Hindustan Coca Cola Beverage Pvt. Ltd. vs Commr. of C. Ex.

@DELETEUPPERDATA

Tarun Agarwala, J.—This is an appeal under Section 35-G of the Central Excise and Salt Act (hereinafter referred to as "the Act"). The appellant availed Cenvat Credit on certain services. The adjudicating authority issued a show cause notice dated 6-6-2007 to the appellant to show cause as to why he should not disallow the Cenvat credit availed by the appellant on certain services, on the ground that there was lack of proper documents as prescribed under Rule 9(1) of the Cenvat Credit Rules, 2004 (hereinafter referred to as the "Rules") and that the services were not directly or indirectly used in or in relation to manufacture. The appellant submitted a reply submitting that the advertising expenses were incurred for sales promotion of the final products and consequently, the same was covered under the definition of "input service". In respect of bus transportation service, the appellant submitted that the same was utilised for official work or for transporting the staff to the factory and back and was therefore integrally connected with the business of the appellant.

The adjudicating authority, after considering the matter and examining the documents accepted the plea of the appellant and dropped the proceedings. The adjudicating authority held, that all the documentation required under Rule 9(1) of the Rules was properly maintained and was duly produced by the appellant and that the services on which Cenvat credit was being taken by the appellant was directly connected with the manufacturing and business activities of the appellant and was within the purview of the definition of "input service" as defined under Rule 2(1) of the Rules.

The department, being aggrieved, filed an appeal contending that bus service was not covered under the definition of motor cab, inasmuch as the capacity of the bus was more than six passengers and, therefore, service tax was not payable on bus service and consequently, Cenvat credit was not admissible. The department, however, admitted that the appellant had used the bus for its staff. In respect of event management service, the department took the ground that this outdoor activity was not organized within the factory premises of the appellant and therefore, such activity cannot be co-related with the manufacturing process and, consequently, no Cenvat credit on this service could be provided.

The appellate authority allowed the appeal holding that the bus was utilized for carrying and dropping the staff of the appellant, but was not a motor cab and, consequently, Cenvat credit could not be allowed. The appellate authority also held that, in respect of event management, the activity was being organized outside the manufacturing premises and, consequently, was not an input service.

The appellant, being aggrieved by the appellate order, preferred a second appeal before the Tribunal contending that the activity of sales promotion cannot be carried within the factory premises and that it was wrong to contend that sales promotion service was not an input service. The appellant further submitted that the bus was being used to transport the staff, which was part of the integral business and, consequently, Cenvat credit was to be given on such expenses.

The Tribunal dismissed the appeal of the appellant and disallowed the Cenvat credit to the appellant on bus transportation and event management service. The Tribunal held that no evidence has come on record to indicate that the bus transportation related to transportation of staff, and in the absence of any evidence, no Cenvat credit could be given. The Tribunal also held that no evidence such as posters, photographs or advertisement showing that such event had taken place has been filed to indicate that the event management had resulted in promotion of sale of its products. The Tribunal held that in the absence of any evidence being brought on record, no Cenvat credit could be given.

The appellant, being aggrieved, filed the present appeal, which was admitted on the following substantial questions of law:

(a) Whether the Tribunal could have gone beyond the case of the Department itself by doubting a fact for the first time and recording a finding on that fact without giving the appellant any opportunity of adducing evidence on the fact in its favour?

(b) Whether the definition of ''input service'' under Rule 2(L) of Cenvat Credit Rules is confined to services availed within the manufacturing premises and the appellant is entitled to avail Cenvat credit of Rs. 235/- on Event Management Services organized in connection with sales promotion activity?

(c) Whether the finding of the Tribunal that there was no evidence to show that the buses on which Cenvat credit had been claimed, were used for transportation of workmen to its factory is ex-facie perverse and against the invoice already on record before the Tribunal and as such, liable to be reversed and the claim of the Cenvat credit made by the appellant on bus transportation services is liable to be allowed?"

We have heard Sri Rahul Agarwal, the learned counsel for the appellant and Sri R.C. Shukla, the learned counsel for the department.

Having heard the learned counsel for the opposite parties at some length, we find that the Tribunal has gone beyond the admitted case of the parties before the authorities below and has rejected the appeal on the ground which was not in dispute.

Insofar as bus transportation is concerned, the department''s own case was that the bus was being used to transport the employees of the appellant and contended that Cenvat credit could only be given to motor cab and could not be given to a bus since more than six passengers travel on a bus. The use of the bus by the appellant for transportation of its employees was not in dispute. The Tribunal has gone beyond the pleadings in rejecting the appeal of the appellant, on the ground that no evidence was filed to show that the bus was actually being used to ferry the employees of the appellant.

Similarly, Cenvat credit was denied by the appellant, on the ground that the expenses were incurred outside the factory premises. There was no dispute before the lower appellate authority that the event management programme had not occurred and expenses were not incurred by the appellant. The question of filing proof of such expenses before the Tribunal consequently did not arise. The Tribunal committed a manifest error in rejecting the appeal of the appellant, on the ground that no proof of the event taking place, had been filed by the appellant, such as poster, photograph and advertisement. In the event the Tribunal wanted to satisfy itself with regard to the fact as to whether the bus was being used to ferry the employees of the appellant or wanted evidence as to whether the event had actually taken place, in that event, an opportunity should have been given by the Tribunal to the appellant to produce such evidence before the Tribunal. Since the same was not given, the order of the Tribunal cannot be sustained and is quashed on this ground itself. The question No. 1 is allowed in favour of the appellant and against the department.

In the light of the aforesaid, it is not necessary for us to dwell into the remaining questions of law so framed by this Court since, we are of the opinion that the Tribunal has to decide the matter afresh.

We, accordingly, allow both the appeals and remit the matter to the Tribunal to again decide the matter afresh in the light of the observations made aforesaid. In the circumstances of the case, parties shall bear their own cost.