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2017 (4) TMI 951 - CESTAT HYDERABAD

2017 (4) TMI 951 - CESTAT HYDERABAD - TMI - CENVAT credit - inputs - input services - Held that: - the steel, cement and such other items have been used to construct the building which is used by appellant to provide the output service of Renting of Immovable Property. Therefore, the credit availed on inputs by appellant prior to 01.04.2011 is eligible for credit - The credit availed on cement, steel etc., as inputs which are used for construction of building after 01.04.2011 is not admissible a .....

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s - Held that: - The period involved in this issue is after 01.04.2011 only. The definition of input services w.e.f. from 01.04.2011 also underwent amendment, whereby the services relating to setting up of factory/premises of provider of output service was deleted from the definition - From the table itself it is clear that the services are not per se for construction of building or setting up of premises and these are merely renovation/modernization works. The services in the table show that th .....

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f credit was interpretational issue, and appellants were under bonafide belief that credit is admissible while availing the credit - there is no evidence to establish that appellant had availed the irregular credit on inputs after 01.04.2011 by suppression of facts with an intention to evade payment of duty - the extended period is not invokable. - Appeal allowed - decided in favor of assessee. - ST/30580/2016 - A/30494/2017 - Dated:- 22-3-2017 - Ms. Sulekha Beevi, C.S., Member (Judicial) Sh .....

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alleging irregular availment of credit on inputs and input services for the period October 2008 to March 2012 to the tune of ₹ 1,94,13,793/-. After due process of law, the original authority allowed part of the credit and disallowed credit to the tune of ₹ 27,81,394/- on inputs and ₹ 4,75,272/- on input services. Being aggrieved, the appellant has filed the present appeal. 3. On behalf of the appellant, the Ld. Counsel Sh. R. Muralidhar appearing for the appellant argued both o .....

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diesel oil and motor spirit, commonly known as petrol and motor vehicles used for providing any output services. That, therefore all goods used by the provider of output services other than the goods mentioned in sub-clause (ii) of the definition of inputs in Rule 2(k) of CENVAT Credit Rules, 2004 is eligible for credit. The appellants are a provider of output services and not a manufacturer. The credit has been availed on items such as, iron and steel, electrical panels, cement, sanitary items, .....

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output services. Major part of the demand falls within the period prior to 01.04.2011. ii) That the Commissioner has erred in relying upon Explanation (2) brought forth w.e.f. 07.07.2009 to the definition of inputs to deny the credit to the appellant, for the reason that this Explanation relates only to a manufacturer and not to a provider of output service. Further that even after 01.04.2011, the credit is admissible, for the reason that the goods in question on which CENVAT credit was taken af .....

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hmedabad [2012 (28) S.T.R. 166 (Tri. Ahmd.)], Adani Port & Special Economic zone Ltd., Vs. CST, Ahmedabad [2016 (42) STR 1010 (Tri. Ahmd.)] iii) In regard to the disallowance of credit on input services it is submitted by the Ld. Counsel that the Commissioner has disallowed the credit stating that the services have been availed for setting up of the premises. According to department, the services relating to setting up has been deleted from the definition of input services w.e.f. from 01.04. .....

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d services are services availed for laying charges for flooring, Erection services in regard to Erection of Machinery, Electrical Installation works, Electrical Consultancy Charges etc. These fall within the category of input service of modernization/renovation services. Such services were availed by appellant to renovate the premises after handing over the premises to the tenant. That services of modernization and renovation of premises are eligible for credit even after 01.04.2011. That these .....

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rch 2012. The appellant has been filing regular returns as well as disclosing the credit availed by them, in these returns. That therefore the allegation that appellant has suppressed facts with intent to evade payment of tax is without any basis. It is submitted by the Counsel that out of the demand of ₹ 1,34,07,214/- raised in the Show Cause Notice, about 86% of the credit was allowed by the Commissioner at the stage of adjudication itself. That this alone would show that the issue of el .....

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e inputs on which the credit is availed by appellant, are iron and steel, cement, ready mix concrete etc. These items are generally used for construction of premises. As per the amendment brought forth w.e.f. 07.07.2009 an Explanation was inserted in the definition of input. As per this Explanation, cement, angles, channels, CTD or TMT bars etc., used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods is not eligible for credit .....

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n the said judgment did not have occasion to discuss the amendment brought forth by inserting Explanation in 07.07.2009. That, the said judgment in the case of Sai Sahmita Storages (P) Ltd., is therefore not applicable. 6. With regard to the credit availed on input services it is submitted by the Ld. AR, that all the services have been availed after 01.04.2011. The definition of input services got amended w.e.f. 01.04.2011, deleting the services relating to setting up of factory/premises of outp .....

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iled with intention to evade payment of duty. That the Show Cause Notice issued invoking the extended period of limitation is therefore correct and proper. 7. I have heard the submissions made before me. 8. The details of the disputed credit availed on inputs and input services is shown in the table below: Description Period Demand as per SCN CENVAT allowed CENVAT denied on inputs October 2008 to March 2012 42,04,945 14,23,551 27,81,394 on input services October 2008 to March 2012 1,52,08,848 1, .....

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n, the definition of inputs prior to 01.04.2011 as well as after 01.04.2011 is noticed as under: Prior to 01.04.2011. As per Rule 2 (k) of CENVAT Credit Rules, 2004 "input means i) all goods except light diesel oil, high speed diesel oil and motor spirit, commonly known as petro, used in or relation to 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 f .....

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commonly known as petrol shall not be treated as an input for any purpose whatsoever. Explanation 2. Input includes goods used in the manufacture of capital goods which are further used in the factory of manufacture. but shall not include cement, angles, channels, CTD or TMT bars or other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods. w.e.f. 1.4.2011: As per Rule 2(k) of the CENVAT Credit Rules, 2004, "inpu .....

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r motor spirit, commonly known as petrol; B) any goods 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 any taxable service specified in sub-clauses (zn), (zzl), (zzm), (zzo), (zzzh) and (zzzza) of clause (105) of Section 65 of the Finance Act; C) capital goods except when used as parts or components in the manufacture of a final product; D) motor vehicles; .....

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t on cement and steel items used for construction of building, factory shed etc. The Commissioner has relied upon the judgment laid in the case of Vandana Global Limited Vs. CCE, Raipur [2010 (253) ELT 440 (Tri-LB)] to deny the credit on inputs such as cements and steel used prior to 01.04.2011 and also for the period after. On bare perusal of the definition of inputs and the Explanation-2, introduced w.e.f. 07.07.2009 makes it clear that Explanation-2 deals with the use of cement and steel as i .....

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of the Commissioner that credit on inputs such as cement, iron & steel used for construction of premises of service provider is not eligible as per Explanation-2 of the definition is contrary to law. 11. Be that as it may, in the case of Vandana Global Ltd., (supra) the Larger Bench took the view that this amendment has retrospective application. The said judgment has been considered by the Honorable Jurisdictional High Court in the case of Mundra Ports & Special Economic Zone Ltd., (sup .....

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Port and SEZ Ltd., (supra) and the relevant portion is reproduced as under: 11. On close reading of input definition under Rule 2(k) of the Rules as above, it is clear that Clause (i) covers all goods, except as specified, used in or in relation to the manufacture of final product. On the other hand, Clause (ii) in Rule 2(k) covers all goods except specified therein, used for providing any output service. In short, Clauses (i) and (ii) are applicable for manufacturer and output service provider .....

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expression used for providing any output service in the said Clause (ii) in Rule 2(k) have widened the scope of definition of input in respect of output service. The definition of capital goods under Rule 2(a) of the Rules provides the goods, specified in sub-clauses (i) to (vii) of Clause (A) used for providing output service, would be treated as capital goods. Similarly, the definition of input service in Rule 2(l) of Rules, 2004, is in two parts. Clauses (i) and (ii) of Rule 2(l) cover the se .....

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e by the learned authorised representative for the Revenue, to read the above definitions in respect of output service provider with the help of words as referred in the context of manufacturer, supported by the earlier decision of the Tribunal in the appellants own case by Final Order dated 8-5-2008. The said decision cannot be sustained as the Hon'ble High Court set aside the said decision. Further, when words of statute are clear and meaning is unambiguous, intention of statute gets irrel .....

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hat the assessee could not provide storage and warehousing services without constructing by cement and steel and the Central Excise duty was paid on these items. The Hon'ble High Court, on plain reading of definition of input and input services under Rule 2(k) and 2(l) of the said Rules, observed that both the definitions would show that unless excluded all goods used in relation to manufacture of final products or for any other purpose used by a provider of taxable service for providing an .....

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i) specific part (ii) inclusive part (iii) place of use 10. Coming to the specific part, one finds that the word "input" is defined to mean all goods, except light diesel oil, high speed diesel oil and petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not. The crucial requirement, therefore, is that all goods used in or in relation to the manufacture of final products qualify as input This pr .....

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ufacture of final product". It is the functional utility of the said item which would constitute the relevant consideration. Unless and until the said input is used in or in relation to the manufacture of final product within the factory of production, the said item would not become an eligible input. The said expression used in or in relation to the manufacture have many shades and would cover various situations based on the purpose for which the input is used. However, the specified input .....

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is impossible to manufacture the final product. Therefore, none of the categories in the inclusive part of the definition would constitute relevant consideration per se. They become relevant only when the above crucial requirement of being "used in or in relation to the manufacture" stands complied with. In our view, one has to therefore read the definition in its entirety. 9. There is no dispute, in these cases, that the assessee used cement and TMT bar for providing storage facility .....

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view of the matter, the order levying penalty was rightly set aside by the CESTAT." In the present case, the steel, cement and such other items have been used to construct the building which is used by appellant to provide the output service of Renting of Immovable Property. Therefore, I hold that the credit availed on inputs by appellant prior to 01.04.2011 is eligible for credit. 12. The appellant has availed credit of ₹ 12,91,631/- (as submitted by Counsel for appellant) on inputs .....

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relates to port services, (zzi) relates to services of technical inspection and certification, (zzm) relates to services rendered by airport authority, (zzo) relates to services of organizing exhibition (zzzh) relates to services of construction of complex, (zzzza) relates to execution of works contract services. This exclusion part in my view, is applicable for both manufacturer as well as provider of output services. Therefore the credit availed on cement, steel as inputs after 01.04.2011 for .....

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availed on cement, steel etc., as inputs which are used for construction of building after 01.04.2011 is not admissible as per definition of inputs w.e.f. 01.04.2011. From the above, I hold that the credit availed on inputs by appellant after 01.04.2011 is not eligible for credit. 14. The next issue to be addressed is the credit availed on input services. The period involved in this issue is after 01.04.2011 only. The definition of input services w.e.f. from 01.04.2011 also underwent amendment, .....

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trial Construction Services-laying charges for flooring 31 23.09.2011 1,57,202/- 2. Nikitha Build Tech Pvt. Ltd., Labour Charges for Erection 77 04.10.2011 2,96,063/- 3. Brunda Electricals Electrical Installation Works 146 01.10.2011 13,581/- 4. Ahlada Engineers Pvt. Ltd., Installation Charges for Single Leaf Door 179 05.11.2011 495/- 5. Totem International Ltd., Installation Charges of Boom Barriers 105 24.11.2011 1,751/- 6. CSRI Consortium Engineers Electrical Consultancy Charges 110-11 15.11. .....

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renovation/modernization works. The services in the table show that these are construction services for laying the flooring, Erection of Machinery, Electric Installation Works, Single Leaf Door, Installation Boom Barriers, Electrical Consultancy Charges. Since these services would fall within the category of modernization, renovation services which come within the inclusive part of the definition of input services, I am of the view, that the services are eligible for credit. The judgment in the .....

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major part of the disputed demand (almost 86%) the same has to be considered as an interpretational issue and therefore appellant cannot be held guilty of suppression of facts with intent to evade payment of duty. The appellant has been filing returns regularly disclosing the credit details. The Department has no case that the investigation conducted by DGCEI has unearthed any transactions which were suppressed by the appellant. The appellants have disclosed the entire credit availed on inputs a .....

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credit is admissible while availing the credit. In Sterlite Telelink Ltd., Vs. CCE, Vapi [2014 (312) ELT 353 (Tri. Ahmd.)] the Tribunal had occasion to consider the issue of limitation when assessee had disclosed entire details of credit in the returns filed by them and it was held that in the absence of evidence to establish the allegation that irregular availment of credit was with conscious intention to evade payment of duty, the extended period is not invokable. In Accurate Chemicals Indust .....

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ssioner had checked the returns, the short payment would have been immediately detected as, as observed by the Commissioner in para 4.5 of the impugned order, even the registration certificate of the appellant mentioned them as a unit of Accurate Transformers Ltd., and in all the documents of the appellant, the transfer of goods from the appellant to Accurate Transformer Ltd. had been reflected as inter unit transfer. Neither there is any allegation nor evidence to prove that there was some coll .....

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for demand of duty and penal provisions of Section 11AC for indolence on the part of the jurisdictional Central Excise officers. Moreover Apex Court in a series of judgments CCE vs. Champher Drugs & Liniments reported in 1989 (40) E.L.T. 276 (S.C.) ; Padmini Products vs. Collector reported in 1989 (43) E.L.T. 195 (S.C.) ; Pushpam Pharmaceuticals vs. CCE reported in 1995 (78) E.L.T. 401 (S.C.) ; Anand Nishikawa Co. Ltd. vs. CCE, Meerut reported in 2005 (188) E.L.T. 149 (S.C.) ; Continental Fo .....

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