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Commissioner of Central Excise, Indore Versus M/s Kehems Engineering Pvt Ltd, M/s Kehems Engineering Pvt Ltd Versus Commissioner of Central Excise, Indore

2015 (8) TMI 640 - CESTAT NEW DELHI

Erection, Installation and Commissioning Service - installation of HVAC systems (air conditioning systems) - Works contract service - Date of taxability of service - Held that:- The later circular makes it absolutely clear that the scope of ECIS was expanded by including specified installation services such as installation of air-conditioning including related pipe work, duct work and metal sheet work. Although Board circular is not binding on the quasi-judicial authorities, it is clear that the .....

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covered under clause (i) and as clause (i) covers everything covered by the definition of ECIS prior to 16.06.2005. it was outside the scope thereof - when, clause (i) of ECIS definition with effect from 16.06.2005 covered everything which was covered by definition of ECIS prior to 16.06.2005. it has to be held that what is contained in clause (ii) of the ECIS definition was not covered under the ECIS definition prior to 16.06.2005. - impugned demand under ECIS which pertains to the period prior .....

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D/06-07, dated 31.01.2007 only in respect of demand of ₹ 20,44,221/-, confirmed under "Erection, Installation and Commissioning Service" (ECIS) in respect of HVAC systems (air conditioning systems) installed by the appellant in the premises of various customers. The Commissioner (Appeals) upheld the said demand, but set aside the penalty on the ground that there was enough scope for a doubt regarding levy of service tax itself with reference to ECIS based on Work Order involving .....

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period, which is 01.07.2003 to 31.03.2005, the service was not covered under the scope of ECIS. 3. Ld. Departmental Representative, on the other hand, stated that (i) the service rendered was covered within the main part of the definition as it existed prior to 16.06.2005 in Section 65 (39a) ibid as the appellant did the installation and commissioning of a plant and (ii) that the service rendered under a works contract was vivisectable as has been held by the Larger Bench of the CESTAT in the c .....

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bid. 5. We have considered the contentions of both sides and have also perused the various contracts under which the service was rendered to various service recipients. It is an admitted fact that these contracts are in the nature of works contract in-as-much-as they involved supply of goods also. As regards the contention of the appellant/assessee that works contract service came into existence only with effect from 01.06.2007 and therefore the service rendered under works contract was not liab .....

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prior to 01.06.2007 if the service inherent in the works contract was a taxable service is sufficient to sustain the impugned Order-in-Appeal as far as dropping the penalty under Section 78 ibid is concerned specially when the appellant had taken the plea of non-taxability of works contracts prior to 01.06.2007 before the primary adjudicating authority, In the case of Continental Foundation Jt. Venture Vs. CCE, Chandigarh-I [2007 (216) ELT 177 (SC)], the Supreme Court has also upheld the view th .....

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8 ibid are identical. As the Show Cause Notice in this case was issued on 19.07.2005, part of the impugned demand (which covers the period 01.07.2003 to 31.03.2005) is also hit by time bar. 6. We now come to the appellant's/assessee's contention that installation of air-conditioning including related pipe work, duct work and sheet metal work became liable to service tax under ECIS only with effect from 16.06.2005. In this regard, it will be useful to reproduce the definition of ECIS as i .....

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erefor; or (b) Plumbing, drain laying or other installations for transport of fluids; or (c) Heating, ventilation or air-conditioning including related pipe work, ductwork and sheet metal work; or (d) Thermal insulation, sound insulation, fire proofing or water proofing; or (e) Lift and escalator, fire escape staircases or travelators: or (f) Such other similar services;]" Prior to 16.06.2005:- (39a) "erection, commissioning or installation" means any service provided by a commiss .....

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not merely installation, but also commissioning while in the definition with effect from 16.06.2005 [in clause (ii) thereof] only installation of air-conditioning is covered. It is seen that with effect from 16.06.2005 clause (i) of Section 65(39a) ibid inter alia covers erection, commissioning and installation of plant and machinery or equipment, which were the only aspects covered under ECIS prior to 16.06.2005. Thus the definition of ECIS prior to 16.06.2005 covered even less than what is co .....

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on of air-conditioning is not covered under the scope of clause (i) of Section 65 (39a) as it exists from 16.06.2005 and if it is not covered under the said clause (i) then it could not have been covered under definition of ECIS under Section 65 (39a) ibid as it existed prior to 16.06.2005 because that definition (as stated earlier) was less wide in scope than the scope of coverage under clause (i) of Section 65 (39a) with effect from 16.06.2005. As regards Revenue's contention that only ins .....

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n thereof would be covered under the same clause, because it is not possible to harmoniously interpret the clauses (i) and (ii) of Section 65 (39a) to conclude that while installation of air-conditioning would be covered under clause (ii) its commissioning would be covered under clause (i). 7. We find that in the Board Circular No.62/11/2003-ST, dated 21.08.2003 it is mentioned in para 1.2 thereof that installing a booster pump, air-conditioner, water filter, water heater, etc. would be covered .....

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ng, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work, and sheet metal work, thermal insulation, sound insulation, fire proofing or water proofing, lift and escalator, fire escape staircases and travelators [refer clause (39a) of section 65]." Thus, the later circular makes it absolutely clear that the scope of ECIS was expanded by including specified installation services such as installation of air- .....

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