9911796707
TMI Blog2018 (9) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to Rs. 12,12,772/- was availed towards such company's commitment to corporate social responsibility (CSR) and audit pointed out the same to be inadmissible. Appellant was put to notice on the ground that such input service did not fall under the definition of input services given in Rule 2(l) of Cenvat Credit Rules 2004 for manufacture of appellant's final product. Upon reply, matter was adjudicated upon and holding the same to be inadmissible, Adjudicating Authority also had imposed interest and penalty on the appellant that was confirmed by the Commissioner (Appeals) GST & CE, Bhiwandi. 3. In his memo of appeal and during the course of hearing of appeal, ld. Counsel for the appellant submitted that the said expenditure was incurred by the company which was covered under the activities relating to business as provided under the definition of input services given in Rule 2(l) of the Cenvat Credit Rules 2004 and the services of students were utilised in relation to manufacturing business of the appellant since they were assigned duties to prepare data sheet, maintain production log book, support preventive maintenance of machines, and assist production operators and in the proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cement, ld. AR submitted that credit of service tax paid on input services for CSR were not covered under Cenvat Credit Rules for which the order passed by the Commissioner (Appeals) needs no interference by the Tribunal since input services cannot be stretched to such an extent that it becomes practically illogical that would cover all activities of the appellant whether or not related to his business. 6. Heard from both sides at length and perused the case records, judicial precedent placed by both the parties, statutory provisions as well as the concept of CSR found mentioned in Section 135 of the Companies Act and the reason of incorporation of such a provision into Companies Act to reach at a definite conclusion as to if such CSR can be brought into the purview of the definition given under Section 2(l) of the Cenvat Credit Rules or the same was a charitable activity before being made a statutory requirement for certain categories of Industrial units/ Companies. 6.1. As found from the Handbook on CSR published by the Confederation of Indian Industry (CII) there is no single Universal accepted definition of CSR, though roots of CSR lie in philanthropy activity of Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their in complacency but has provided the company with additional or secure supply of raw material. iv) It enhances the reputation of company, its goodwill by creating a positive image and branding benefits that continue to exist for companies who operate CSR programmes. 6.4. The essence of the above discussion would indicate that CSR is not a charity any more since it has got a direct bearing on the manufacturing activity of the company which is largely dependent on smooth supply of raw materials even from remote location or tribal belts (that requires no resistance in the supply chain from the community) and the same also augments the credit rating of the company as well as its standing in the corporate world. 7. Now coming to the issue in hand, the appellant's contention is that it had engaged youth from the lower strata of the society in its factory to provide them on the floor exposure to the production activities of the company and it so doing, it has engaged them in preparation of data sheet, maintenance of production log book, preventive maintenance of the machine and assist in production operation as well as transfer of raw materials etc. So the same is included with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity was not carried out, the appellant's activity of manufacturing and sale of excisable goods would have continued. In placing reliance on the decision reported in Millipore India Pvt. Ltd. (supra) and decision of the Bangalore Tribunal in Mangalore Refinery and Petrochemicals Ltd. case reported in 2015 (10) STR 1093 that distinguished the Mangalore Refinery case. He thrust his emphasis on the copy of the agreement made between the appellant and the M/s. Shree Kalamadevi Charitable Trust about which reference is also made in the orderin- original that although the Trust and the company specifically agreed with the training being provided by the company, it was purely towards CSR initiative driven by the company (para 13 at page 57 of the appeal paper book) and therefore no separate stand can be taken by it that students were engaged in the manufacturing activity. It pertains to the dispute for the year 2009-10. Therefore in the instant case without any statutory obligation, the activities of the appellant falls in the category of charity and not manufacturing. 11. To pin point the dispute, it is now to be looked into as to if CSR can be considered as input service and be in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
