IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal No. E/42146/2014
(Arising out of Order-in-Appeal No.136/2014-CE dated 16.6.2014 passed by the Commissioner of Central Excise (Appeals), Salem)
M/s. ITC Ltd. Vs. CCE, Salem
Shri R. Parthasarathy, Advocate for the Appellant
Shri B. Balamurugan, AC (AR) for the Respondent
CORAM- Hon’ble Shri D.N. Panda, Judicial Member
Date of Hearing / Decision: 01.01.2016
Final Order No. 40007/2016
Learned counsel says that maintenance of health of the factory workers where they work in hazardous situation is an essentiality both under statute as well as requirement of the conditions of the employment. When the statute prescribes that health hazards is to be removed controlling pollution as well as providing safety measure, the expenditure incurred thereon suffering service tax cannot be said to be alien to the manufacturing activity.
2. The submission of learned counsel does not appear to be unreasonable when the facts and circumstances of the case is seen. Employees were working in a situation calling for medical necessity and safety, controlling of pollution and health hazards. Law need not necessarily codify each and every item as input used in or in relation to manufacture. The basic principle being use of input in or in relation to manufacture, such test is to be applied to consider allowance of CENVAT credit of the service tax paid on the input utilized and having relevance to the output manufactured. The present case is within such parameter of law for which the appellant deserves consideration.
3. Revenue supports adjudication.
4. In view of the reasoning above, service tax paid in respect of health care service provided to the factory workers shall be admissible as CENVAT credit and the appellant succeeds on this count.
5. So far as CENVAT credit claimed on guest house is concerned, it appears that the same has no relevance to output service for which appellant shall not get any CENVAT credit of service tax if any on such count.
6. Submission of the learned counsel is that when the interpretation of law was in question, extended period of limitation should not be attracted.
7. The appellant having succeeded on merit as above, there shall be no penalty on the health service. So far as guest house maintenance service is concerned, there appears no deliberate intention of appellant to cause any evasion. Therefore, penalty on such issue is also waived.
8. In the result, appeal is partly allowed to the extent indicated above.
(Dictated and pronounced in open court)