M/S. Golden Tobacco Limited vs Commissioner Of Central Excise ...

[Arising out of Order-in-Appeal No. SB(85-86)85-86/MV/2010 dtd. 19/8/2010 passed by the Commissioner (Appeals), Central Excise, Mumbai Zone-I]

For approval and signature:

Honble Mr Ramesh Nair, Member (Judicial)

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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 : 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? =======================================================

M/s. Golden Tobacco Limited : Appellants

VS

Commissioner of Central Excise Mumbai-I : Respondent

Appearance

Shri Vinay Ansulkar, Advocate for the Appellants Shri H.M. Dixit, Asstt. Commissioner (A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 4/6/2015 Date of decision: 4/6/2015

ORDER NO.

Per : Ramesh Nair

These two appeals are taken up for disposal as per the direction of the Honble Bombay High Court in the order dated 22/7/2014.

2. The fact of the case is that appellant have availed Cenvat Credit in respect of various input service however the Ld. Counsel at the outset of the hearing has clearly stated that they are only contesting the issue on admissibility of Cenvat Credit in respect of two services i.e. Rent a Cab service and Insurance service and in respect of rest of the services they are not contesting.

3. Shri Vinay Ansulkar, Ld. Counsel for the appellant submits that in the show cause notice the credit was proposed to be denied only on the ground that input service was not received in the Vileparle factory of the appellant. It is his submission that rent a cab service was used for the executive of the appellant for official use which relates to manufacture of the goods and business activity of the appellant. He submits that on query from the bench that regarding actual use of rent a cab service, is there any evidence. He fairly submits that since credit was proposed to be denied only on the ground that the input service is not received in the appellants factory, this fact has not been verified by the lower authority. He relied upon CCE, Nagpur V/s Ultratech Cement  [2010 (20) S.R.T. 577 (Bom.) = 2010 (260) E.L.T. 369 (Bom.)] judgments. As regard the service of insurance, he submits that service of insurance related to insurance of residential flats and remaining are related to insurance of stock, offices, office equipments, fire insurance, transit insurance of stock of finished goods, machinery spares, insurance of cash and employee insurance of the factory employees. He submits that all these services were used by the appellant in course of their business activity, therefore the same are admissible input service and credit should be allowed. He placed reliance on the judgment in case of Idea Cellular Ltd. V/s. Commissioner of C. Ex. Meerut-I [2011(22) S.T.R. 450 (Tri-Del.)] wherein insurance of vehicle, laptop, cash, during transit were held to be input services and credit was allowed.

4. On the other hand, Shri. H.M. Dixit, Ld. Asstt. Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that as regard rent a cab service appellant have not placed any details regarding actual use of the rent a cab service. He also submits that there is a possibility that rent a cab service can be used by the management and employee of the appellant company for their personal use, in such case Cenvat Credit cannot be allowed. Therefore, in absence of the fact of actual use of rent a cab service, the issue cannot be finally decided at this stage. As regard insurance service, he submits that insurance service shown in the show cause notice relates to various items which includes insurance of residential flats. It is his submission that in services which is for the personal use such as residential flat etc. cannot be held as input service. He stated that he has no objection in remanding case to ascertain fact regarding actual use of both the services.

5. I have carefully considered the submissions made by both sides and perused the record.

6. I find that as regard the rent a cab service, I observed that actual use of rent a cab service has not been produced by the appellant before the lower authority. Ld. Counsel only gave broad submission that rent a cab service is used for the executive of the appellant company for official use, however no evidence was produced. I also observed that even show cause notice also have not verified or brought anything on record regarding actual use of rent a cab service. Therefore in this position this Tribunal cannot take final view whether Cenvat credit in respect of rent a cab service is admissible or otherwise. However in my considered view that if rent a cab service is not used for personal use of the employee and the director of the company but if it is used for official use of the appellant then it will be treated as used in the business activity of the appellant. In my prima facie view, in such case Cenvat credit should be allowed. But since fact is not on record, I prefer to remand the matter to the original authority to verify the fact of use of the rent a cab service and accordingly take a final decision.

As regard the insurance service, it is observed that insurance service on which Cenvat Credit were disputed are on various account. However, I am of the view that if insurance in relation to the residential flat or individual, it is not admissible input service and the credit on such insurance service cannot be allowed. At the same time insurance of stock of input, finished goods, transit insurance, insurance of cash handling and also insurance of equipment and insurance of factory employees which are required under the statue of Factory Act are the services which has direct nexus with the manufacturing as well as business activity of the appellant, on which, in my prima facie view, the Cenvat Credit should be allowed. However the actual use of the such insurance service has not been verified by the lower authority and common allegation i.e. non receipt of input service in the appellant factory was made in the show cause notice. I do not agree with this allegation of show cause notice that merely because service in question are not received in the factory, the credit cannot be denied on this ground.

The services are not tangible unlike inputs. Service can be provided and used anywhere either in the factory or outside factory. Only aspect to be seen that whether the services are in relation to the manufacture or related to the business activity of the assessee. Therefore Cenvat credit cannot be denied on the ground that services are not received in the factory of the assessee. As regard other services except the services of rent a cab service and insurance service the Cenvat Credit shall be disallowed as conceded by the Ld. Counsel. In my above observations, I remand the matter only on the issue of admissibility of Cenvat Credit in respect of rent a cab service and insurance service to the adjudicating authority, who shall passi denovo adjudication order keeping in view of my above observations, preferably within a period of two months from the date of receipt of this order. Needless to say that appellant shall be given sufficient opportunity of personal hearing and also to submit additional documents to prove the nature and use of the services by them. Appeals are allowed by way of remand in the above terms.

(Operative part pronounced in court)

Ramesh Nair Member (Judicial)

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