1. All the 29 appeals are taken up together for disposal, as the issues involved in these appeals are identical in nature, relating to refund of unutilized CENVAT credit on export of services under Rule 5 of Cenvat Credit Rules, 2004 (CCR).
2. M/s Integra Software Services Pvt. Ltd., Puducherry, hereinafter referred to the appellants are engaged in export of Pre- publishing Services and e-publishing services and they have availed input credit of various input services like Advertisement services, Audit Services, Bank Charges, Consultancy, Courier charges, Maintenance, Renting of Immovable property, Security Software, Telephone, Training and foreign Outsourcing service etc and used them for rendering the output services exported and had filed refund claims on various dates under Rule 5 of the CCR 2004 read with Notifn.No.5/2006CE(NT) dt.14.03.2006.
3. While the original adjudicating authority had granted refund, revenue had preferred an appeal before the Commissioner (Appeals) stating that certain services were not eligible for CENVAT Credit and that documents were not proper for claim of credit. The Commissioner (Appeals) had partially allowed the appeals. Aggrieved by the order of the Commissioner (Appeals), the Appellant has preferred appeals before this bench.
The summary of appeals has been provided in the following table:
Note: In respect of the Appeal No. ST /42508 & 42509/2015 , break up of denial of input service has not been provided. But since the order deals only with two issues namely management consultancy and sewage treatment, I am giving my observations for these two services.
4. Shri S. Ramachandran, learned consultant for the appellant, as regards denial of input service, submitted that the learned Commissioner (Appeals) had given a narrow interpretation of inclusive part of definition and rejected refund on certain input services, which is totally incorrect since the services specified in inclusive part were only illustrative and not exhaustive.
5. Further the learned consultant placed reliance on the following case laws:-
1. CCE Vs. Ultratech Cement Ltd. (2010 (260) ELT 369 (Bom.) paras 28, 34 & 35)
2. CCE, Bangalore-III Vs Stanzen Toyotetsu India (p) Ltd - 2011-TIOL-866-HC-KAR-STPara (10):
3. Ramala Sahkari Chini Mills Ltd UP Vs CCE Meerut I 2016-TIOL-20-SC-CX-LB
4. C.C.E., Pune vs Emerson Innovation Center - 2015-TIOL-887-CESTAT-MUM
He had also placed heavy reliance on the CBEC circular No.120/01/2010-S.T. dated 19.01.2010 which states as follows:-
3.1?Use of different phrases in rules and notification [para 2(a)] :
3.1.1?The primary objection indicated by the field formations is that the language of Notification No. 5/2006-C.E. (N.T.) permits refund only for such services that are used in providing output services. In other words, the view being taken is that to be eligible for refund, input services should be directly used in the output service exported. As regards the extent of nexus between the inputs/input services and the export goods/services, it must be borne in mind that the purpose is to refund the credit that has already been taken. There cannot be different yardsticks for establishing the nexus for taking of credit and for refund of credit. Even if different phrases are used under different rules of CENVAT Credit Rules, they have to be construed in a harmonious manner. To elaborate, the definition of input services for manufacturer of goods, as given in Rule 2(l)(ii) of CENVAT Credit Rules, 2004, includes within its ambit all services used in or in relation to the manufacture of final products and includes services used directly or indirectly. Similarly Rule 2(l)(i) of Cenvat Credit Rules also gives wide scope to the input services for provider of output services by including in its ambit services used.... for providing an output service. Similar is the case for inputs.
3.1.2?Therefore, the phrase, used inmentioned in Notification No. 5/2006-C.E. (N.T.) to show the nexus also needs to be interpreted in a harmonious manner. The following test can be used to see whether sufficient nexus exists. In case the absence of such input/input service adversely impacts the quality and efficiency of the provision of service exported, it should be considered as eligible input or input service
Therefore, he had submitted that the Commissioner (Appeals) had erred in his decision in not allowing the credit on the input services availed by the appellants since in the absence of use of these input services, it would adversely affect the quality and efficiency of the provision of output service.
6. As regards, denial of credit on account of non availability of registration, details of input service providers, The learned counsel for the appellants submitted the registration details of such input service providers, which had been collected from the CBEC official website and had been provided before the Ld. Commissioner (Appeals), which the Commissioner (Appeals) had totally ignored and passed the appellate order.
7. As regards rejection of refund covered by certain invoices on grounds that description of input service has not been mentioned properly, it is submitted that the appellant had given clear evidences before Commissioner (Appeals) explaining nature of service rendered by such input service providers and also justified the essentiality of such input services in rendering their output services.
8. As regards the rejection of refund on ground that service tax was not claimed in invoices, the learned counsel submitted that they had made service tax payments under reverse charge. They also produced copies of invoices in support of their claim.
9. Shri A. Cletus, ADC (A.R), representing the Department had re-iterated the Order in Appeal.
10. I have carefully gone through the records and heard both sides. The brief facts of the case is that the appellant is a 100% EOU engaged in the service of information technology service named E publishing of books, they are exporting output service namely information technology software service which is covered under section 3(iii) of the Service Tax Rules, 2005. The appellants had availed various input services in the course of providing their output service. Since the appellants could not utilize their entire credit as the entire output service was exported, they have filed various refund claims under Rule 5 of the CENVAT Credit Rules, 2004. The following are the issues to be addressed in this appeal:
a) Whether the appellants are eligible for refund under Rule 5 of the Cenvat Credit Rules 2004 for the input service under dispute?
b) Whether rejection of refund is valid for reasons such as non mention of service tax registration number on the invoice, description of input service not mentioned properly, service tax not claimed in invoices?
Now, I take up the first issue in detail:
i) RENTING OF IMMOVABLE PROPERTY SERVICES:
11. With regard to the eligibility of credit availed for the renting of the immovable property, it was submitted by the appellant that without a building the appellant cannot perform their job and the building premises is essential for the nature of output service rendered by the appellant. Further he submitted that the appellant could perform their output service only by providing good infrastructure and good work space to install all electronic equipments & computers, allied equipments & gadgets and to accommodate the staff & employees.
12. It is an undisputed fact that the appellants are engaged in providing output service namely E publishing of books, and it is impossible for the appellants to provide the service without building or a proper premises, absence of which would adversely affect the quality and efficiency of the provision of service exported. Therefore, as clarified by CBEC vide circular dated 19.01.2010, I find that rent has a direct nexus with the output service provided by the appellants and hence are eligible for the credit. In the case of India Trimmings Pvt Ltd Vs CCE Coimbatore 2016 (42) STR 552 (Tri.Che), this Tribunal had further held that renting of immovable property service is having direct nexus in the manufacture of goods. Rule 2(1) of CCR, 2004, clearly mentions that service utilized in or in relation to manufacture of final products is eligible as input services. Hence, credit on renting of immovable property is eligible for the appellants.
ii) RENT A -CAB Service
13. With regard to rent a cab service, it was submitted by the appellant that they have incurred expenses of transportation/rent-a-cab service for providing their output service and for rendering qualitative service which has a direct relation to the provision of their service and hence cannot be construed as a mere welfare measure and placed reliance on the following case laws:-
1. CCE Bangalore-I vs. Interplex Electronics India Pvt. Ltd - 2015 (039) STR 0578 Kar.
2. CCE NASIK Vs CABLE CORPORATION OF INDIA LTD. - 2008 (12) S.T.R. 598
I find that the contention of the appellant is correct since Rent-a-Cab service is used for transportation of employees to work. It has to be considered as being used for the provision of output service and for promoting the business as any facility given to the employees will result in greater efficiency and promotion of business. Hence, by following the decision of the Honble High Court of Karnataka referred supra, I allow the credit availed for the Rent-a-Cab service.
iii) CONSULTANCY SERVICES
14. As regards management consultancy service, the appellants submitted that they had provided expert guidance by conducting seminars in the area of sales, marketing and business promotion activities and consultancy support services by way of demonstration of capabilities of the company in rendering of service to the foreign clients, strategic support in finalization of price, delivery schedules and marketing strategies etc. I find that no business can be conducted without providing or equipping the employees with the basic strategies and legal planning. Hence, the appellant is very much eligible for refund of amount claimed on such management consultancy service.
iv) ANTECEDENT CHARGES
15. With regard to the antecedent charges, the appellants submitted that it is nothing but a part of man power recruitment service. Further he submitted that the appellants had to recruit qualified and skilled employees with proven integrity and antecedent verification through specialized agencies helps them in recruiting required manpower as per the specifications and technical requirement of the client.
16. I find that the recruitment of employees and their background verification is very essential in providing efficient and quality output. Hence the antecedent charges are in relation to their providing of output service and credit cannot be denied to the appellants. Reference was also invited to the decision in the case of CCE Hyderabad-IV Vs. Deloitte Tax Services India Pvt. Ltd - 2008 (11) S.T.R. 266 (Tri. - Bang.). In view of the above reasonings, I find that the appellant is eligible for the refund of the cenvat credit taken on Antecedent Charges.
v) HOUSE KEEPING and CLEANING SERVICES
17. With regard to the housekeeping and cleaning services, the appellants submitted that it involved the cleaning and up-keep of the premises and providing a dust-free atmosphere to protect the building and premises free from pests to ensure a safe and healthy atmosphere to its employees. I find that it is essential for a service provider to keep its premises clean and hygienic for the smooth running of its business and hence is in relation to their output service. Therefore, the credit on this service is eligible. Reliance was placed on the decision in the case of CCEx, Chennai vs. Rotork Control (India) Pvt Limited reported in 2010 (277) ELT 217.
vi) PROFESSIONAL CHARGES
18. I find that these charges were paid to Man Power Recruitment agents to identify the candidates suitable for employment with the appellant and these are very much covered under the definition of input service as provided under Rule 2(1) of CCR,2004.
vii) MEAL COUPON
19. With regard to the above service the appellants submitted that it was incurred for providing food to employees. The same cannot be categorized as mere staff welfare activity. They help in keeping the morale of the employees and boost productivity. I find that the submission of the appellants is not acceptable for the reason that meal coupon is one of a welfare activity for the employees and definition under Rule 2 (l) cannot be stretched too far to make the welfare activities also within the purview of the input service definition and hence the credit is not eligible for such services.
viii) DG HIRE CHARGES
20. With regard to the DG HIRE CHARGES, it was submitted by the appellant that for rendering of continuous service to their clients located abroad, continuous power supply was an essential requirement, therefore DG Hire Charges paid for operating of Diesel Generating sets at the premises of the appellant are very much eligible for refund.
ix) INSURANCE CHARGES
21. Further, with regard to the INSURANCE CHARGES paid to M/s. National Insurance Company Ltd., it was submitted that for risk coverage and up-keep of electronic systems and appliances installed in the premises of the appellant, they have availed the same. I find that the insurance was not availed for any personal benefits and was availed for the appellant's electronic systems and appliances which are in relation to their output service and hence is covered under the definition of input service as provided under Rule 2(l) of CCR 2004. Reliance is placed on the decision of this Tribunal in Final Order no 41321/2015 dated 01.10.2015 in the matter of M/s Sterilite Industries.
x) SUBSCRIPTION CHARGES
22. With regard to the SUBSCRIPTION CHARGES, I find that it is very much essential to keep abrest of up to date knowledge in the field of technological development and business which directly helps the growth and qualitative performance of the appellants company by subscribing to various associations. Hence the appellant is very much eligible for taking credit of such input service. Appellants also placed reliance on the decision in Allaince Global Services (I) (P) Ltd Vs CCE & ST Hyderabad II 2016 (42) STR 438 (Tri.Hyd).xi) DELIVERY FEE and CUSTOMS HOUSE AGENTS
23. Deliver Fee and Customs House agents services are very pivotal for the appellants services since they are engaged into export of services hence the credit cannot be denied to the appellants.
xii) SEWAGE TREATMENT
24. I also find that the learned appellate authority had also rejected the refund covered by certain invoices pertaining to maintenance of sewage treatment plant which were as per the statutory requirement imposed under the Water Consent Order issued by the Puducherry Pollution Control Committee in pursuant to Section 25 & 26 of the Water (Prevention and Control of Pollution) Act, 1974 and Rules. It has been made mandatory on the part of the appellant, to treat the domestic waste water in the Sewage Treatment Plant in accordance with the prescribed and fixed standards of the Pollution Control Authority and the treated water has been reused for toilet flushing and gardening. Such services are also very much essential for the appellant and hence, eligible for refund.
25. I find that the need to protect the environment and maintenance of sewage treatment had already been accepted by the Honble Supreme Court in the case of Indian farmers and Fertiliser Coop Ltd vs. CCE Ahmedabad, reported in 1996 (86) ELT 177 (SC) at para 9, it has held as follows:-
It is too late in the day to take the view that the treatment of effluents from a plant is not an essential and integral part of the process of manufacture in the plant. The emphasis that has rightly been laid in recent years upon the environment and pollution control requires that all plants which emit effluents should be so equipped as to rid the effluents of dangerous properties. The apparatus used for such treatment of effluents in a plant manufacturing a particular end-product is part and parcel of the manufacturing process of that end-product.
Therefore I find that the ratio laid down by the Apex Court is squarely applicable to the appellants case also and hence are eligible to refund of credit pertaining to the maintenance of sewage treatment plant.
xiii) AIR TRAVEL AGENT
26. I find that the services of the air travel agent was availed for making travel arrangements of employees to meet clients in connection with marketing and accordingly shall be eligible for refund.
xiv) CHARTERED ACCOUNTANT SERVICE
27. With regard to the Chartered Accountant service, I find that it is part of the auditing activity and is done to ensure accuracy of financial and other records which are vital for the business of the appellant. Further the same is a specified service in the inclusive part of the definition of input service.
xv) COMMERCIAL COACHING &TRAINING CHARGES
28. With regard to the Commercial coaching &Training Charges, I find that the services had been availed to train the recruited employees and further stated that Coaching and Training is very much covered in the inclusive part of the input servicedefinition in Section 2 (l) of the Finance Act 1994.
xvi) MANPOWER RECRUITMENT and SUPPLY AGENT
29. With regard to manpower recruitment and supply agent, reference was placed on the decision in Garware Polyster Ltd Vs. CCE Aurangabad 2012 (26) STR 215 (Tri. Mum.). credit was also denied by the LAA on the services of manpower recruitment and supply agent also which they had availed to secure skilled and qualified man power to perform the output services. Accordingly, credit is allowed for the same and shall be entitled for refund.
xvii) LEGAL CONSULTANCY SERVICES
30. With regard to the credit availed on the legal consultancy services, I find that the consultants had provided expert legal advice in relation to finalizing Customer Contracts/Business agreements, Taxation matters, Settlement of Disputes and Arbitration matters which is essential for providing output service. Further the same is a specified service in the inclusive part of the definition of input service. Hence, credit is allowed.
xviii) GTA SERVICE and TECHNICAL INSPECTION Services
31. With regard to the GTA service and Technical Inspection services, I find that both the services play significant role in the export of services and hence, the credit availed by appellant is very much in order and consequently appellant would be very much eligible for the refund.
32. It is evident that without availing all these services, the appellant would not be in a position to provide the output service of E Publication of Books. Absence of it would adversely affect the provision of output service. Hence, such services are directly related to output service and fully satisfy the definition of input service as given in Section 2 (l) of the CCR, 2004, and accordingly shall be eligible for refund (except for meal charges/food coupon).
33. Now I take up the second issue in detail. Refund has been denied on account of the following procedural aspects:
i) Non availability of registration details of input service providers
ii) Description of input service not mentioned properly
iii) Service tax not claimed in invoices
i) Non availability of registration details of input service providers
34. As regards denial of credit on account of non availability of registration details of input service providers, it is seen from the order of the Ld. Commissioner(Appeals), that a credit of Rs.55,578/- had been rejected for the reason that the invoice copies did not contain the registration number of the service provider. The learned counsel for the appellants submitted that the registration details of such input service providers which had been collected from the CBEC official website, had been provided before the Commissioner (Appeals). On perusal of the documents, it is seen that the registration details of all such input service providers were available and therefore the rejection of refund on the ground of non availability of registration number in the invoice is not maintainable and consequently refund amounting to Rs.55,578/-covered by such input service invoices are very much allowable.
35. In view of the same, the impugned O-in-As to the extent of rejection of refund, on grounds of non availability of service tax registration numbers, is not maintainable and the same is liable to be set aside and appeal is liable to be allowed.
ii) Description of input service not mentioned properly
36. With regard to the rejection of refund covered by certain invoices on grounds that description of input service not mentioned properly, it is seen that the appellant gave clear evidences before Commissioner (Appeals) explaining nature of service rendered by such input service providers and also justified the essentiality of such input services
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in rendering their output services. In view of the same, the rejection of refund of Rs. 1,18,427/- covered by such input service invoices are totally incorrect and the impugned O-in-As to the extent of rejection of such amount is not maintainable and the same is liable to be set aside and appeal is liable to be allowed. iii) Service tax not claimed in invoices 37. As regards the rejection of refund of Rs. 78,508/- on the ground that service tax was not claimed in invoices, the appellant had proved with documentary evidences, that for such invoices they had made service tax payments under reverse charge and had also produced copies of invoices and accordingly they were very much eligible for refund. In view of the same, the rejection of refund of Rs. 78,508/- covered by such input service invoices are totally incorrect and the impugned O-in-As to the extent of rejection of such amount is not maintainable. 38. I find that the learned appellate authority had disallowed the aforementioned credits on the grounds that the said input services did not add any value towards the activity of manufacture or running of business of the appellant and such input services were not specified in the inclusive part of input service definition. The Commissioner (Appeals) had placed heavy reliance on the tests laid down in Maruti Suzuki case by the Honble Apex Court and on Sundaram Brake Linings Tribunal ruling. 39. I observe that the reliance placed on the decision of the Apex Court in Maruti Suzuki case law and the Sundaram Brake linings case law is inapplicable since the decision in Maruti Suzuki is no longer a good law in view of the decision of the larger Bench of the Honble Supreme Court in the case of Ramala Sahkari Chini Mills Ltd vs. CCEx MeerutI reported in 2016 (334) ELT 3 (SC) and also the decision of this Tribunal in Sundaram Brake Linings is reversed by the Honble High Court of Madras in CMA No. 314/2011 dated 13.02.2015. 40. Accordingly, the Appellant shall be entitled for CENVAT Credit and consequent credit in accordance with the principles laid down by the Supreme Court in the case of Ramala Sahkari Chini Mills Ltd. In view of the foregoing, I find that the appellant are eligible for the refund (except for meal voucher) and the impugned order holding the contrary is set aside. All the appeals are allowed in the above terms.