THE appellant availed CENVAT credit of Rs.12,93,573/- in
respect of services utilized for the maintenance or repairs of
residential buildings/quarters.
Revenue was of the view
that these services will not fall under the ambit of "input service" in
terms
of Rule 2(l) of CCR, 2004 and, therefore, the credit was
inadmissible.
The demand notice was confirmed by the
original authority and upheld by the Commissioner (A), against which
order the appellant is in appeal.
The appellant
submitted that their manufacturing unit is located in a remote village
adjoining the mines of the company. They had made residential quarters
and buildings for the purpose of housing employees of the manufacturing
unit; they undertake maintenance and repair of such residential
quarters;that the said expenditure is considered and added in the cost
of final products manufactured. To this effect, the appellant submitted a
certificate dated 17/11/2015 issued by the Chartered Accountant to
state that the services of repair and maintenance of residential colony
of the appellant units at Zawar mines forms part of assessable value of
the final product. Reliance is placed on the Andhra Pradesh High Court
decision in ITC Limited - 2012-TIOL-199-HC-AP-ST, Bajaj Hindustan Ltd. -
2015-TIOL-2162-CESTAT-DEL, Reliance Industries Ltd. vs. CCE& ST
(LTU), Mumbai - 2015-TIOL-2343-CESTAT-MUM, Ultratech Cement Ltd. -
2010-TIOL-745-HC-MUM-ST and Coca Cola India Pvt. Ltd. vs. CCE, Pune -
III - 2009-TIOL-449-HC-MUM-ST in support of their contention that
service tax paid on any service which is in relation to business should
be eligible for CENVAT credit.
The AR justified the
demand and placed reliance on the decision of Bombay High Court in the
case of Manikgarh Cement - 2010-TIOL-720-HC-MUM-ST.
The Bench inter alia observed -
"…The
appellants contend that it is a part of a business activity and
necessarily forms part of business expenditure captured in the
assessable value of their final product. I find that similar issue was
under consideration by the Hon'ble High Court of Andhra Pradesh in the
case of CC & CE., Hyderabad - III vs. ITC Limited (supra). The
Hon'ble High Court held that staff colony provided by the company, being
directly and intrinsically linked to its manufacturing activity could
not therefore be excluded from consideration of credit. Consequently,
the services which were crucial for maintaining the staff colony, such
as lawn mowing, garbage cleaning, maintenance of swimming pool,
collection of household garbage, harvest cutting, weeding etc.
necessarily had to be considered as "input services" falling within the
ambit of Rule 2 (l) of the Cenvat Credit Rules, 2004. In Bajaj Hindustan
Ltd. (supra), this Tribunal followed the above decision and
distinguished the decision of Hon'ble Bombay High Court in the case of
Manikgarh Cements vs. CCE, Nagpur (supra). Similarly, the Tribunal in
the case of Reliance Industries Ltd. vs. CCE& ST (LTU), Mumbai
(supra) examined in detail the scope of "input services" and expression
"relating to business". After considering the various decisions of the
Tribunal and High Courts, came to the conclusion that Cenvat credit of
service tax paid on various services which were utilized for residential
colony/township of the appellant's factories are eligible for credit.
The Tribunal examined and relied on the decisions of Hon'ble Bombay High
Court in Ultratech Cement Ltd. (supra) and Coca Cola India Pvt. Ltd.
vs. CCE, Pune - III (supra) and distinguished the decision of the same
High Court in the case of Manikgarh Cements vs. CCE, Nagpur (supra)."
Holding
that the appellants are eligible for the input credit of service tax,
the impugned order was set aside & the appeal was allowed.