1


                                          In the High Court of Judicature at Madras

                                                     Dated : 15.11.2018

                                                          Coram :

                                        The Honourable Mr.Justice T.S.SIVAGNANAM

                                                            and

                                       The Honourable Mr.Justice N.SATHISH KUMAR

                          Civil Miscellaneous Appeal Nos.2627, 2632, 2633 and 2639 to 2642 of 2018


                      The Commissioner of Central
                      Excise & Service Tax, Large Tax
                      Payer Unit, Chennai-101.                                     ...Appellant
                                                             Vs
                      1.M/s.Brakes India Ltd., Chennai-2

                      2.The Customs, Excise and Service
                        Tax Appellate Tribunal, South Zonal
                        Bench, Chennai-6.                                          ...Respondents

APPEALS under Section 35G of the Central Excise Act, 1944 against the common final order Nos.40090 to 40096 of 2016 in Appeal Nos.E/40427 to 40433/2014 on the file of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai dated 25.1.2016.

For Appellant : Mr.A.P.Srinivas For Respondent-2: Mr.Clint Li Johny for Mr.K.Vaitheeswaran COMMON JUDGMENT (Judgment was delivered by T.S.SIVAGNANAM,J) We have heard the learned counsel on either side. http://www.judis.nic.in  2

2. These appeals by the Revenue under Section 35G of the Central Excise Act, 1944 are directed against the common order passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai (for brevity, the Tribunal) dated 25.1.2016 in Appeal Nos.E/40427 to 40433/2014 vide final order Nos.40090 to 40096 of 2016.

3. The following substantial question of law arises for consideration in these appeals :

                                         “Whether     an   activity      carried    out     in
                                  compliance    of   statutory   requirement        under   a

particular Act alone would make the said activity/ service as input service under Rule 2(1) of the CENVAT Credit Rules, 2004 especially when such service/activity has no nexus in or integral connection to the manufacture of final product ?”

4. The assessee's case before the Tribunal was that the plantations, which were established by them, were erroneously construed as gardening services provided when the assessee had established the plantation and greenery in the campus on account of the direction issued by the Appellate Authority under the provisions of the Water (Prevention and Control of Pollution) Act, 1974. In terms of the said direction, the assessee was required to maintain a green belt area comprising of 1000 trees per acre of land and effective usage of water among other conditions.

5. The question was as to whether the assessee was entitled to avail the CENVAT credit in this regard.

http://www.judis.nic.in  3

6. The Tribunal referred to the decision of the Division Bench of this Court in the case of CCE, LTU, Chennai Vs. Rane TRW Steering Systems Ltd. [reported in (2015) 39 STR 13]. In the instant case also, a similar issue arises i.e whether the housekeeping and landscaping services should be included under the term 'input services' as defined under Rule 2(l) of the CENVAT Credit Rules, 2004. The Division Bench took note of the decision of the Karnataka High Court in the case of Commissioner Vs. Millipore India Pvt. Ltd. [reported in (2012) 26 STR 514] wherein it was held that the Environmental Laws expect the employer to keep the factory without contravening any of those laws, that the concept of corporate social responsibility is also relevant and that when the employer spends money to maintain their factory, to discharge a statutory obligation, in an eco-friendly manner, certainly, the tax paid on such services would form part of the costs of the final products. Therefore, the Court held that the Tribunal was right in holding that the service tax paid in all those cases would fall within the definition of 'input services' and that the assessee is entitled to the benefit thereof. Accordingly, the appeal filed by the Revenue was dismissed.

7. The decision in the case of Millipore India Pvt. Ltd., was taken note of by the Division Bench of this Court in the case of Rane TRW Steering Systems Ltd., and it was held that when the employer spends money to maintain factory premises in an eco-friendly manner based upon the directives issued by the Statutory Authorities, the tax paid on such http://www.judis.nic.in  4 T.S.SIVAGNANAM,J AND N.SATHISH KUMAR,J RS services would form part of the costs of the final product, that the same would fall within the ambit of 'input services' and that the assessee is entitled to claim the benefit. In our considered view, the Tribunal rightly decided the issue in favour of the assessee and we find no grounds to entertain the above appeal.

8. Accordingly, the above appeal filed by the Revenue is dismissed and the substantial question of law framed is answered in favour of the assessee. No costs.

15.11.2018 Internet : Yes To The Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, No.26, Sastri Bhavan Annexe Building, Haddows Road, Chennai-6.

CMA.Nos.2627, 2632, 2633 and 2639 to 2642 of 2018 http://www.judis.nic.in