit on construction of residential colony. He relied upon the decision of the Hon ble High Court of Andhra Pradesh in the case of Commissioner of Central Excise Vs. ITC Ltd. 2013 (32) STR 288 (AP) and argued that the Hon ble High Court had considered the very same issue with respect to credit availed on construction of residential colony / staff colony within factory premises and held that such staff colony provided by the company being directly or intrinsically linked to manufacturing activity is eligible for credit. The cement factory runs 24 x 7 basis and it is necessary to ensur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asim Industries 2011 (21) STR 378, Commissioner of Central Excise Vs. Madras Cements Ltd. 2010 (20) STR 672 and Commissioner of Central Excise Vs. M/s.Navabharat Ventures Ltd. 2012-TIOL-1342-CESTAT-BANG has taken similar view. 6. In respect of credit availed on construction of school building as well as guest house, he submitted that these do not have any nexus with the manufacturing activity of the appellant, therefore not eligible for credit. 7. Heard both sides. 8. At the outset, it has to be stated that the period involved is prior to 1.4.2011. The definition of input services during the relevant period is noticed as under:- Input service means any service - i. used by a provider of taxable service for providing an output service, or 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 relation to such factory or premises, advertisement or sales promotion, market res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstruction service used in constructing residential colony as such activity is not intimately connected with the business of assessee. The High Court observed that it is merely a welfare activity and not covered by the expression activities relating to business . In the said case, the need for such residential facility inside the factory was not stressed. The ld. consultant has submitted that the residential colony was constructed to ensure availability of workers at all times, in the mines as well as the factory. Thus, the said activity cannot be considered as a mere welfare activity. Further, the decision of Hon ble High Court of Bombay in Manikgarh Cement (supra) was rendered relying upon the case of Maruti Suzuki Ltd. Vs. Commissioner of Central Excise 2009 (240) ELT 641 (SC). The said decision was rendered in a case of interpretation of inputs and not input services . Moreover, the decision rendered in Maruti Suzuki Ltd. (supra) was doubted and referred to a Larger Bench and differed as reported in 2010 (260) ELT 261 (SC). The decision in the case of Maruti Suzuki Ltd. 2009 (240) ELT 641 (SC) being no longer good law, the judgment rendered in the case of Manikgarh Cemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d maintenance as well as vehicle insurance has been excluded. The period being prior to 1.4.2011, the services of construction of residential colony and repair and maintenance of vehicle as well as insurance services are eligible for credit. 12. We therefore hold that appellant is eligible for credit in respect of construction service used for setting up of residential colony in the factory premises. However, the very same view cannot be applied in the case of guest house and school constructed by the appellant inside the factory premises as the construction of school for providing education to the children of the employees of the factory will fall wholly as a welfare activity and it has no nexus or relation to the activity of manufacture. Similarly, the use of a guest house is a mere facility to visitors of the factory and cannot be considered as activity relating to business of appellant. We hold that the disallowance of credit in respect of construction service of guest house and school is legal and proper and we uphold the same. 13. From the above discussion, we are of the considered view that the credit allowed in respect of construction of residential complex and servic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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