TMI Blog2023 (1) TMI 1135X X X X Extracts X X X X X X X X Extracts X X X X ..... The principle of nexus of service should not, therefore, restrict itself to direct use but should encompass indirect deployment and, hence, should be examined also in relation to the main leg of the definition. The lack of finding in the impugned order on the applicability of the main leg of the definition and its nexus with the final output hinders the exercise of appellate determination. It would be appropriate to have that undertaken to enable which we set aside the impugned order and restore the proceedings before the original authority to take note of the submissions of the appellant herein on the direct/indirect use of the impugned services procured by the appellant and determine nexus or lack thereof. Appeal allowed by way of remand. - EXCISE APPEAL NO: 1043-1045 OF 2012 - A/85039-85042/2023 - Dated:- 20-1-2023 - MR C J MATHEW, MEMBER (TECHNICAL) AND MR AJAY SHARMA, MEMBER (JUDICIAL) Shri Karan Sarawagi, Advocate for the appellant Shri Sanjay Hasija, Superintendent (AR) for the respondent ORDER These appeals, disputing denial of CENVAT credit of tax discharged on services deployed in townships between July 2009 and July 2010, upon consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of buildings for its employees such as residential quarters, schools, hospitals etc. From the very nature of the buildings specifically included in the extended definition and the kind of services included in it, it is clear that constructions of only such buildings are covered as input service which are linked to manufacturer, storage and sale etc. of the final product. Thus, I find that construction service does not include the construction of townships and its repair and maintenance by the assessee for their employees. It may improve their quality of life and is a welfare measure but it has no nexus with the manufacture, storage or sale of the final products. I also find that services used for setting up/constructing certain buildings are treated as 'input service' in terms of Rule 2(l)(ii) of CENVAT Credit Rules 2004 ibid, no service used in constructions and maintenance repairing of other than those, are intended to be allowed/included in the definition of input service' under any description. before proceeding to disallow the credit availed at the Bharuch facility of the appellant too reflects the scant attention paid to the definition. 3. According to L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and, more particularly, the context in which these disputes were carried before the Hon ble High Court of Bombay. 6. In re Manikgarh Cement on the very same issue of deployment of service in residential colonies and eligibility, thereby, to avail CENVAT credit, the Hon ble High Court of Bombay relied upon the decision of the Hon ble Supreme Court in Maruti Suzuki Ltd v. Commissioner of Central Excise, Delhi [2009 (240) ELT 641 (SC)] to hold that 8. In our opinion, establishing a residential colony for the employees and rendering taxable services in that residential colony may be a welfare activity undertaken while carrying on the business and such an expenditure may be allowable under the Income Tax Act. However, to qualify as an input service, the activity must have nexus with the business of the assessee. The expression relating to business in Rule 2(l) of CENVAT Credit Rules, 2004 refers to activities which are integrally related to the business activity of the assessee and not welfare activities undertaken by the assessee. 9. Applying the ratio laid down by the Hon ble Apex Court in the case of Maruti Suzuki Limited v. Commissioner of Central Excise, Delhi ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablish the relationship between the input service and the manufacture of the final product. The manufacturer thereby can avail the credit of the service tax paid by him. Once the cost incurred by the service has to be added to the cost, and is so assessed, it is a recognition by Revenue of the advertisement services having a connection with the manufacture of the final product. This test will also apply in the case of sales promotion. making it abundantly apparent that the includibility of the cost of impugned services in the assessable value of the finished products was perceived as a determinative factor, in the specific context and on the plea of the intervener about activities relating to business in rule 2(l) of CENVAT Credit Rules, 2004 being broad enough, for the finding that 17. Further there is also a compelling commercial reason as to why concentrate is made in one place and the aerated water is manufactured by the bottler. The aerated water is removed by the bottler to the market in crates and bottles which are durable and reusable. They have to be constantly collected from the market, refilled and dispatched to the market. This involves constant handling a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paradigm from an incidental reference in addition, owing to placement of the decision in re Coca Cola India Pvt Ltd before the referral bench and doubts about its relevance, to situations other than of captive consumption. 9. Our perusal of the cited judgments leads to the conclusion that these were relevant to the particular circumstances that justified, or did not justify, claim for eligibility. Consequently, it would be appropriate to hold that perception of nexus , with its unbounded connotations, is not an appropriate nomenclature for the touchstone intended by rule 3 of CENVAT Credit Rules, 2004; conformity must need be tested against the entirety of the definition of input service in rule 2(l) of CENVAT Credit Rules, 2004 including the principal and inclusive leg on every finding of denial. Our perusal of the order of the original authority supra reveals that the principal leg has been accorded but a cursory disposal. 10. From a plain reading of the germane definitions in CENVAT Credit Rules, 2004, we also find that the distinction drawn between input and input service for deploying the expression whether directly or indirectly also appears to have been overl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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