CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
West Zonal Bench, Ahmedabad

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Appeal No.		:	E/1052/2011
					
[ Arising out of OIA-BC/180/SURAT-II/2011 dtd 26.7.2011 Passed by Commissioners of Central Excise, Customs and Service Tax-SURAT-II ]  	

M/s Gujarat State Fertilizers & 
Chemicals Ltd					  -	Appellant(s)

			Vs.

Commissioners of Central Excise, 	-	Respondent(s)

Customs and Service Tax-SURAT-II Represented by For Assessee : Shri Willingdon C, Advocate For Revenue : Shri G P Thomas, Authorised Representative For approval and signature :

Mr. H.K. Thakur, Hon.ble Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes CORAM :

Mr. H.K. Thakur, Hon.ble Member (Technical) Date of Hearing / Decision : 12/6/2015 ORDER No. A/10823 / 2015 dtd 12/6/2015 Per : Mr. H K Thakur;

This appeal has been filed by the appellant against OIA No dt 26.7.2011 under which the first Appellate Authority has upheld OIO dt 17.3.2011 passed by the Adjudicating Authority. Both the lower authorises have held that services provided by the Male Nurses at the factory and colony of the appellant have no nexus with the manufacturing activity and hence Cenvat Credit of Rs 1,52,583/- has been denied to the appellant under Rule 2(l ) of the Cenvat Credit Rules 2004. Shri Wellington C, Advocate, appearing on behalf of the appellant argued that as per Section 45 of the Factories Act 1948 appellant is required to maintain an ambulance and trained medical and nursing staff in the factory for certain emergencies/facilities. He has also made the Bench go through Section 92 of the Factories Act 1948 and argued that in case statutory medical facilities are not provided in the factory then the appellant is liable to penalties under the Factories Act 1948. The Learned Advocate also relied upon Rule 71 of the Gujarat Factories Rules 1963. According to these rules also every factory should have an ambulance room which should be under the charge of a qualified medical practitioner. It was his case that the services required to be statutorily provided under the Factories Act and rules made there under are admissible as input credit under Rule 2 (l)of the Cenvat Credit Rules as services provided in relation to manufacture. The Learned Advocate, relied upon the following case laws to argue that analogous activities like Pollution Control activities and Canteen Services has also been held by the High Court to eligible for Cenvat Credit.

i) CCE, Ahmedabad I vs Ferromatik Milacron India Ltd  2011(21)STR.8(Guj)

ii) CCE, Bangalore II vs Millipore India Pvt Ltd  2012(26)STR.514(Kar.)

2. Shri G P Thomas, Authorised Representative, appearing on behalf of the Revenue strongly defended orders passed by the lower authorities and argued that the medical facilities of the Male Nurse are not only provided in the factory but are also provided in the residential colony of the staff. It was his case that such services provided to the appellant has no nexus to the manufacturing activity and that Cenvat Credit has been correctly denied by the First Appellate Authority.

3. Heard both sides and perused the case records. It is the case of Revenue that services of Male Nurses for the welfare of the employees has no nexus to the manufacturing activity, especially when such services are also provided in the residential staff colony. However, on a special enquiry from the Bench as to what evidence is available with the Revenue to indicate that such services only provided in the residential colony, Learned Authorised Representative only referred to the bald statements made in the show cause notice and the adjudication order. In the absence of any documentary evidence it cannot be said that such services of Male nurse are provided only in the residential colonies. On the contrary, as per the provisions contained under Section 45 of the Factories Act 1948 read with Gujarat Factories Rules 1963, it is obligatory on the part of a specific manufacturer to maintain first Aid Appliances and ambulance alongwith trained medical staff to take care of certain situations. Once the facility is required to be provided statutorily, it cannot be said that the same is not be in relation to manufacture. Similar views have been taken by the courts in relation to Pollution Control Activity where these services are required to be provided statutorily under the Pollution Control Act and the Factories Act. On this issue jurisdictional High Court while allowing credit with respect to Canteen Services in the case of CCE, Ahmedabad I vs Ferromatik Milacron India Ltd [2011(21)STR.8(vvj)] has taken a view that Cenvat Credit on Canteen Service is admissible. Para 6 of this case law is relevant and is reproduced below:

 6.?As noted hereinabove, under the provisions of Section 46 of the Factories Act, it is mandatory for the employer to provide canteen services to the staff. Thus, provision of canteen services is a statutory requirement. Provision of canteen services being indispensable, it is incumbent on a manufacturer of goods, to provide the same if he desires to run his factory. In view of the definition of input service which means any service used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products, the input service does not have to used directly in the manufacture of final products, it may be a service which is only indirectly used in relation to the manufacture of final products. In the circumstances, canteen services which are indispensable in relation to manufacture of the final products would certainly fall within the ambit of input service as defined under the Rules.

4. Similarly, in the case of CCE vs Millipore India Pvt Ltd  2012(26)STR.514, Karnataka High Court has held as follows in Para 7 with respect to Pollution Control Activities, which is reproduced below:

 7.?That apart, the definition of input services is too broad. It is an inclusive definition. What is contained in the definition is only illustrative in nature. Activities relating to business and any services rendered in connection there- with, would form part of the input services. The medical benefit extended to the employees, insurance policy to cover the risk of accidents to the vehicle as well as the person, certainly would be a part of the salary paid to the employees. Landscaping of factory or garden certainly would fall within the concept of modernization, renovation, repair, etc., of the office premises. At any rate, the credit rating of an industry is depended upon how the factory is maintained inside and outside the premises. The Environmental law expects the employer to keep the factory without contravening any of those laws. That apart, now the concept of corporate social responsibility is also relevant. It is to discharge a statutory obligation, when the employer spends money to maintain their factory premises in an eco-friendly, manner, certainly, the tax paid on such services would form part of the costs of the final products. In those circumstances, the Tribunal was right in holding that the service tax paid in all these cases would fall within the input services and the assessee is entitled to the benefit thereof. In that view of the matter, we do not see any infirmity in the order passed by the Tribunal. Accordingly, the substantial questions of law framed in this appeal are answered in favour of the assessee and against the revenue. The appeal is dismissed.

5. The ratio laid down by the above relied upon case laws support the view that Cenvat Credit with respect to medical facilities provided statutorily under the Factories Act 1948 will be admissible. In view of the above observations, appeal filed by the appellant is allowed.

(Dictated and pronounced in the Court) (H.K. Thakur) Member (Technical) swami ??

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