John Deere India Pvt. Ltd vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI

COURT No. I

Appeal No. E/880, 881, 882/2010, 156/2011, 69/2012

(Arising out of Order-in-Appeal No. P.III/VM/18-20/10 dated 29.01.2010, P.III/VM/245/10 dated 06.10.2010 and P.III/RS/282/2011 dated 28.09.2011 passed by Commissioner of Central Excise (Appeals), Pune III)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) ================================================

1. Whether Press Reporters may be allowed to see : No 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 : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

John Deere India Pvt. Ltd.

Appellant Vs.

Commissioner of Central Excise, Pune III Respondent

Appearance:

Shri S.A. Gundecha, Advocate for appellant Shri V.K. Agarwal, Addl. Commr (AR) for respondent

CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

Date of Hearing: 21.07.2015 Date of Decision: 21.07.2015

ORDER NO

Per: M.V. Ravindran

All these appeals are disposed of by a common order as they raise very same question of law and in respect of very same assessee.

2. Relevant facts that arise for consideration in all these appeals, appellant is a manufacturer of tractor and is having Central Excise registration and avails benefit of CENVAT Credit of inputs and input services. During scrutiny of the records it revealed that appellant had availed CENVAT credit of service tax paid on various input services such as -

1. Air Travel Agencies Services

2. Cargo Handling Services

3. Courier Service

4. Management Maintenance & Repair Services

5. Outdoor Catering Services

6. Rent-a-Cab Services

7. Life Insurance Service

8. Renting of Immovable Property

9. Mandap Keepers Services

10. Sound Recording Services 11 General Insurance Services

12. Event Management Services

13. Construction Services

14. Auctioneers Services

15. Business Support Services

16. Telecommunication Services

17. Architects Services

18. Renting of Tangible Goods Services

2.1 Entertaining a doubt that these services have not been used in or in relation to the manufacture and clearance of final products and therefore do not fall under the category of definition of input service as per Rule 2 (l) of the CENVAT Credit Rules, 2004, show cause notices were issued proposing to disallow the CENVAT credit and demanding thereof with interest and proposal to impose penalties. Identical set of show cause notices were issued, to be adjudicated by the adjudicating authority. The adjudicating authority after following due process of law confirmed the demands raised along with interest and also imposed penalties. Aggrieved by such an order, the appellant preferred appeals before the first appellate authority inter alia contesting the findings recorded by the adjudicating authority. The adjudicating authority have also held in favour of the appellant in some of the CENVAT credit availed against which Revenue filed an appeal before the first appellate authority. The first appellate authority rejected the appeal filed by the assessee and allowed the appeal filed by the Revenue holding that the CENVAT credit availed by the appellant of service tax paid on the input services (as enumerated herein above) is erroneous and confirmed the demands with interest and also imposed penalties.

3. Learned Counsel appearing on behalf of appellant would draw our attention to the services on which service tax was paid and CENVAT credit was disallowed. It is his submission that all the services on which CENVAT credit is sought to be denied are used in or in relation to the manufacturing activity of the appellant. He would submit that appellant had given detailed write-up in reply to the show cause notice and brings to our notice of the said defence raised by them before the adjudicating authority. For example he would submit that the service rendered for air ticket booking agency services were in respect of air travel undertaken by the employees in relation to business for marketing and sale of their final products, cargo handling services are used by the appellant during the course of carrying on business of loading and unloading of the tractors, courier services were used for exchange of several documents/articles which are in relation to the business of the appellant, management, maintenance and repair services are utilized by appellant from the service providers who are maintaining, managing and repairing the machines which are used for manufacturing of tractors and outdoor catering services are used for providing food and beverages to the employees/workers of the factory which are mandatory under the factories Act.

3.1 After taking us through the entire submissions made by them he would submit that in respect of construction service and auctioneer services, there is no demand confirmed by the lower authorities. He would submit that the issue is no more res integra as the service which are used in or in relation to the activity of business or relating to business, CENVAT credit is eligible as the law which has been settled by the Honble High Court of Bombay in the case of Coca Cola India Pvt. Ltd.  2009 (242) ELT 168 (Bom.), Ultratech Cement Ltd. - 2010 (20) STR 577 (Bom.) and various judgements of the Tribunal in the case of Endurance Technologies Pvt. Ltd. 2013 (32) STR 95 (Tri. Mum), Telco Construction Equipment Co. Ltd - 2013 (32) STR 482 (Tri. Bang.) and Emcon Technologies India Pvt. Ltd. - 2013 (31) STR 441 (Tri. Bang.).

4. Learned DR while reiterating the findings of the first appellate authority would bring to our notice that Life Insurance services which were received by appellant were in respect of employees and their family members. He would submit that CENVAT credit of that portion of the service tax paid on this service is attributable to the family members of the employees are not eligible to be availed as CENVAT credit and the CENVAT credit availed on service tax paid on services of renting of Tangible Goods Services may not be eligible.

5. We have considered the submissions made by both sides and perused the records.

6. On perusal of the records, we find that the services which are rendered by various service providers as enumerated in paragraph 2 above, we find that all these services are utilized by appellant in the factory premises and some are indicating the activities relating to the business like sales and marketing. On deeper perusal of the details put-forth by appellant before the adjudicating authority, we find that in respect of the services as enumerated herein above, we find that these services are used in or in relation to the manufacture of final products i.e. tractors which are clared on payment of appropriate Central Excise duty, whenever applicable. We do not find the defence raised by the appellant in the reply to the show cause notice has been controverted by the Revenue by adducing any evidence contrary to the claim made by the appellant. In our view, as correctly pointed out by learned Counsel, the issues raised by the Revenue is held in favour of the assessee by the judgements as cited herein above and more specifically by the judgements of Honble High Court in the case of Coca Cola India Pvt. Ltd. (supra) and Utratech Cement Ltd. (supra). We find that the submissions made by learned D.R. in the case of CENVAT credit on renting of tangible goods services is also incorrect as we find that the service tax paid by the service provider are on the hiring charges on forklift, which were hired out to appellant for movement of materials within the factory premises. Accordingly, we hold that these services as also all other services as enumerated in paragraph 2 herein above are eligible to be availed as input service credit. We find that learned D.R. was correct in pointing out that CENVAT credit availed on that portion of service tax paid by Life Insurance service provider in respect of the family or dependent of the employees may not be eligible for CENVAT credit. We hold that CENVAT credit availed by the appellant to that extent which is in respect of life insurance cover provided to the family and dependents of the employees of the appellant is to be held as ineligible and we do so.

7. Since the correct amount is not ascertainable from the show cause notice, we direct the adjudicating authority to workout the exact figure involved in the service of life insurance cover attributable to the family of the employees and direct appellant herein to discharge the said service tax liability along with interest. Though we have upheld this demand, we find that there could be a bonafide impression on the part of the appellant such CENVAT credit is eligible to be availed hence no penalty is required to be imposed, as we set aside major portion of demand, question of imposition of penalties on appellant would not arise.

8. All appeals are disposed of as indicated herein above.

(Dictated in Court)

(C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial)

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