9911796707
TMI Blog2023 (9) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... efinition of input service. As regard the insurance service for staff/directors the adjudicating authority has contended this service was used for welfare and health of staff and directors and the same is nowhere being utilized in our relation to manufacturing process, directly and indirectly. Therefore, it cannot be considered as input service. Being aggrieved by the Order-in-Original the appellant filed the present appeal. 2. Ms Priyanka Rathi Learned Counsel, appearing on behalf of the appellant submits that it is evident from the record that construction service received by the appellant is in respect of expansion, modernization, modification of the existing plant and the same was not excluded in the definition of Input service under Rule 2(l). It is her submission that even though setting up was removed from the inclusion portion of the definition but other activity such as modernization, renovation still remained included in the definition of input services therefore the Cenvat Credit is clearly admissible on construction service. 2.1 As regard the insurance service it is her submission that the dispute can be raised in respect of insurance service, only for the period afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products up to 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 relating to such factory or premises, advertisement or sales promotion, market research. storage up to 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, inward transportation of inputs or capital goods and outward transportation up to the place of removal" Definition of 'input service' w.e.f. 01.04.2011 "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 modemization, renovation or repairs of a factory, premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch includes these services in the definition of input service, appellant has correctly availed Cenvat credit on construction service in the present case. This issue has been considered in various judgments cited above by the learned counsel, which is reproduced below: (a) In the case of Bellsonica Auto Components (Supra) the Punjab & Haryana High Court has passed the following order: "8. The land was taken on lease to construct the factory. The factory was constructed to manufacture the final product. The land and the factory were required directly and in any event indirectly in or in relation to the manufacture of the final product and for the clearance thereof up to the place of removal. But for the factory the final product could not have been manufactured and the factory needed to be constructed on land. The land and the factory are used by the manufacturer in any event indirectly in or in relation to the manufacture of the final product, namely, metal-sheets. The respondents' case, therefore, falls within the first part of Rule 2(l) aptly referred to by Mr. Amrinder Singh as the "means part." 9. The respondents' case also falls within the second part of Rule 2(l) i.e. th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in fact the said services were not covered by Rule 2(l), it would not have been necessary to introduce the amendment. It is clear, therefore, that prior to the amendment the setting up of a factory premises of a provider for output service relating to such a factory fell within the definition of 'input service.' The amendment of 2011 is not retrospective and is not applicable to the respondents' case. 12. Our view is supported by the judgment of a Division Bench of the Bombay High Court in Coca Cola India Pvt. Ltd. v. Commissioner of C. Ex., Pune-III, 2009 (242) E.L.T. 168 (Bom.). = 2009 (15) S.T.R. 657. The Division Bench construed Section 2(l) as follows :- "39. The definition of input service which has been reproduced earlier, can be effectively divided into the following five categories, in so far as a manufacturer is concerned : (i) Any service used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products, (ii) Any service used by the manufacturer whether directly or indirectly, in or in relation to clearance of final products from the place of removal, (iii) Services used in relation to setting up, modernization, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty and not for the manufacture of the final product. The said services cannot be said to be remotely connected to the final product as observed by the Commissioner. 14. In the circumstances, the questions of law are answered against the appellant and in favour of the assessees/respondents. The appeal is dismissed." (b) In the case of Milestone preservatives Pvt. Ltd (Supra) this Tribunal has passed the following order: "4. I have considered the submissions made by learned Authorised Representative and perused the record. I find that right from beginning the appellant is taking a stand that construction and architectural services are used for repair and renovation of factory. This submission of the appellant was not effectively rebutted by the Revenue and the Cenvat credit was denied by the lower authorities on the ground that construction service is excluded and appearing in the exclusion clause which were brought in the statute vide Notification No. 3/2011-CE (NT) dated 1-3- 2011. On this basis the credit on Construction and Architectural services was denied. The credit in respect of group Medi-claim Insurance, Group personal accident insurance, insurance, motor car/vehic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 up to 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 relating to such factory or premises, advertisement or sales promotion, market research, storage up to 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 up to the place of removal: From 1-4-2011 (i) "input service means any service- (ii) used by a provider of output service for providing an output service, or (iii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products up to the place of removal. and includes services used in relation to modernisati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion clause of the said definition of input service. After amendment to the definition of the 'input service', a clarification issued by the Board vide Circular No. 943/4/2011-CX, dated 29-4-2011 whereunder answering to the questions raised on the eligibility of credit of service tax paid on construction service as an input service' used in modernization, renovation or repair, it has been clarified that the said services being provided in the inclusive part of definition of 'input service' are definitely eligible to credit. Thus, harmonious reading of the inclusive part of the definition and the exclusion clause mentioned at clause (a) relating to construction service of the definition of input service, it is clear that the construction service relating to modernization, renovation and repair of the factory continued to be within the meaning of 'input service and accordingly, the Service Tax paid on such service is eligible to credit. Undisputedly, the appellant carried out modernization/renovation work to meet USA, FDA guidelines for manufacture of their products therefore, the service tax paid on such construction service is eligible to credit. In the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly shows that any service relating to modernization, renovation of the existing factory is admissible as input service which is the direct case of the appellant. This aspect has been considered in various judgments which are reproduced below :- Bharat Coking Coal Ltd. v. Commr. of Central Excise & S. Tax, Ranchi - MANU/CK/0036/2021 Further, the said CHP has been set up with "9. the view to 'modernise the coal loading process in the mines' also satisfies the definition of input service. Moreover, since the credit has been allowed by the Department on certain invoices raised by the Contractor, the Department has in-principle found the service to be eligible for credit. We also agree with the submission made by the appellant that the mode of valuation adopted by the Contractor to discharge service tax on 40% of the contract value is in accordance with law contained in Service Tax Valuation Rules and cannot be disputed while deciding credit eligibility at the appellant's end. When service tax has been levied only on 40% of the total value, it essentially means that service tax has been paid only on the service portion." ION Exchange (I) Ltd. v. Commissioner of C. Ex., Cus. & S.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods and outward transportation up to the place of removal; From 1-4-2011 "input service" means any (l) service, (i) used by a provider of output service for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products up to the place of removal, and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation up to the place of removal; but excludes, - (A) service portion in the execution of a works contract and construction services including service listed under clause (b) of Section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for - (a) construction or execution of works contract of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services; or (B) se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture of their products therefore, the service tax paid on such construction service is eligible to credit. In the result, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per the law." Musaddilal Projects Ltd. v. Commr. of C. Ex., Cus. & S.T., Hyderabad-I - 2017 (4) G.S.T.L. 401 (Tri. - Hyd.) The department has denied credit alleging "15. that all these services are for setting up of premises of the appellant and therefore not admissible. It is the case of appellant that the input services were not availed for setting up of the premises, but the services were availed only for modernization and renovation of the premises. From the table itself it is clear that the services are not per se for "construction of building" or "setting up of premises" and these are merely renovation/modernization works. The services in the table show that these are construction services for laying the flooring, Erection of Machinery, Electric Installation Works, Single Leaf Door, Installation Boom Barriers, Electrical Consultancy Charges. Since these services would fall within the category of modernization, renovation services which come within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or health insurance of staffs/directors, we find that in the following judgment the similar issues has been considered and it was held that Cenvat credit on insurance service for staffs /directors is admissible. (a) In the case of Stanzen Toyotetsu India Pvt. Ltd (Supra) The Hon'ble High Court of Karnataka has passed the following decision: "14. In so far as Insurance coverage to the employees is concerned in the course of employment if the employees suffer injury or dies, there is a vicarious liability imposed on the employer to compensate the employee. If the employer employs its own transportation facility in order to cover the risk which also includes the risk of workers who are covered in that statutory establishment. He has to take the insurance policy without which the vehicle cannot go on the road. Under the Workmen's Compensation Act he has to obtain the Insurance Policy covering the risk of the employees. The employees' State Insurance Act takes care of the health of the employees also and casts an obligation on the employer to provide insurance services. Under these circumstances, this Group Insurance Health Policy though is also a welfare measure is an obligation wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
