TMI Blog2021 (2) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of previous years performances, the same may still be issued by the service provider when the user company does not avail or utilise any service. The Adjudicating Authority has further observed that there is no provision in the CCR to avail credit on notional input service and such services cannot be stated to be services used by the manufacturing company - the observation of the Adjudicating authority is neither supported by law nor even is followed in actual prevalent practices. It is a general prevalent practice that the service recipients enter into an annual maintenance contract with their service providers. In such cases the service recipients may or may not have the situation to utilise the services of the service provider but have co pay the contracted sum. If any service tax is paid by the service provider in such cases and is realised from the service recipient, no bar can be put on the availment of Cenvat credit. CESTAT in the case of M/S AMARA RAJA POWER SYSTEMS LTD. ANOTHER. M/S AMARA RAJA ELECTRONICS LTD. VERSUS THE COMMISSIONER C C. E, TIRUPATHI [ 2015 (12) TMI 1558 - CESTAT HYDERABAD] has answered the identical issue in favour of the appellants as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the respondent under Rule 14 of the CCR read with Section 11A of the Act along with interest under Section 11AA of the Act. Equal penalty under Rule 15(2) of CCR read with Section 11AC of the Act was also confirmed. 3. Being aggrieved, the Appellant have preferred this appeal contending, inter-alia, as under: (i) That as per Memorandum of Association of M/S Aditya Birla Management Corporation Limited (in short 'ABMCPL'), this company was formed to provide common facilities to its member companies with a view to optimize the benefit of specialization and achieve economies of scale in order to minimize of costs of each member company and the appellant is one of its member companies. ABMCPL was set up to provide business support services to the member companies and the same were rendered to the member companies. (ii) That section 66B Of the Finance Act'1994 provides that service tax shall be levied on all services, other than those services which are specified in the Negative list, which are provided or agreed to be provided. In the instant case ABMCPL was providing services for a consideration to its member companies (including appellant), which were neither ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and its member companies (including appellant) was merely sharing of common expenses and there was no concrete proof that these expenses were made for such services provided by ABMCPL which were used by the appellant in manufacture of their final product. On going through the impugned order, I find that the confirmation of the demand has been made on the pretext of having no nexus, direct or indirect, between the impugned services and the manufacturing activities of the Appellant. The Adjudicating Authority has observed that the impugned bills/ invoices have been issued on the basis of performances of previous years of the user companies and not on the basis of actual services rendered by the service provider and hence the nexus of input services being used by the manufacturer breaks. The bills/ invoices being issued on the basis of previous years performances, the same may still be issued by the service provider when the user company does not avail or utilise any service. The Adjudicating Authority has further observed that there is no provision in the CCR to avail credit on notional input service and such services cannot be stated to be services used by the manufacturing company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal. (emphasis supplied) Here again, clause (ii) is of relevance. Under clause (ii) of rule 2(I) of CCR, the expression input service is defined in broad terms. In order to be an input service under clause (ii), the following requirements must be satisfied. Firstly, the expression requires the utilization of any service ; secondly, the service must be used by the manufacturer; and thirdly, the service may be used, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal. The expression directly or indirectly has a wide import. The service, in other words, need not be a service which is direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gibility of credit on input service observed as under.' The services mentioned in the section are only illustrative and it is not exhaustive. Therefore, when a particular semice not mentioned in the definition clause is utilised by assessee/manufacturer and service tax paid on such service is c/aimed as Cenvat credit, the question is what are the ingredients that are to be satisfied for availing such credit. If the credit is availed by the manufacturer, then the said service should have been utilised by the manufacturer directly or indirectly in or in relation to the manufacture of final products or used in relation to activities relating to business. If any one of the tests is satisfied, then such a service falls within the definition of input service' and the manufacturer is eligible to avail Cenvat credit of the service tax paid on such service'. 11. Moreover, it is very much clear from the Memorandum of Association of ABMCPL submitted by the appellant that main objectives of the company to be pursued by the company on its incorporation are to enable the members of the company to mutually avail and share common facilities and resources afforded by the company main ..... X X X X Extracts X X X X X X X X Extracts X X X X
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