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2016 (9) TMI 194 - CESTAT HYDERABAD

2016 (9) TMI 194 - CESTAT HYDERABAD - 2016 (44) S.T.R. 136 (Tri. - Hyd.) - CENVAT credit reversal works contract service construction / execution of the works contract of a building or a civil structure or a part thereof - whether the works of laying of pipes comes within the ambit of works contract which is expressly excluded in the definition of input services ? - construction service - Section 65(25b) of the Finance Act, 1994 Held that: - Wherever the legislature wanted to include the c .....

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T appeal disposed off decided in favor of appellant. - Appeal No. E/22333/2015 - FINAL ORDER No. A/30264/2016 - Dated:- 1-4-2016 - Ms. Sulekha Beevi, C.S., Member(Judicial). Shri G. Prahlad, Authorised representative for the Appellant. Shri Arun Kumar, Authorised representative for the Respondent. ORDER: [Order per: Sulekha Beevi, C.S.] The appellant M/s. Rashtriya Ispat Nigam Ltd. was served with a show-cause notice, inter-alia, proposing to disallow service tax credit of ₹ 64,85,30,5 .....

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r-in-original, the original authority confirmed the demand of interest on ₹ 10,39,634/- till the date of reversal, and also confirmed the demand of ₹ 13,84,799/- along with interest besides imposing equal amount of penalty on this demand. The present appeal is filed challenging i) the confirmation of demand of ₹ 13,84,799/-, ii) the demand of interest on ₹ 10,39,634/- being the credit reversed by appellant before utilization. 2. On behalf of the appellant, the learned cou .....

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ng of pipe works in the factory for supply of water to the raw material plant. He contended that laying pipe line or conduit is distinct and different from construction of a building or civil structure or part thereof. That w.e.f. 01/04/2011, the definition of input services excludes services related to construction of a building or civil structure or part thereof and not with regard to input services related to construction of pipeline or conduit. To support his arguments, he referred to the d .....

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arguments, he placed reliance on the Advance Ruling in GSPL India Transco Ltd. [2015(40) STR 393 (A.A.R)]. 3. The second issue in the appeal is with regard to demand of interest on the credit of ₹ 10,39,634/- which was reversed by the appellant before utilization. The learned counsel relied upon the judgment laid in CCE&ST, LTU, Bangalore Vs. Bill Forge (P) Ltd. [2012(279) ELT 209 (Kar.)], CE Vs. Strategic Engineering (P) Ltd. [2014(310) ELT 509 (Mad.)] and in Grasim Bhiwani Textiles L .....

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structure or part thereof and that therefore the credit is not admissible. With regard to the second issue of demand of interest on the amount of credit which was reversed by the appellant before utilisation, the learned AR submitted that the demand is legal and proper. 5. I have heard the rival submissions and perused the appeal records. 6. The invoice No.01/01 dated 09/02/2013 shows the description of service as works contract service. The description of the work mentioned in the invoice is un .....

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tter appreciation, the definition of input service is noticed as under:- Rule 2 (l): input service means any service, (i) used by a provider of output service for providing an output service; or (ii) used by a 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 modernisation, renovation or repairs of a factory, premises of provider of output servic .....

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auses (p), (zn), (zzl), (zzm), (zzp), (zzzh) and (zzzza) of clause (105) of section 65 of the Finance Act (hereinafter referred as specified services), insofar as they are used for (a) construction of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services; It is the case of appellant that the exclusion portion of the definition excludes only those servic .....

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nition of input service. According to him, the services of construction of a building or a civil structure or a part thereof is entirely different and distinct service from construction of pipeline or conduit. For this learned counsel draws reference from the definition of construction service provided in under Section 65(25b) of the Finance Act, 1994, which is as under:- "Commercial or Industrial Construction" means - (a) construction of a new building or a civil structure or a part t .....

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cture, pipeline or conduit, 8. In the above definition, the two services are given under two different sub-clauses which means that construction of pipeline or conduit cannot be considered to be part of construction of building or civil structure. Similarly, sub-clause (b) of definition of works contract service contained in sub-clause (zzzza) of Section 65(105) of the Finance Act, 1994 is also noteworthy in this regard which is reproduced as under:- (b) construction of a new building or a civil .....

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This itself would indicate that erection/construction of pipeline or conduit cannot be considered as part of construction of building of civil structure or part thereof. 10. The Authority of Advance Ruling, New Delhi in GSPL India Transco Ltd. (supra) had occasion to analyse similar issue. The observations in the said decision is reproduced as under:- 13. Rule 3(1) of CENVAT Credit Rules, 2004 inter alia envisages that a provider of output service shall be allowed to take credit of Service Tax l .....

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or providing an output service. However, it excludes services portion in the execution of works contract and construction services. It has been correctly pointed out by the applicant that service of laying of pipeline is different from construction of building or a civil structure, as under erstwhile Section 65(25b) of the Finance Act, 1994, commercial and industrial service meant (a) construction of a new building or a civil structure or a part thereof, or industrial construction service meant .....

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