Essel Propack Ltd. Versus Commissioner of CGST, Bhiwandi
Central Excise
2018 (9) TMI 247 – CESTAT MUMBAI – 2018 (362) E.L.T. 833 (Tri. – Mumbai)
CESTAT MUMBAI – AT
Dated:- 31-8-2018
Appeal No. E\/85322\/2018 – Order No. A\/87216 \/ 2018
Central Excise
Hon'ble Dr. Suvendu Kumar Pati, Member ( Judicial )
\nShri Prasad Paranjape, Advocate for the appellant
\nShri D.S. Chavan, Supdt. ( AR ) for the respondent
\nORDER
\nDenial of cenvat credit to the appellant against payment made to a third agency i.e. M\/s. Shree Kalamadevi Charitable Trust for imparting training to students of underprivileged section of society in discharge of corporate social responsibility is challenged before this Tribunal.
\n2. Facts given arise to this appeal is that appellant M\/s. Essel Propack Ltd. situated in village Vadavali at Thane District manufactures multi layer plastic laminates falling under chapter heading 39201012 & 39201012 of the Central Excise Tariff Act, 1985 and it has been availing cenv<\/p>\n
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Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n es relating to business as provided under the definition of input services given in Rule 2(l) of the Cenvat Credit Rules 2004 and the services of students were utilised in relation to manufacturing business of the appellant since they were assigned duties to prepare data sheet, maintain production log book, support preventive maintenance of machines, and assist production operators and in the process, they learn the nature of job that made them eligible to become future workers in factories. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n expenses were claimed by the trust and the same was reimbursed that would not fulfil the requirement of input service availed by the appellant. Ld. AR of the department also pointed out that Section 135 of the Companies Act effective from 01.04.2014 on mandatory CSR activities to be discharged by the company pertains to the period not covered under the period of dispute which was between October 2009 and November 2010 and therefore the contention of the ld. Advocate for the appellant that such obligation of CSR activity was discharged in compliance to statutory obligation is not to be accepted. In citing judicial decisions on these issues and highlighting the judgment reported in 2012 (26) STR 514 (Kar) in the case of Millipore India Pvt. Ltd. and 2010 (20) STR 456 in the case of Manikgarh Cement, ld. AR submitted that credit of service tax paid on input services for CSR were not covered under Cenvat Credit Rules for which the order passed by the Commissioner (Appeals) needs no interfe<\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n s globally. The concept of CSR has evolved and now encompasses all related concept including corporate sustainability since EC defines CSR as the responsibility of enterprises arose for their impact on society who should have in place a process to integrate social, environmental, ethical human rights and consumer consciousness into the business operation and core statute in close collaboration with their stake holders. The World Bank CST defines CSR as “the continuing commitment by business to contribute to economic development while meeting the quality of life in the work place and their family as well as of the community and society at large.” Similarly, United Nations IDO also defines it as a management concept whereby companies integrate social and environmental concerns in their business operations and interaction with stakeholders (not only with share holders). Therefore, CSR is generally understood as being the way through which the company achieves a balance of economic, enviro<\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n nce to operate companies as government licenses would not suffice such smooth operation. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ond, no direct service was availed by the appellant from the said Kalama charitable Trust as it had made the expenditure itself and sought reimbursement from the appellant. Third, the same is not in conformity to the Rules meant for raising of invoice as contemplated under Rule 9(2) besides being outside the scope of input service defined under Rule 2(l) of the Cenvat Credit Rules 2004 for which the credit as referred above was inadmissible. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n activity was not carried out, the appellant's activity of manufacturing and sale of excisable goods would have continued. In placing reliance on the decision reported in Millipore India Pvt. Ltd. (supra) and decision of the Bangalore Tribunal in Mangalore Refinery and Petrochemicals Ltd. case reported in 2015 (10) STR 1093 that distinguished the Mangalore Refinery case. He thrust his emphasis on the copy of the agreement made between the appellant and the M\/s. Shree Kalamadevi Charitable Trust about which reference is also made in the orderin- original that although the Trust and the company specifically agreed with the training being provided by the company, it was purely towards CSR initiative driven by the company (para 13 at page 57 of the appeal paper book) and therefore no separate stand can be taken by it that students were engaged in the manufacturing activity. It pertains to the dispute for the year 2009-10. Therefore in the instant case without any statutory obligation, the <\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n rovision (may not be in the form of statutory provision) regarding discharging of CSR activities by the companies as it says that new guidelines issued by the DPE in April 2013 would replace two existing separate guidelines on CSR and sustainable development issued in 2010 and 2011 respectively. Therefore sustainability is dependent on CSR without which companies cannot operate smoothly for a long period as they are dependent on various stake holders to conduct business in an economically, socially and environmentally sustainable manner i.e. transparent and ethical. Hence in my considered view, CSR which was a mandatory requirement for the public sector undertakings, has been made obligatory also for the private sector and unless the same is to be treated as input service in respect of activities relating to business, production and sustainability of the company itself would be at stake. The relied upon case laws, which have equated CSR only with charity and not covered the other aspec<\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" Essel Propack Ltd. Versus Commissioner of CGST, BhiwandiCentral Excise2018 (9) TMI 247 – CESTAT MUMBAI – 2018 (362) E.L.T. 833 (Tri. – Mumbai)CESTAT MUMBAI – ATDated:- 31-8-2018Appeal No. E\/85322\/2018 – Order No. A\/87216 \/ 2018Central ExciseHon'ble Dr. Suvendu Kumar Pati, Member ( Judicial ) Shri Prasad Paranjape, Advocate for the appellant Shri D.S. Chavan, Supdt. … Continue reading “Essel Propack Ltd. Versus Commissioner of CGST, Bhiwandi”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-13556","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/13556","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13556"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/13556\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13556"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13556"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13556"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n4. Ld. Counsel for the appellant Shri Prasad Paranjape also pointed out with reference to judicial decision that the concept of business is not static and over the period of time, the expression involves complete care and concern for the society at large and the people of the locality in which business is located in particular for which the term activities relating to business is of wider ramification and corporate social responsibility is within its ambit that would cover rule 2(1) of the Cenvat <\/p>\n
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\n ii) It attracts and boosts employees and encourages them to participate by enhancing employees moral that they all belong to the company.
\n iii) Companies have invested in CSR to enhance community livelihood by incorporating them in their supply chain. This has not only benefited communities and increased their in complacency but has provided the company with additional or secure supply of raw material.
\n iv) It enhances the reputation of company, its goodwill by creating a positive image and branding benefits that continue to exist for companies who operate CSR programmes.
\n6.4. The essence of the above discussion would indicate that CSR is not a charity any more since it has got a direct bearing on the manufacturing activity of the company which is largely dependent on smooth supply of raw materials even from remote location or tribal belts (that requires no resistance in the supply chain f<\/p>\n
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\n9. The stand of the department is reiteration of the order-in-original passed by the Jt. Commissioner of Central Excise, Thane I that was also affirmed by the Commissioner (Appeals) Thane on the ground that the reimbursement of expenses is nothing but financial assistance in the form of charity made to Kalama Charitable Trust. Reliance has been placed on the decision of the CESTAT Chennai bench in 2011 (268) ELT 86 (Tri-Chennai) in holding such finding by the first appellate authority and justification of invocation of extended period was made by <\/p>\n
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