C.C.E. Delhi-Iii vs M/S Pricol Ltd
- CitationExcise Appeal No. E/52209/2014 -Ex[SM]
Ratio decidendi
The rule this decision rests on
Housekeeping services that the factory uses to keep its premises clean, as a statutory requirement under Section 11 of the Factories Act, 1948, have a nexus with the manufacture of the final product and qualify as input service for the purpose of cenvat credit, since manufacturing cannot lawfully proceed without such compliance. Rent-a-cab services used to transport employees to the factory are a basic necessity rather than a welfare measure, because delay in workers reaching the premises would directly or indirectly disrupt manufacturing, and such services therefore also qualify as input service entitling the assessee to cenvat credit. A welfare-activity line of reasoning, as in the Bombay High Court decision in Manikgarh Cement, is inapplicable where the disputed services are not welfare activities but have a nexus with the manufacture of the final product.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[Arising out of Order-In-Appeal No. 91/SVS/GGN/14 dated: 25.02.2014 passed by CCE Noida]
For approval and signature:
Hon'ble Mr. S.K. Mohanty, Member (Judicial)
1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3 Whether Their Lordships wish to see the fair copy of the Order?
4 Whether Order is to be circulated to the Departmental authorities?
C.C.E. Delhi-III ...Appellant
Vs.
M/s Pricol Ltd. Respondent
Appearance:
Mr. M. S. Negi, DR for the Appellants
Ms. Rajni Gupta, Advocate for the Respondent
CORAM:
Hon'ble Mr. S.K. Mohanty, Member (Judicial)
Date of Hearing.29.06.2015
FINAL ORDER NO. 53091 /2015
Per S. K. Mohanty (for the Bench):
The Revenue is in appeal against the impugned order dated 24.02.2014 passed by the Ld. Commissioner of Central Excise (Appeals); Gurgaon, wherein cenvat credit taken by the respondent on the services namely, House-keeping and Rent-a-Cab have been allowed, holding that the said services are to be considered as input service for the business activities undertaken by the Respondent.
2. Sh. MS Negi, the Ld. DR appearing for the appellant submits that the impugned order is not legal and proper in view of the Judgment of Honble Bombay High Court in the case of CCE Nagpur vs Manikgarh Cement reported in 2010 (20) STR 456-(Bomb) where it has been held that welfare activities of the assessee not covered under the expression relating to business and unless the nexus between relevant services and business of assessee is established, cenvat credit is not permissible on the taxable services.
3. On the other hand, the Ld. Advocate Ms. Rajni Gupta, appearing for the respondent submits that the disputed services are confirming to the definition of input service for the purpose of taking cenvat credit and for utilization towards clearance of the final product from the factory. The Ld. Advocate relied on the following decisions to justify the stand of respondent that the disputed services qualify for availment of cenvat credit.
(i) NTF (India) Private Ltd. vs Commissioner, 2013 (30) STR 575 (Tri.-Del)
(ii) Delphi Automotive System P Ltd. vs Commissioner, 2014 (36) STR 1089 (Tri. Del)
(iii) Balkrishna Industries Ltd. vs Commissioner, 2010 (254) ELT 301 (Tri. Mum)
(iv) Commissioner vs Stanzen Toyotetsu India (P) Ltd. 2011 (23) STR 444 (Kar)
4. Heard the Ld. Counsel.
5. With regard to the service tax paid on housekeeping service, it is no doubt, a fact that the said service has been used for keeping the factory premises neat and clean, which is a statutory requirement of Section 11 of the Factories Act, 1948. Thus, said services has the nexus with the manufacture of final product, because without compliance with the provisions of the Factories Act, manufacturing activities are not possible. As regards, the rent-a-cab service for transportation of employees, it is not a welfare measure, but a basic necessity, for the reason that unless the workers reach the factory premises in time, the manufacturing activities either directly or indirectly will suffer. Thus, the disputed services should qualify as input service for the purpose of getting the cenvat benefit. The case laws cited by the Respondent squarely apply to the facts of the present case for taking of cenvat credit on the disputed services.
6. The judgment of Honble Bombay High Court in the case of Manikgarh Cement (supra), cited by the Ld. DR for the appellant is not applicable to the facts of the present case, inasmuch as, the disputed services availed by the respondent are not relating to the welfare activities and have the nexus with the manufacture of final product as held by the Honble Karnataka High Court in the case of Stanzen Toyotetsu (supra) and also by Tribunal in the case of NTF (India) Pvt. Ltd. (supra)
7. In view of above, there is no infirmity in the impugned order, and thus, the appeal filed by the Revenue is dismissed.
(Dictated and pronounced in open court)
(S.K. Mohanty)
Member(Judicial)
Neha
Page | 1
Page | 1
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free