BCH ELECTRIC LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellants are manufacturers of motor starters, converters, connectors, MCC panel, etc., chargeable to the Central excise duty under Chapters 85 and 90 of the Central Excise Tariff. The factory is located at Faridabad and their head office is at New Delhi. The point of dispute is as to whether the appellant would be eligible for Cenvat credit of service tax paid on services of renting of immovable property (used for car parking) and services of club membership (membership of India International Centre, New Delhi and IEEMA, New Delhi). The total disputed amount of Cenvat credit in respect of these two services is Rs. 1,06,375 which was availed of during the period from 2007 -08 to September, 2010. The jurisdictional Assistant Commissioner vide the order -in -original dated November 18, 2011 held that these two services are not eligible for Cenvat credit and accordingly vide the order dated November 18, 2011 confirmed the Cenvat credit demand along with interest and imposed penalty of equal amount on them under rule 15 of the Central Excise Rules, 2004. On appeal to the Commissioner (Appeals), this order of the Assistant Commissioner was upheld by the order -in -appeal dated April 25, 2012 against which this appeal has been filed. Heard both the sides.

(2.) Shri K.L. Handa, consultant, learned counsel for the appellant pleaded that the car parking expenses have been included in the costing of their final product as availment of this service is essential for their business, that this service has to be treated as activity relating to manufacturing business of the appellant, that the club membership is necessary as IEEMA provides the market related information such as information of events, market expectations, new technology, help for advertisement, etc., to its members to carry out the business and it is also helpful in view of the future order booking for a company and such information is the basic need of an industry to stand in competition in the market, that in view of this Cenvat credit has been wrongly disallowed in respect of these services, more so, when the expenses on both these services are included in the cost of final products as is clear from the certificate dated December 20, 2012 given by the chartered accountant, that the hon'ble Bombay High Court in the case of CCE v. Ultratech Cement Ltd. reported in : (2010) 20 STR 577 (Bom) (para 38) of the judgment has, expressing agreement with the judgment of the hon'ble High Court in Coca Cola India reported in : (2009) 25 VST 473 (Bom); (2009) 15 STR 657 (Bom), wherein it has been held that when a service forms part of the cost of final product then, the credit of service tax paid on such input service would be allowable, that during the period of dispute, definition of "input service" covered "activities relating to business", that in any case, the bulk of the Cenvat credit demand is time barred as while the period of demand is from 2007 -08 to September, 2010, the show -cause notice has been issued on December 8, 2010 and in this case the appellants were regularly filing the ER -1 returns disclosing the availment of Cenvat credit in respect of the various inputs and input services, and hence the appellant cannot be accused of suppressing any information from the Department, more so, when the availment of Cenvat credit in respect of these services was detected by the Department in the course of audit of their records, during which, the appellant themselves had produced all the records, that he also relies upon the judgment of the hon'ble Gujarat High Court in the case of Prolite Engineering Co. v. Union of India reported in : (1995) 75 ELT 257 (Guj) wherein the hon'ble High Court held that non -disclosure of information which is not required to be disclosed by the statutory provisions or prescribed pro forma does not amount to suppression or concealment, that since in the ER -1 returns a manufacturer is not required to give invoice -wise details of input or input services in respect of Cenvat credit taken and the jurisdictional Central excise officer while examining the ER -1 returns is free to call for any records to examine the correctness of the Cenvat credit availed, the appellant cannot be accused of suppressing the relevant facts from the Department. He, therefore, pleaded that the impugned order denying the Cenvat credit and confirming its demand along with interest is not sustainable.

(3.) SHRI R.K. Mathur, learned Departmental representative, pleaded that so far as the renting of immovable property for parking of the cars is concerned, the same is a welfare activity, that the genuineness of the appellant's claim regarding availment of this service is doubtful, as during day time only two cars are parked and during night, 15 cars are claimed to have been parked, that in any case, there is no nexus of the services of renting of car parking space with the manufacture of finished product and hence, this service is not covered by the definition of "input services", that so far as the services of club membership is concerned, there is no nexus of this service with the manufacture of final products and hence, this service is also not eligible for Cenvat credit, that the appellant while availing of the Cenvat credit in respect of these two services never specifically disclosed in ER -1 returns filed by them or by other means about the availment of Cenvat credit and hence, the longer limitation period under the proviso to section 11A(1) of the Central Excise Act has been correctly invoked and penalty of equal amount has been correctly imposed on the appellant. He, therefore, pleaded that there is no infirmity in the impugned order.