M/S. Bajaj Hindustan Ltd vs C.C.E. Meerut-I

[Arising out of Order-in-Appeal No. 54&62-CE/MRT-I/2009-10 dated 28.05.2010 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Meerut].

For approval and signature:

Honble Shri Ashok Jindal, 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?

M/s. Bajaj Hindustan Ltd. .Appellants

Vs.

C.C.E. Meerut-I .Respondent

Appearance:

Shri P.K. Mittal, Advocate for the Appellant

Ms. Ranjana Jha, DR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing: 17.06.2015

FINAL ORDER NO. 51968-51969/2015-EX(SM)

Per Ashok Jindal:

The appellants are in appeals against the impugned orders wherein input service credit has been denied on various input services.

2. The facts of the case are that appellant is a manufacturer of sugar and molasses and availed certain services during the period August 2004  January 2007 namely Pandal and Shamiana service, tour operator services, construction services and availed Cenvat Credit on all these services. The show cause notice dated 08.09.2009 was issued to deny Cenvat Credit on these services on the premise that these services do not qualify as input services as per Rule 2(l) of the Cenvat Credit Rules 2004. Another show cause notice was issued for the period October 2007  February 2009 on 05.06.2009 to deny Cenvat Credit on the services of Pandal and Shamiana and tour operator services. Both the lower authorities denied Cenvat Credit to the appellants. Aggrieved from the said orders appellant is before me.

3. The Ld. Counsel for the appellant submits that for Pandal and Shamiana services and tour operator services the Ld. Commissioner (A) herself has held that appellant is entitled to take Cenvat Credit but denied Cenvat Credit on the premise that appellant has not produced the documents to show that the cost of these services has been included in the assessable value of the final product or not. He submits that it was not the issue in the show cause notice and it was never asked to the appellant to provide the said documents. Therefore, Cenvat Credit cannot be denied. With regard to the construction services it is the contention of the appellant that these services have been used by the appellant for residential quarters for their employees, officers mess, recreation club and cemented road inside the residential colony. In this context he submits that as their factory is located in a remote area where there is no facility for the residence of employees, therefore, to increase the efficiency of the employees they provided accommodation to their employees so time is not to be wasted in going to and fro to their factory.

In these circumstances, it is the contention of the Ld. Counsel that the construction service is an integral part of their manufacturing activity. He further submits that construction services are also availed for providing dormitory to employees within the factory. He submits that these services are also an integral part of their manufacturing activity. To support this contention he relied on the decision in their own case by this Tribunal in Appeal no.3300/2012 vide order dated 29.11.2012 wherein this Tribunal has allowed Cenvat Credit for construction of labour hutments kisan sheds, painting building, kisan halls and dormitory meant for the employees in the factory premises itself. For construction services of residential colony he relied on the decision of Honble High Court of Andhra Pradesh in the case of ITC ltd. 2013 (32) STR 288 (AP) and Ultratech Cement 2014 (201) ECR 136 (Tri Kolkata). He furthers submits that the show cause notice dated 08.09.2009 is time barred as same has been issued by invoking extended period of limitation and also submits that extended period of limitation is not invokable in the facts of this case wherein there is a doubt for availment of Cenvat Credit on the above services.

To support his contention he relied on the decision in the case of Mundra International Containers Pvt. Ltd. in Appeal no. ST/701/2011 Tri-Amd.

4. On the other hand Ld. AR oppose the contention of the Ld. Counsel and submits that it is not a case of valuation. In fact, appellant did not provide the documents to verify whether the value of these services has been included in the assessable value of the final product which is an essential requirement to allow Cenvat Credit. With regard to construction services she submits that on the one hand appellant is claiming tour operator services to provide transport facility to the employees from their residence to the factory and on the other hand appellant is claiming that their factory is situated in remote area and no facility for the residence of employees. Therefore, they have constructed residential colony. These are two contrary claim of the appellant. Moreover, the construction of residential colony is an expenditure of capital in nature. Therefore, appellant is not entitled to take Cenvat Credit. For further contention, she supported the impugned order.

5. Heard the parties. Considered the submissions.

6. In these matters show cause notice have been issued to the appellant to deny Cenvat Credit on the premises that the services of Pandal and Shamiana, tour operator and construction services do not qualify as input services as per Rule 2(l) of the Cenvat Credit Rules 2004. The said issue came up before the Honble High Court of Bombay in the case of C.C.E. Nagpur Vs. Ultratech Cement Ltd. -2010 (20) S.T.R. 577 (Bom) wherein it has been held that any service availed by the assessee being a manufacture of excisable goods in the course of business is entitled for Cenvat Credit. It is not disputed by the Revenue that the services in question were not availed by the appellant in the course of their business of manufacturing of excisable goods. Therefore, I hold that Cenvat Credit to the appellant cannot be denied. The argument of the Ld. AR that the claim of the appellant is contrary. On the one hand they are claiming tour operator services and on the other hand they are claiming construction service of residential colony. From the facts of the case and adjudication by the lower authorities it is not disputed that appellant has not constructed residential colony and appellant has not used tour operator services for carrying their employees from their residence to the factory and factory to residence. When these facts are admitted facts then claim of the appellant is entertainable and appellant is entitled to take Cenvat Credit. Without going into the case laws relied upon by the Ld. Counsel for appellant as the decision of Ultratech Cement Ltd. (Supra) covers the entitlement of Cenvat Credit. Therefore, I hold that appellant is entitled to take Cenvat Credit.

7. In these circumstances I do not find any merits in the impugned orders. Therefore, same are set aside. Appeals are allowed with consequential relief if any.

(Dictated and pronounced in the open court)

(Ashok Jindal) Member (Judicial)

Bhanu

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E/3039 & 3040/2010-EX(SM)