COMMISSIONER OF CENTRAL EXCISE Vs. MANIGARH CEMENT WORKS

JUDGEMENT

(1.) THIS appeal filed by the department is directed against the order of the Commissioner (Appeals) permitting the respondent to avail themselves of the benefit of CENVAT credit on certain services recognised by the appellate authority as "input services" within the meaning of Section 2(l) of the CENVAT credit Rules, 2004. During the material period, the respondent had taken CENVAT credit of service tax paid on (a) construction of buildings (b) repairs and maintenance of such buildings (c) man -power recruitment (recruitment of security guards) and (d) cleaning services - - all these undertaken in a residential colony situated outside the factory premises. In adjudication of the relevant show -cause notice, the original authority held these services to be outside the purview of the definition of "input service" given under Rule 2(l) of the CENVAT Credit Rules and disallowed the credit in question to the respondent. But the appellate authority held otherwise and consequently the appeal filed by the respondent came to be allowed. In the present appeal, the department refers to the definition of "input service" and submits that none of the above services can be recognised as input service for want of nexus with the activities of manufacture and clearance of excisable goods. According to the appellant, only those services which are used in or in relation to the manufacture and/or clearance of excisable goods could be held to be "input services". It is also submitted that the Tribunal's decision dated 4.12.2007 which went in favour of the respondent in an earlier case involving identical issue has not been accepted by the department and that an appeal against the same is under consideration. Today, the ld. DR submits that the appeal filed by the department against the Tribunal's order dated 4.12.2007 has since been admitted by the Hon'ble High Court as Central Excise Appeal No. 22/2008. However, it is fairly conceded the Hon'ble High Court has not stayed the operation of the Tribunal's order dated 4.12.2007. Nevertheless, in an endeavour to amplify some of the grounds of this appeal, reference is made to the definition of 'input service' and the DR also seeks to draw an analogy between it and the definition of "input" given under Rule 2(k) of the CENVAT Credit Rules. It is argued that, whether it be the definition of 'input' or definition of 'input service', the items specified in the inclusive part of the definition should necessarily satisfy the essential legal requirements laid down in the main part of the definition so as to qualify as input service. In this context, reliance is placed on the Hon'ble Supreme Court's decision in Maruti Suzuki Ltd. v. CCE Delhi : 2009 (240) ELT 641 (SC). Relying on the apex Court's findings contained in paragraph 9 to 14 of its judgment, ld. DR submits that the definition of 'input service' given under Rule 2(l) has to be considered as a whole and that anything mentioned as input service in the inclusive part of the definition should necessarily satisfy the essential requirements of the main part of the definition. In other words, no service which does not satisfy the requirement of having been used in or in relation to the manufacture or clearance of final product, whether directly or indirectly, would qualify to be an input service. Ld. DR means to say that the mere mention of a service in the exclusive part of the definition would not per se entitle the service recipient to claim CENVAT credit.

(2.) ON the other hand, ld. counsel for the respondent seeks to distinguish the case of Maruti Suzuki from the instant case. He points out that, in the case of Maruti Suzuki, the apex court split the definition of "input" into three parts, viz. the main part, the inclusive part and the place of use. Ld. counsel submits that the main part and the inclusive part of the definition of "input" were held to be qualified by the place of use. On the other hand, according to the ld. counsel, in a case involving interpretation of the definition of "input service", the place of use is irrelevant. It is pointed out that many of the services specified in the inclusive part of the definition of "input service" are services rendered outside the factory. Secondly, it is submitted that the nexus to be established between the main and inclusive parts of the definition of "inputs service" is much broader when compared to the nexus between the corresponding parts of the definition of "input". By way of illustration, the ld. counsel refers to instances of 'use' given in the definition of input service. The main part of the definition contains the expression "used in or in relation to the manufacture of final product." The inclusive part of the definition contains expressions like "used in relation to setting up, modernisation etc." and "used in relation to activities relating to business". According to the ld. counsel, in the inclusive part of definition of "input service", any expression of the kind "in or in relation to the manufacture of final products" is conspicuously absent and expressions like "in relation to setting up," and "in relation to activities relating to business" are significantly present and therefore it is not necessary to show any nexus between any of the services mentioned in the inclusive part of the definition and the manufacture/clearance of final products referred to in the main part. It is argued that the inclusive part should be independently considered. Ld. counsel argues that every activity or group of activities mentioned in the inclusive part of the definition should stand on its own legs, unaffected or unqualified by anything contained in the main part of the definition. It is in this context that the ld. counsel has referred to the Hon'ble High Court's judgment in Coca Cola India P. Ltd. v. CCE Pune 2009 (242) ELT 168 (Bom). In the cited case, the Hon'ble High Court was considering the definition of "input service". It was held that this definition could be divided into 5 parts/limbs and that each limb of the definition could be considered as an independent benefit. It was further held that, if an assessee could satisfy any one of the five limbs of the above definition, credit of the service tax paid on the relevant input service would be available to him. The Hon'ble High Court further clarified that it was not necessary for the assessee to satisfy other limbs of the definition. According to the ld. counsel, the order passed by this Tribunal in the respondent's own case vide : 2008 (9) STR 554 (Tri -Mum) (which is presently under challenge by the department before the Hon'ble High Court) is in conformity with the Hon'ble High Court's ruling in Coca Cola case. Contextually, the counsel has also relied on order No. A/55/09 dated 16.1.2009 passed by this bench in another earlier case of the same assessee, (appeal No. E/475/08), wherein the order dated 13.12.07 was followed as binding precedent. I have given careful consideration to the submissions. The three services in question are a) construction service (b) repairs and maintenance service, (c) man -power recruitment service (d) cleaning service, all of which were provided by the respective service providers at the residential colony outside the respondent's factory. Employees of the respondent reside in the said colony. Residential buildings were constructed, old residential buildings were repaired and maintained, security guards for the colony were recruited by a man -power recruiting agency and the residential premises were cleaned by another agency. The question is whether any or all of these services could be held to be "input service" within the ambit of the definition of 'input service' given under Rule 2(l) of the CENVAT Credit Rules, 2004. This definition reads as under:

(3.) THE Hon'ble High Court, in the case of Coca Cola (supra), examined the scope of the above definition. It held that the definition could be divided into five categories and that each category/limb of the definition could be considered as an independent benefit or concession/exemption. Their Lordships clarified that, if an assessee could satisfy any one of the five categories/limbs, credit of the service tax paid on the relevant services would be available to him. The assessee need not satisfy the other limb(s) of the definition. According to the ld. counsel, the question whether CENVAT credit of service tax paid on the aforesaid four services rendered at the residential colony outside the factory is admissible to the respondent is squarely covered by the Hon'ble High Court's decision, in their favour. On the other hand, ld. DR has heavily relied on the Hon'ble Supreme court's decision in Maruti Suzuki case. According to him, the Hon'ble Supreme Court's decision impliedly overrules the High Court's decision. I agree. In the case of Maruti Suzuki, the Supreme court was considering the definition of 'input' given under the CENVAT Credit Rules. The definition reads as under: