TMI Blog2016 (1) TMI 1053X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 / Additional Duty of Excise under Section 3(1) of the Customs Tariff Act, 1975 paid on parts and spares used for their replacement of the defective ones and Service Tax paid on inspection, Certification and engineering services etc. for the aforesaid repair and maintenance activities and claim set off against the output service tax paid for rendering of passive infrastructure service by the applicant to its customers. - Ruling No. AAR/CE/ 03 /2016, Application No. AAR/44/CE/21 /2013 - - - Dated:- 22-1-2016 - Justice V.S. Sirpurkar (Chairman), Shri S. S. Rana (Member) And Shri R. S. Shukla (Member) For the Applicant : Shri Tarun Gulati, Advocate For the Respondent : Shri Amresh Jain(AR) RULING M/s Indus Towers Limited (hereinafter also referred to as applicant ), a Public Limited Company incorporated under the Companies Act, 1956, is engaged in business of providing telecommunication infrastructure support services to mobile telecom operators in India. Applicant submits to be registered under the category of Business Support Services and was formed with the main object of sharing passive telecommunication infrastructure support services among various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-used without requiring replacement in all cases. The equipments repaired are generally 3-7 years old or are damaged due to transportation or due to fire / floods / rains or are not working efficiently due to any technical defect etc. The aforesaid repairs and maintenance activities can be performed by applicant itself inhouse at its warehouse or third party service providers who could be individuals, partnership firms or companies at applicant s warehouse or at their own repair facilities. 3. Applicant has summarized the activities proposed to be carried out by the applicant of repair and maintenance of the equipments hereunder:- I. The equipments which require repair and maintenance shall be transferred from the applicant s telecom sites to the warehouse. Both the site and the warehouse are registered under a single centralized registration for Service Tax purposes. II. The said equipments shall be examined at the warehouse to ascertain whether same can be repaired at a reasonable cost. III. Post inspection/ testing, if the equipment is found to be non-repairable or repair costs are likely to exceed the potential benefits, the parts in good working condition may be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the repaired product as its own. The applicant will not put its own logo or trade name on the repaired product (other than for transportation and identification for fixed assets tracking) for marketing or brand promotion. No new product or article will be manufactured as part of the aforesaid repairs activities. 6. Following issues are raised by the applicant for determination by the Authority; Whether in the facts and circumstances of the applicant s case, the activities of repair and maintenance proposed to be undertaken by the applicant amounts to manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944. 7. Applicant submits that term manufacture has been defined under Section 2(f) of the Central Excise Act, 1944 (Excise Act). Under Section 3 of the Excise Act, an Excise Duty is levied on manufacture of goods undertaken in India. H ble Supreme Court in the case of J. G. Glass has laid down the following two-fold test for deciding whether the process amount to manufacture . First, whether by the said process a different commercial commodity comes into existence or whether the identity of original commodity ceases to exist. Secondly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I and Jaipur-I replied to said first question raised by the applicant stating that the activities involving mere repair of goods do not appear amounting to manufacture within the meaning section 2(f) of the Central Excise Act, 1944. In view of above, we hold In the facts and circumstances of the applicant case, the activity of repair and maintenance proposed to be undertaken by the applicant will not amount to manufacture within the meaning of section 2(f) of the Central Excise Act, 1944. 11. Second issue raised by the applicant is whether in the facts and circumstances of the case and in the event the aforesaid activities of repair and maintenance amount to manufacture, then the basis for arriving at value for purpose of Excise Duty under the Central Excise Act, 1944 and Rules made there-under. Since the activities of repair and maintenance have been held as not amounting to manufacture, the second issue raised by the applicant becomes infructuous. 12. Third issue raised by the applicant is whether in the facts and circumstances of the case, the applicant is eligible to avail CENVAT credit of Excise Duty under the Central Excise Act, 1944 / Additional duty of Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by third party vendor to the applicant for repair of capital goods, such as D.G. sets, Air conditioners etc. 17. As far as issue (b) above is concerned, applicant submits that they propose to procure parts from third party vendors, which shall be used for replacing the defective parts of equipment during repair. Since the parts procured from third party vendors would form part of the repaired equipments which would be used by the applicant in provision of telecommunication infrastructure support services, the applicant should be entitled to avail CENVAT credit of Excise duty charged by the third party vendors. 18. Applicant submits that they are entitled to avail Cenvat Credit on the duty paid on parts and spares used for replacement of the defective ones with respect to goods such as D.G. sets, Air Conditioners etc. since they are capital goods within the meaning of Rule 2(a) (A)(i) of the Cenvat Credit Rules,2004. Therefore, its components, spares and accessories will be considered as capital goods in view of Rule 2(a)(A)(iii) ibid. Further, applicant will be eligible to avail Cenvat Credit under Rule 3 of Cenvat Credit Rules, 2004 for duty paid on capital goods. 19. Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff Act, leviable under the Excise Act; (iii) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978 (40 of 1978); (iv) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance), Act 1957 (58 of 1957); (v) the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001(14 of 2001); (vi) the Education Cess on excisable goods leviable under section 91 read with Section 93 of the Finance (No.2) Act, 2004 (23 of 2004); (via) the Secondary and Higher Education Cess on excisable goods leviable under section 136 read with section 138 of the Finance Act, 2007 (22 of 2007); (vii) the additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under clauses (i)(ii)(iii)(iv)(v)(vi) and (via); (viia) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, Provided that a provider of taxable service shall not be eligible to take credit of such additional duty (viii) the additional duty of excise l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Rule 2 (a)(A)(iii) of Cenvat Credit Rules, 2004 and not as manufacturer. It is also noticed that Central Excise Commissionerate, Kolkata (IV), inter alia, submits that Cenvat Credit of Central Excise duty paid on inputs used / to be used for repair and maintenance of their various equipments like DG sets, Air Conditioners etc., would not be admissible to them in terms of para 3 of Departmental Instructions dated 08.07.2010 issued by the Board under F.No. 267/11/2010-CX 8, which reads as under; 3. It thus follows from the above judgements that credit on capital goods is available only on items, which are excisable goods covered under the definition of capital goods under CENVAT Credit Rules, 2004 and used in the factory of the manufacturer. As regards input they have to be covered under the definition of input under the CENVAT Credit Rules 2004 and used in or integrally connected with the process of actual manufacture of the final product for admissibility of cenvat credit. The credit on inputs used the manufacture of capital goods, which are further used in the factory of the manufacture is also available except for items like cement, angles, channels, CTD or TMT bars and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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