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2019 (7) TMI 330 - AT - Service TaxInput Credit - Works Contract services - Composition scheme - Appellant submits that they were given separate contracts for supply of transformer as well as erection and commissioning of same. In purchase order also both the values are appearing separately - HELD THAT:- Appellant has supplied the transformer under separate contract on payment of central excise duty and the erection, commissioning of transformer was under separate contract. When the value of both the activity is separately shown, both the activities cannot be clubbed to make it taxable under the Works contract composition scheme. The revenue has nowhere disputed the payment of central excise duty on transformer and therefore once excise duty payment is made on the transformer, the Appellant is eligible for availing credit of cenvat charged on the inputs used in manufacture of Transformers. The inputs used for manufacture of transformer are not inputs for execution of works contract. There is no allegation that the Appellant has taken cenvat credit of duty paid on Transformer which was erected/ commissioned by them - Hence the demand of cenvat against the Appellant is absolutely illegal. Valuation - inclusion of value of transformer which is not used/ consumed in providing service - HELD THAT:- Transformer was not used in execution of works contract but it itself was installed/ commissioned and hence there is no meaning of including the value of transformer in value of works contract service. The value of any material which is being used in providing the services can be included. The transformer is not used/ consumed in providing service so as to include its value in assessable value of Works contract. Further even assuming so prior to 06.07.2009, for the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007, there was no requirement of including the value of free issue of material used for carrying out the works contract. Appeal allowed - decided in favor of appellant.
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