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2015 (12) TMI 1111 - CESTAT MUMBAI

2015 (12) TMI 1111 - CESTAT MUMBAI - 2016 (42) S.T.R. 277 (Tri. - Mumbai) - Denial of CENVAT Credit - Input services used for Commercial Industrial Construction Service (CICS) - Renting of Immoveable Property Service (RIPS) - whether appellant is not eligible for credit as input services have resulted in an immovable property which is neither excisable nor any service tax is payable on the same - penalty under Rule 15(3) of the Cenvat Credit Rules read with Section 78 of the Finance Act, 1994 - .....

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to be provided were declared. We find that as held by the Hon'ble High Court of Karnataka in the case of mPortal India Wireless Solutions Pvt. Ltd., there is no provision in the Cenvat Credit Rules which imposes a restriction on availment of credit on input services procured before registration is taken. - On the apprehension raised of Revenue as to how the verification could have been done in respect of services procured during the previous five years, we find that the appellant had submi .....

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partment has conceded that the Cenvat credit was availed for the construction of mall and Renting of Immovable Property Service. - Almost the entire credit has been availed on input services which have been used for providing the output service that is Renting of Immoveable Property Service for which there was no restriction under the clause (l) of the definition of ‘input service'. The inclusive part of the definition of input service allowed services used in relation to setting up, moderni .....

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llant : Shri S S Gupta, CA & Shri Vinod Awtani, CA For the Respondent : Shri Roopam Kapoor, Commissioner (AR) ORDER Per P S Pruthi This appeal is directed against the impugned Order-in-Original dt. 10.4.2013 denying the service tax credit of ₹ 8,34,74,601/- and ordering recovery of the same alongwith interest and imposing equivalent penalty under Rule 15(3) of the Cenvat Credit Rules read with Section 78 of the Finance Act, 1994. 2. The appellant is engaged in the business of construct .....

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two services of CICS and RIPS. They constructed a mall at Pune for which they received various input services and capital goods during the period June 2007 to March 2011. They filed ST-3 return without showing availment of input tax credit. However, they filed revised return for the period October 2010 to March 2011 on 21.7.2011 indicating availment of Cenvat Credit of service tax paid on input services and capital goods procured during the period June 2007 to March 2011. They had sold 20% of th .....

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e tax credit wrongly availed was confirmed. Appellant are in appeal against his impugned order. 3. The Ld. C.A. appearing on behalf of the appellant contended that the use of input services and capital goods has not been disputed in the show cause notice. He further stated that no credit was availed on the steel/cement used in the construction of the mall. Even the credit taken on tiles was recovered. Although, the show cause notice referred to Rule 10 of the Cenvat Credit Rules alleging that cr .....

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ered the services of construction during the relevant period and he placed reliance on Cadilla Healthcare Ltd. - 2013-TIOL-20-AHM-ST. The fact that input service' definition was amended from 1.4.2011 to exclude services used for construction, itself implies that such services were covered earlier. The Ld. Counsel further relied on the case ofMundra Ports & Special Economic Zone Ltd. 2015 (39) STR 726 (Guj.) . 4. The Ld. AR appearing for Revenue contended that even though the appellants w .....

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aled against by the Department. He relied on the judgment in the case of Bharti Airtel Ltd. Vs. CCE - 2014-TIOL-1452-HC-Mumand Vodafone India Ltd vs Commissioner 2015 (40) STR 865 (Bom). in which the Hon'ble High Court of Mumbai held that Cenvat Credit is not admissible on the inputs which go into the construction of Telecommunication towers and pre-fabricated buildings. The Ld. AR vehemently contested that there can be no verification of credit of services which were procured during previou .....

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the service tax liability on the output service namely Renting of Immovable Property Service. There is no hiding the fact that these services were received over a period of 5 years from 2007 to 2011. And it was only when the construction was ready for renting out they took centralized registration in 2011. In the centralized registration the input service as well as the services to be provided were declared. We find that as held by the Hon'ble High Court of Karnataka in the case of mPortal I .....

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Immoveable Property Service. Here again, we are bound to follow the judgments of the Andhra Pradesh High Court in the case of Sai Sahmita Storages (P) Ltd. 2011 (270) ELT 33 (A.P.) as well as the Tribunal judgment in the case of Navratna Highway (supra). In the present case, we find the appellant availed service tax input of ₹ 8.34 Crores on following input services: Air Conditioning Work AMC for Support services Auditor Expenses Banking and Insurance Brick Work Business Development Carpen .....

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rk Marketing and Advertisement Professional Fees Painting Work Plumbing Work POP Work Post Tensioning PT Work Repairing and Maint Security Services Shipment Clearing Agent Steel Rolling Work Structural Work DG Set Installation Rainforcement Expenses Surveyor Telephone and Mobile Expenses Temp Toilet Installation Work Testing Lab Work Travelling Expenses Wall Panel Fixing Work Water Proofing Work According to Revenue, the services above have not been used for providing Renting of Immovable Proper .....

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ssessee. Section 65(102) of the Finance Act defines "storage and warehousing" as to include storage and warehousing services for goods including liquids and gases but does not include any service provided for storage of agricultural produce or in service provided by cold storage. As per Section 65(105)(zza), read with Section 66 of the Finance Act, there shall be levied tax on storage and warehousing services at 12% of the value of taxable service. The service tax payable is determined .....

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lation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production; (ii) all goods, except l .....

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y a provider of taxable service for providing an output service; or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage u .....

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other purpose used by a provider of taxable service for providing an output service are eligible for CENVAT credit. In Maruti Suzuki Ltd . v. Commissioner of Central Excise, Delhi-III , (2009) 9 SCC 193 = 2009 (240) E.L.T. 641 (S.C.) the Supreme Court laid down as follows. 9. Coming to the statutory definition of the word "input" in Rule 2(g) in the CENVAT Credit Rules, 2002, it may be noted that the said definition of the word "input" can be divided into three parts, namely .....

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s "input". This presupposes that the clement of "manufacture" must be present. 8. Yet again considering the inclusive part of the definition of "input", it was held as follows. All these considerations become relevant only when they are read with the expression "used in or in relation to the manufacture of final product" in the substantive/specific part of the definition. In each case it has to be established that inputs mentioned in the inclusive part is .....

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ich the input is used. However, the specified input would become eligible for credit only when used in or in relation to the manufacture of final product. Hydrogen gas used in the manufacture of sodium cyanide is an eligible input, since it has a significant role to play in the manufacturing process and since the final product cannot emerge without the use of gas. Similarly, Heat Transfer Oil used as a heating medium in the manufacture of LAB is an eligible input since it has a persuasive role i .....

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d cement and TMT bar for providing storage facility without which storage and warehousing services could not have been provided.-" Although the High Court extended the benefit even to steel and cement, we find from the list above that the appellant have mostly taken credit on various inputs services and not on items such as steel and cement. When a query was raised from the Bench regarding entries of credit in respect of invoices raised by entities such as MITC Rolling Mills Pvt. Ltd. and U .....

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of Sai Sahmita Storages case, the service tax credit cannot be denied. Reliance is also placed on the Hon'ble High Court of Gujarat decision in the case of Mundra Ports & Special Economic Zone Ltd. (supra). 5.2 We do not find that for the input services for which input service tax credit was availed at Pune, the invoices are addressed to their Bombay office. However this will not be a bar in availing the credit as the appellant had taken centralized registration at Pune before availing t .....

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ow cause notice which enabled the department to make such verification. We may further go on to say that in the show cause notice no doubt has been expressed regarding the actual receipt of the services. As regards the verification of actual use of the input services, we find that the Annexure "A" to the show cause notice gives details of Cenvat credit availed on inputs and capital goods for the period 1.6.2007 to 31.3.2011 implying that department has conceded that the Cenvat credit w .....

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each case." Ld AR is relying on this judgement apparently to say that in the present case there is too much delay in claiming cenvat credit. We have held that the cenvat on the input services is admissible in principle and Hon'ble High Court of Karnataka has held that registration is not a condition for availing cenvat credit. In this situation, whether the delay is reasonable is the question that needs to be answered. It is noted that the appellant took the credit only when the mall wa .....

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ly availed in Pune after centralized registration was taken. We find that the adjudication order has not given any finding to the effect that the Credit was transferred from Mumbai to Pune without observing the conditions of Rule 10 of the Cenvat Credit Rules as was alleged in the show cause notice. Even on other issues there appears to be a mismatch between the allegations in the show cause notice and the findings in the adjudication order. The show cause notice does not question the availment .....

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