ISMT LTD. Vs. COMMR. OF CUS. & C. EX., AURANGABAD
LAWS(CE)-2015-5-36
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on May 11,2015

Ismt Ltd. Appellant
VERSUS
Commr. Of Cus. And C. Ex., Aurangabad Respondents




JUDGEMENT

RAMESH NAIR, MEMBER (J) - (1.)THIS appeal is directed against Order -in -Appeal No. AGS/(61)27/2010 dated 20 -4 -2010 passed by the Commissioner (Appeals) of Central Excise & Customs, Aurangabad, wherein ld. Commissioner (Appeals) upheld the order -in -original dated 6 -1 -2010 and rejected the appeal filed by the appellant. The fact of the case is that the appellant has availed Cenvat credit of Rs. 31,581/ - in respect of security service provided to guest house of appellant company located near by their factory.
(2.)The show cause notice dated 12 -11 -2009 was issued wherein proposed denial of Cenvat credit on the ground that said services appears to have not used/consumed exclusively for the manufacture of excisable goods or during the course conducting of business and as seen from the nature of the service the nexus or use criteria appears to have not fulfilled. In the adjudication order dated 6 -1 -2010 the demand of Cenvat credit proposed in the show cause notice was confirmed and penalty of Rs. 2,000/ - under Rule 15 of the Cenvat Credit Rules, 2004 and also interest under Section 11AB of the Central Excise Act, 1944 read with Rule 14 of Cenvat Credit Rules, 2004 was demanded. Aggrieved by the said order, appellant filed appeal before the Commissioner (Appeals), who rejected the appeal of the appellant hence the appellant is before me. Ms. Sparsh Prasad, ld. Counsel for the appellant submits that guest house is used for the stay of company employee and auditors who conduct audit of the factory records therefore it is related to factory activity. She submits that the security service which is subject matter is used for security of guest house and therefore it is admissible input service in terms of definition of input service provided under Cenvat Credit Rules, 2004. She placed reliance on following judgments:
(a) L'Oreal India Pvt. Ltd. v. Commissioner of C. Ex., Pune -I [ : 2011 (22) S.T.R. 89 (Tri. -Mumbai)].

(b) Commissioner of C. Ex., Visakhapatnam v. Hindustan Zinc Ltd. [ : 2009 (16) S.T.R. 704 (Tri -Bang.)]

(c) Commissioner of C. Ex., Nagpur v. Ultratech Cement Ltd. : [2010 (20) S.T.R. 577 (Bom.) : 2010 (260) E.L.T. 369 (Bom.)]

She submits that in view of the above cited judgments Cenvat credit in relation to guest house of the manufacturing unit has been allowed.

On the other hand, Shri Ashutosh Nath, ld. Asstt. Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that the security provided to the guest house has no nexus with production of the goods therefore the same does not qualify as input service in terms of definition of input service provided under Cenvat Credit Rules, 2004. In support of his argument he placed reliance on following judgments:

(a) Commissioner of C. Ex. & Customs v. Gujarat Heavy Chemicals Ltd. - : 2011 (22) S.T.R. 610 (Guj.).

(b) Commissioner of C. Ex., Nagpur v. Manikgarh Cement - : 2010 (20) S.T.R. 456 (Bom.).

(c) MRF Ltd. v. Commissioner of C. Ex., & ST. (LTU), Chennai - : 2013 (31) S.T.R. 689 (Tri. - Chennai)

(3.)I have carefully considered the submissions made by both sides and perused the record. I find that service in question is security services provided to the guest house of the appellant. The guest house is used for lodging of the employees, outside auditors which performing their service to the appellant's factory. Nothing is available on record to show that guest house is used for any other purpose. In view of this fact, since guest house used for the stay of employee, auditors which has directed nexus with factory which produces excisable goods therefore Cenvat credit is admissible to the appellant. On going through judgments relied upon by the rivals, I find that in the case of L'Oreal India Pvt. Ltd. (supra) house keeping service of guest house has been held admissible and in the case of Hindustan Zinc Ltd. (supra) maintenance service of guest house was allowed as input service. Since the similar service involved in the present case, the ratio of both the judgments are squarely applicable in the appellant's case also. As regard reliance placed by the ld. A.R. on various judgments, I find that the judgment of Gujarat Heavy Chemicals Ltd. and Manikgarh Cement (supra) facts were different as in these judgments services were provided to the residential quarters of the employee whereas in the present case service was provided to the guest house which is used by appellant for the purpose of smooth function of the factory. As regard the MRF Ltd. (supra) case the credit of security service availed at guest house was denied on the ground that it is used not only for the business purpose for personal engaged in the manufacturing process but also for satisfaction of their personal needs. In the present case no such material was available that guest house was available for the personal needs of the employee therefore judgment of MRF Ltd. is distinguished. In view of my above discussion and careful consideration of the judgments relied upon by the both sides, I am of the view that in facts and circumstances of the case, security service provided to the guest house in the factory is admissible input service, therefore I set aside the impugned order and allow the appeal.
(Operative part pronounced in Court)

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