M/S Shilp Grauvers Ltd vs Commissioner, Central Excise & Service ...

Appeal No.E/949/2012 [Arising out of OIA No.144/2012(Ahd-III)SKS/Commr.(A)/Ahd, dt.19.10.2012, passed by Commissioner (Appeals), Central Excise & Service Tax, Ahmedabad]

M/s Shilp Grauvers Ltd Appellant

Vs

Commissioner, Central Excise & Service Tax, Ahmedabad-III Respondent

Represented by:

For Appellant: Shri Dhaval K. Shah, Advocate For Respondent: Shri L. Tendupatra, Authorised Representative

For approval and signature:

Honble Mr. P.K. Das, Member (Judicial)

1. Whether Press Reporters may be allowed to see the No 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 of Seen the order?

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

CORAM:

HONBLE MR. P.K. DAS, MEMBER (JUDICIAL)

Date of Hearing/Decision:28.05.2015

Order No. A/10701 / 2015, d.28.05.2015

Per: P.K. Das

The relevant facts of the case, in brief, are that the Appellants were engaged in the manufacture of M.S. Copper Cylinder, Copper Roller, Engraved Screen, Ink Screen and Ink Proofing Machine, classifiable under Chapter 84 of the Schedule to the Central Excise Tariff Act, 1985. A show cause notice dt.16.09.2010 was issued, proposing to deny the input service credit amounting to Rs.4,75,441.00 alongwith interest and to impose penalty. The Adjudicating authority denied the input service credit namely; Canteen Service (Outdoor Catering Service), Housekeeping, Commission to Agents, and Repair of Motor Vehicles. It has also confirmed the demand of CENVAT Credit alongwith interest and imposed penalty of equal amount of CENVAT Credit. The Commissioner (Appeals) upheld the Adjudication Order.

2. After hearing both the sides and on perusal of the records, I find that both the authorities below denied the CENVAT Credit on the ground that these services have no nexus with the business activity of the Appellant and as such, they cannot be termed as input service. The Adjudicating authority observed that these services are not essential in the manufacture of the final product.

3. The Appellants in their reply to the show cause notice had given the detailed use of these services in the manufacture of final product as under:-

A) Canteen Service (Outdoor Catering Service):-

A canteen was installed in their factory premises and supplied various food articles including tea, coffee, snacks, break-fast etc to their staff members, employees and workers to run their business activity of production and sale of goods.

The Hon'ble Bombay High Court in the case of Commissioner of C.Ex., Nagpur Vs Ultratech Cement Ltd  2010 (260) ELT 369 (Bom.) held that CENVAT credit of service tax paid on Outdoor Catering Service used in Canteen for employees is admissible, but, they are not entitled to avail the CENVAT Credit for a portion of cost borne by the workers. Hence, the appellant is eligible to avail input service credit on Outdoor Catering Service except for a portion of cost borne by the workers.

B) Housekeeping:-

It is necessary, in every Factory or Office of the Factory, to maintain cleanliness in the premises, including the Production Area, Toilets & Bathrooms, Garden Area, Parking Premises, Canteen Area or Premises & other parts of the Compound in which the Factory or Office of the Factory, is situated, to minimize the Air & Water Pollution, so as to maintain a clean environment for the Officers, Staff Members, Employees of the Factory or Office & the visitors, visiting our Factory or Office, for sale & purchase of Excisable Goods, including, Inputs, Capital Goods, Packaging Materials, & Finished Goods, produced in Factory, as well as Service Providers, providing taxable Services. Therefore, it is essential to maintain the Factory & Office Premises, clean & neat, with the help of the Housekeeping Agency and this being the position, the Service of a Housekeeping Agency, is said to have been availed of, by them, in connection with the Business Activity of Production and Sale of finished goods.

The Tribunal in the case of Balkrishna Industries Ltd Vs CCE Aurangabad  2010 (254) ELT 301 (Tri-Mum), following the decision of Hon'ble Bombay High Court held that better atmosphere created by garden increasing work efficiency and input service credit on garden maintenance is admissible. So, the Appellant is eligible to avail input service credit of housekeeping service, which is related to the better maintenance and pollution control of the factory premises.

C) Commission to Agents:-

The learned Authorised Representative for the Revenue submits that the Hon'ble Gujarat High Court in the case of Commissioner of C.Ex., Ahmedabad-II Vs Cadila Healthcare Ltd  2013 (30) STR 3 (Guj.) held that the assessee is not eligible to input service credit on Commission Agent service. The learned Advocate on behalf of the appellant submits that the demand of tax is barred by limitation. In the present case, the demand of tax for the period 2007-08 (upto December 2008) was issued by the show cause notice dt.16.09.2010. He submits that this issue is covered by the decisions of the Tribunal as under:-

i) Omega Paper Pack Pvt.Ltd. Vs CCE Vapi Order No.A/10177/WZB/AHD/2012, dt.15.01.2013

ii) M.K. Industries Vs CCE Daman 2013 (31) STR 59 (Tri-Ahmd)

The learned Authorised Representative for the Revenue submits that the Appellant had not disclosed the fact of availment of credit in their ER-1 return in detail, which amounts to suppression of facts with intent to evade payment of tax. I find that the dispute relating to demand of tax was decided by Hon'ble Gujarat High Court in the case of Cadila Healthcare Limited (supra). Hence, the Appellant availed the CENVAT credit on a bonafide impression. The Tribunal in the case of Omega Paper Pack Pvt.Ltd. (supra) held as under:-

7. I find the said findings of the above referred authority is not in consonance with the law. The appellant herein has availed cenvat credit on service tax paid to the Commission Agent on the bona-fide belief, that the said commission paid by him is in line of business. There are various decisions which clearly indicate that credit can be availed on service tax paid by commission agent as reported in the case of Cadila Healthcare Ltd. [2010 (17) STR-134 (Tri-Ahmd.)], which was upturned by the Honble Gujarat High Court. I find that the appellant could have entertained a bona-fide belief that he is eligible to avail cenvat credit of service tax paid to the commission agent during the period from May, 2005 to March, 2007. I find that the appellant has made out a case on limitation. Accordingly, I hold that the show-cause notice issued on 03/06/2010 for the demand of cenvat credit availed on service tax paid by the Commission Agent during the period from May, 2005 to March, 2007 is blatently time barred. In view of the foregoing, I set-aside the impugned order and allow the appeal.

So, the denial of CENVAT Credit on the extended period of limitation cannot be sustained.

(D) Repair to Motor Vehicles:

It is stated by the Appellant that they have availed CENVAT Credit of Service Tax charged by authorised service station in connection with the repair and maintenance of the commercial vehicles belonging to the manufacturing unit. The said vehicles were used by the staff members, officers and employees of the Appellant from time to time. The Tribunal in the case of CCE Tirunelveli Vs DCW Ltd  2011 (22) STR 214 (Tri-Che.) held in the context of travel service that credit of Service Tax paid on air fare taken for business purpose would be eligible for CENVAT Credit. In the present case, I find that the credit availed on repair or maintenance service of vehicles used by their staff members and therefore, there is no reason to deny the Service Tax credit on repair or maintenance service.

4. In view of the above discussion, denial of input service credit on Housekeeping and Repair of Motor Vehicles are set aside. The denial of CENVAT Credit on Commission Agent is upheld and the demand of CENVAT credit for extended period of limitation is set-aside. Regarding the CENVAT Credit availed on Outdoor Catering Services, it is directed that the Appellant is liable to reverse the credit on a portion of the cost borne by the workers.

5. The appeal filed by the Appellant is disposed of in above terms. The penalty imposed on the appellant is set aside as it is a case of admissibility of input service credit. (Dictated & Pronounced in Court)

(P.K. Das) Member (Judicial)

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