Whether BSS like roads, parking, security gate falls within the ambit of input services?

PJ/Case Law/2013-14/1610

Case:- COMMISSIONER OF CENTRAL EXCISE, DELHI-III Vs M/s MINDA ACOUSTICS LTD

Citation:-2013-TIOL-894-CESTAT-DEL

Brief facts:- All the appeals filed by the Revenue and by the appellant are being disposed of by a common order as they arise but of the same impugned order of Commissioner (Appeals). However, for the sake of brevity, facts as available in the assessee appeal are being adverted too. The appellant is a 100% EOU engaged in the manufacture of Sound Signalling equipments. The dispute in the present appeal relates to the Cenvat credit availed by the appellant in respect of various services. It is seen that original by a show cause notice was issued for disallowing the Cenvat credit on various inputs services like CHA service, courier service, catering service, medical claim insurance, rent a cab and general insurance and business support service and denial of Cenvat credit of Rs. 12,66,562/- was confirmed by the Additional Commissioner along with imposition of penalty of Rs. 3,50,00/- On appeal against the said order, the Commissioner (Appeals) allowed the credit in respect of various services but denied the same in respect of business support service to the extent of Rs. 10,59,538/-. The said denial is challenged by the appellant, whereas allowing of the Cenvat credit stand challenged by the Revenue. The appellant was availing the business support service (support service for business and commerce) such as security, cleaning and housekeeping, canteen, reception, maintenance of common areas i.e. roads, parking, security gate and running and maintenance of common facilities like ETP, STP, EPBX, WTP, DG sets, air compressors, chilling plant. For the said purposes, they have entered into an agreement with M/s Minda Acoustics Ltd. on 1/5/06 for the purpose of providing the above business support services. The Revenue has denied the credit on the ground that they cannot be held to be admissible cenvatable input services.

Appellant’s contention:- The appellant contended that services like security, cleaning and housekeeping , canteen, reception, maintenance of common areas i.e. roads, parking, security gate and running and maintenance of common facilities like ETP, STP, EPBX, WTP, DG sets, air compressors, chilling plant do not fall in ambit of input service definition thus credit won’t be allowed.

Reasoning of Judgement: The Hon'ble Bombay High Court in the case of CCE, Nagpur vs. Ultratech Cement Ltd. reported in 2010 (20) S.T.R. 577 (Bom.), that the criteria for coverage of input services is that the same is integrally connected with business of manufacture of final product and the scope of the definition being very wide, the same would cover services not only used directly or indirectly in or in relation to the manufacture of final products, but also various services used in relation to business of manufacture, whether prior to manufacture or after manufacture. The definition of input service seeks to cover every conceivable service used in business of manufacture. Similarly, in the case of Coca Cola India Pvt. Ltd. vs. CCE, Pune - III reported in 2009 (15) S.T.R. 657 (Bom.), it stands held that the term business appearing in the definition of input service cannot be given a restricted definition in as much as the said term is of wide import and covers all the activities related to functioning of a business. By applying the ratio of the above decision to the facts of the instant case, it was found that the business support services being provided by M/s Minda Acoustics Ltd. are relatable to the business activities of the appellant and are squarely covered by the definition of input services. Also it as found that no merits in the Revenue's contention that the same are not directly related to manufacture of their final products. Thus appeal was dismissed.

Decision:- Appeal was dismissed.

Comment:-The analogy drawn from this case is that the definition of input service cannot be given a restricted definition in as much as the said term is of wide import and covers all the activities related to functioning of a business.

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PJ/Case Law/2013-14/1610

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