1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY, NAGPUR BENCH, NAGPUR CENTRAL EXCISE APPEAL No.9 of 2010 (Manikgagh Cement, Gadchandur .vs. The Commissioner of Central Excise, Nagpur) ------------------------------------------------------------------------------------------------------------------------------- Office Notes, Office Memoranda of Coram, appearances, Court's orders Court's or Judge's order of directions and Registrar's orders ------------------------------------------------------------------------------------------------------------------------------------ Shri H.V. Thakur, Advocate for the appellant, Shri S.K. Mishra, Advocate for the respondent. CORAM:- J.P. DEVADHAR AND A.B. CHAUDHARI, JJ. DATED :- 11 th OCTOBER, 2010 1. Challenging the the order of Customs, Excise and Service Tax Appellate Tribunal, Mumbai dated 03-11-2009, the appellant- Assessee has filed this appeal under Section 35-G of the Central Excise Act, 1944. According to the assessee, the following substantial question of law arises out of the order of the Tribunal : “Whether the services such as construction, repairs and maintenance of buildings, manpower recruitment (recruitment of security guards) and cleaning services availed in the appellant company's staff residential colony adjoining its cement factory can be said to be 'input service' within the meaning of Rule 2(1) of the CENVAT Credit Rules, 2004 and as such whether the appellant is entitled to avail CENVAT Credit on the service tax paid on the said service ?” 2. The assessee is engaged in the business of manufacture of cement. The assessee had established a manufacturing plant at 2 Gadchandur. Adjacent to the factory, the assessee had set up a residential colony for the benefit of the employees working in the factory. The dispute in the present case is, whether, the assessee is entitled to take credit of service tax paid on services such as construction, repairs and maintenance of building, manpower recruitment (recruitment of security guards) and cleaning services provided at the Company's staff residential colony as “input service” within the meaning of Rule 2(1) of the CENVAT Credit Rules, 2004 and utilize the same in paying excise duty/CENVAT on clearance of the cement manufactured by the assessee ? 3. The Tribunal following the decision of the Hon'ble Apex Court in the case of Maruti Suzuki Ltd. Vs. Commissioner of Central Excise, Delhi reported in 2009 (240) ELT 641, held that the assessee had not established nexus between the services rendered and the business activity carried on by the assessee and therefore, the credit of service tax was not allowable. 4. Learned Counsel for the appellant-assessee submitted before us that the services rendered by the assessee at the staff residential colony was an activity carried on in the course of manufacturing cement which was the business of the assessee and hence entitled to avail credit of service tax paid on the services rendered. He submitted that the decision of the Apex Court in the case of Maruti 3 Suzuki Ltd. Vs. Commissioner of Central Excise, Delhi (Supra) is not applicable to the facts of the present case. 5. In our opinion, the fact that the assessee had incurred expenditure by rendering services at the residential colony established for the benefit of the employees of the assessee and the fact that the said expenditure was allowable expenditure under the Income Tax Act is not a decisive factor for allowing credit of the service tax paid by the assessee. Applying the ratio laid down by the Apex Court in the case of Maruti Suzuki Ltd. Vs. Commissioner of Central Excise, Delhi (Supra) we hold that unless the nexus between the services rendered with the business carried on by the assessee is established, credit of service tax cannot be availed. In the present case, no doubt the services were rendered at the residential colony while carrying on the business of the assessee but such services were not rendered in relation to the business of the assessee. Thus there being no nexus between the services rendered and the business carried on by the assessee, and the service rendered was not integrally connected with the business of the assessee, the Tribunal was justified in denying the credit of service tax paid by the assessee. 4 6. In the result, we see no merit in the appeal and the same is hereby dismissed. No order as to costs. JUDGE JUDGE pma