TMI Blog2018 (1) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2004 or the Finance Act, 1994 or the rules made there under. We do not find any such restriction or prohibition nor the ld. D.R. has been able to show any such restriction to us. We find that in the present case, assessments were done by the appellant in accordance with the provisions. The issue in hand is squarely covered by the decision in the case of M/s SV Jiwani Versus CCE & ST, Vapi [2014 (3) TMI 454 - CESTAT AHMEDABAD], where it was held that it is undisputed that the appellant had provided output services which covered by works contract for setting up of plant, it has to be held that cenvat credit availed by the appellant is in consonance with the provisions of the CCR 2004. Appeal allowed. - ST/70517/2017-CU[DB] - ST/A/71971/2017-CU[DB] - Dated:- 9-11-2017 - Mr. Anil Choudhary, Member (Judicial) And Mr. Anil G. Shakkarwar, Member (Technical) Shri Shailesh P. Sheth, Advocate for M/s SPS Legal, for Appellant Shri Rajeev Ranjan, Joint Commissioner (AR), for Respondent ORDER Per : Anil G. Shakkarwar The present appeal is arising out of Order-in-Original No. 31 to 34/Commissioner/ST/Noida/2016-17 dated 31/03/2017 passed by Commissioner of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition Scheme do not allow availment of Cenvat credit on input. Therefore, it appeared to Revenue that Cenvat credit of ₹ 112,60,92,760/- as availed on input was inadmissible to the appellant and therefore, the said debit has resulted in short payment of Service Tax. It, further, appeared to Revenue that by debiting the said amount of ₹ 112,60,92,760/- appellant passed on inadmissible Cenvat credit to their customers and also collected from the customers in the name of Service Tax ₹ 90,23,90,907/- which was liable to be recovered under the provisions of Section 73A of the Finance Act, 1994. Further under Composition Scheme, Revenue worked out that giving the benefit of inputs service Cenvat credit of ₹ 15.42 Crore ₹ 3.30 Crore of cash payment, there was short payment of Service Tax to the tune of ₹ 22,37,01,811/-. Therefore, a Show Cause Notice dated 23/10/2012 was issued to the appellant. Through the said Show Cause Notice, the appellant were called upon to show cause as to why (i) their service should not be reclassified under Works Contract Service instead of Commercial or Industrial Construction Service, (ii) The inadmissible Cenvat credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 March, 2014. He also stated that the Show Cause Notices invoked the same provisions of law as invoked in the case of Show Cause Notice dated 23/10/2012 except in the case of Show Cause Notice dated 27/10/2014 and 23/10/2015, wherein Cenvat credit on inputs is demanded by invoking provisions of Rule 14 of Cenvat Credit Rules, 2004 read with Section 73 of the Finance Act, 1994. In Para 42 of Show Cause Notice dated 23/10/2012 as stated, the provisions of Finance Act, 1994 appeared to have been contravened by the appellant which are stated, as follows:- (a) Section 65-A 1 of the Finance Act, 1994, (b) Section 66 of the Finance Act, 1994, (c) Section 68 of the Finance Act, 1994, (d) Section 73A (1) of the Finance Act, 1994 (e) Rule 2(k) Rule 3 of the Cenvat Credit Rules, 2004. The Original Authority stated in the opening Paragraph of his impugned Order-in-Original that, it is issued in compliance to the Tribunals Final Order No. A/70073/2016 dated 18/11/2015. In Para 5.10.13 while dealing with the judgement in S.V. Jivanis case (supra) which had been taken by the Revenue to the Hon ble Bombay High Court and where the appeal of the Revenue was dismissed by the Hon ble Court re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the inadmissible Cenvat credit availed on construction/building materials in excess of the Service Tax assessed/determined in terms of provisions under Section 73A of the Finance Act, 1994. 5. I order to charge and recover the interest at appropriate rate(s) as applicable during the relevant periods, under Section 73B and Section 75 of the Finance Act, 1994 from the assessee on the aforesaid amounts adjudged in paras 3 4 above with reference to the SCN dated 23.10.2012. 6. I impose a penalty of ₹ 10,000/- (Rupees Ten Thousand only) on the assessee under Section 77 of the Finance Act, 1994 for their various acts of omission and commission as mentioned in the preceding paras with reference to the SCN dated 23.10.2012. 7. I impose a total penalty equivalent to dues payable as above amounting to ₹ 99,25,44,686/- [(Rs.20,13,18,981/- (+) ₹ 79,12,25705/-) (Rupees Ninety Nine Crores Twenty Five Lakhs Forty Four Thousand Six Hundred Eighty Six only)] on the assessee under Section 78 of the Finance Act, 1994 read with Rule 15(3) of the Cenvat Credit Rules, 2004 for their various acts of omission and commission as mentioned in the preceding paras with refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 73(1) of the Finance Act, 1994. 14. I order to charge and recover the interest, at appropriate rates), as applicable during the relevant periods, under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 75 of the Finance, Act, 1994 from the assessee on the aforesaid amount mentioned in Para 13 above with reference to the SCN dated 27.10.2014. 15. I hereby confirm the demand of ₹ 6,08,20,141/- (Rupees Six Crores Eight Lakhs Twenty Thousand One Hundred Forty One only) (as per Chart C D to the SCN dated 27.10.2014) upon the assessee, being the amount collected in cash as Service Tax and adjusted from the inadmissible Cenvat credit availed on the construction/building materials in excess of the Service Tax assessed/determined in terms of provisions under Section 73A of the Finance Act, 1994. 16. I hereby order to charge and recover the interest, at appropriate rate, as applicable during the relevant periods, under Section 73B Section 75 of the Finance Act, 1994 from the assessee on the aforesaid confirmed dues with reference to the SCN dated 27.10.2014. 17. I impose the penalty of ₹ 60,82,014/- (Rupees Sixty Lakhs Eighty Two Thousand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee, equivalent to 10% of the dues adjudged under Para 21, amounting to ₹ 53,59,408/- (Rupees Three Lakhs Fifty Nine Thousand Four Hundred and Eight only) under Section 76 of the Finance Act, 1994 read with Rule 15(1) of the Cenvat Credit Rules, 2204 for their various acts of omission and commission as mentioned in the preceding Paras with reference to the SOD dated 23.10.2015. Aggrieved by the said order the appellant has moved the present appeal before this Tribunal. 5. The grounds of appeal are as follows:- (i) The ld. Commissioner disallowed Cenvat credit availed on inputs in terms of Rule 2 3(1) of Cenvat Credit Rules, 2004 to the extent of ₹ 1,12,60,92,760/- in case of show cause notice dated 23.10.2012 and the amounts in case other 3 notices as specified above and that such order is not sustainable in law. (ii) The provision of Rule 2A of Service Tax (Determination of Value) Rules, 2006, start with expression subject to the provisions of Section 67which means the provision prescribed under said Rule 2A, is subject to the provisions of Section 67 of the Finance Act, 1994. (iii) Opening Para of Rule 3 of Composition Scheme reads as- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proposal to disallow Cenvat credit amounting to ₹ 1,12,60,92,760/- ₹ 2.90 crores respectively. He further submitted that the demand of ₹ 20,13,18,981/- was confirmed on the basis that the appellant should have exercised their option under Composition Scheme. He further submitted that as stated in the grounds of appeal, Composition Scheme is optional and they individually opted for Normal Scheme. He has pointed out that only when the Composition Scheme is opted, Cenvat credit on inputs is inadmissible but since they have not opted for Composition Scheme, the provisions of Composition Scheme are not applicable to them. He has further pointed out that provision of said Rule 2A of Service Tax (Determination of Value) Rules, 2006, are subject to provisions of Section 67 of the Finance Act, 1994 and they have arrived at assessable value by applying the provisions of Section 67of the Finance Act, 1994 and also that Revenue in Para 42 of said Show Cause Notice dated 23/10/2012 did not make an allegation that the appellant had violated provisions of said Section 67 of the Finance Act, 1994. He has further submitted that once the Cenvat credit is admissible to them, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.06.2007 from which date such works contracts were made liable to service tax. The issue, on the other hand, involved in the present case is entirely different. Therefore, the Final Order of this Tribunal in the above sated case of M/s S. V. Jiwani was applicable to the appellant. 7. Heard the ld. A. R. for Revenue, who has also submitted written submission as under-: 7. The departments Central Excise Appeal No.252 of 2014 in the Case of CCE S. Tax Vs. S. V. Jiwani was disposed of by Hon ble High Court Mumbai vide Order dated 01.02.2016 as the Hon ble High Court found that Revenue was not put to loss in that case and clarified that such issues as are raised in the present appeal and the substantial question of law can be gone into appropriate case where has sustained any loss or there is evasion of tax. 8. Construction Service was made taxable vide Finance Act, 2004 w.e.f. 10.09.2004 and w.e.f. 16.06.2005, the scope of the service was expanded and re-named as Commercial or Industrai Construction Service. Taxable services mean any service to be provided to any person, by any other person in relation to commercial or industrial construction (Section 65(105)(zzq). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice is classified to the heading providing the most specific description rather than a more general specification. The Works Contract Service is more specific than the Industrial Construction Service in the present circumstances and thus the service provided by M/s IBPPLmerits to be classified under the Works Contract Service. 10. Further, the Hon ble Supreme Court in its Order dated 20.08.2015 in Civil Appeal No.6770 of 2004 in the case of L T Ltd and Others {2015 (39) STR 913 (SC)} has held that (i).. This is clear from the very language of Section 65(105) which defines taxable service as any service provided.All the services referred to in the said Sub-clauses are service contracts simplicitor without any element in them.(ii) Section 67 of the Finance Act, which speaks of gross amount charged, only speaks of the gross amount chargedfor service provided and not the gross amount of the works contract as a whole from which various deductions have to be made to arrive at the service element in the said contract. (iii) Ot is this scheme alone which complies with constitutional requirements in that it bifurcates a composite indivisible works contract and takes care to see that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said provisions of Section 67 of the said Act have been complied with, the question of applicability of said Rule 2A of the Rules does not arise. It is further clear from the provisions of Sub-section (4) of Section 67 of the said Act, that where value cannot be determined as provided under Sub-rule (1) to (3) of Section 67 of the said Act, then only the value is to be determined as provided under the Rules. We find that there is no allegation in the Show Cause Notice that provisions of Section 67 of the said Act, are violated by the appellant, therefore, there is no question of application of said Rule 2A of the said Rules, nor there was any question of forcibly applying option of Composition Scheme on the appellant. In both these circumstances, the appellants were entitled for Cenvat credit on inputs. We, therefore, find that appellants were entitled for Cenvat credit on inputs. We find that the entire demand is made out on the presumption that Cenvat credit on input was not admissible and as a result there was short payment and as a result there was also a demand Section 73A of the Finance Act, 1994. In view of our above discussion and findings, the allegation in the show cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicability in the present case. In that case, the Apex Court was considering the sole issue of leviability of service tax on the composite contract which are in the nature of works contract prior to 01.06.2007, i.e. the date on which the works contract service was brought under the levy by a specific entry. The issue in the present case is about the valuation methodology of works contract service, after 01.06.2007, the option available to the appellant for valuation and its bearing on admissibility of Cenvat Credit on inputs. The judgment of the Hon ble Apex Court has, therefore, been relied upon by the Commissioner out of context as we find that the issues for determination in that case and in the present case are entirely different. 9. We find that the judgement of this Tribunal in M/s S. V. Jiwani (supra) squarely apply in the present case. The relevant portion of the order of the Tribunal in M/s S. V. Jiwani (supra) is reproduced below:- 6. We have considered the submissions made at length by both sides and perused the records. 7. Undisputed facts are appellant were awarded a contract by Classic Marbles Impex Pvt. Ltd., for setting up of their plant w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged. (3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service. (4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed. Explanation : For the purpose of this section, - (a) consideration includes any amount that is payable for the taxable services provided or to be provided; (b) money includes any currency, cheque, promissory note, letter of credit, draft, pay order, travellers cheque, money order, postal remittance and other similar instruments but does not include currency that is held for its numismatic value: (c) gross amount charged includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and book adjustment, and any amount credited or debited, as the case may be, to any account, whether called Suspense accountor by any other name, in the books of accounts of a pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e an impression that the rule will prevail over the provision of Section 67 and Rule 2A of the Valuation Rules for determination of value for discharge of Service Tax liability in cases of works contracts, but on deeper reading we find that the said provisions indicate another intention of legislature. 15. In order to appreciate a correct position, the relevant Rule needs to be reproduced : 1. (1) These rules may be called the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. (2) They shall come into force with effect from the 1st day of June, 2007. 2. Definitions. - In these rules, unless the context otherwise requires, - (a) Actmeans the Finance Act, 1994 (32 of 1994); (b) sectionmeans the section of the Act; (c) works contract servicemeans services provided in relation to the execution of a works contract referred to in sub-clause (zzzza) of clause (105) of section 65 of the Act; (d) words and expressions used in these rules and not defined but defined in the Act shall have the meanings respectively assigned to them in the Act. 3. (1) Notwithstanding anything contained in Section 67 of the Act and Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for inclusion is gross value for discharging of Service Tax liability under the provisions of Finance Act, 1994. In our view, if the Rule 3(1) of Works Contract (Composition Scheme) for Payment of Service Tax Rules, 2007 is to be considered as having overriding effect over Section 67 and Rule 2A of Valuation Rules on literal construction of non-obstante clause, then an incongruous result will follow since the statutory provisions will be rendered nugatory and otiose. Further we are of the view that an anomalous situation would arise, if it is held so, as benefit of Rule 2A of Valuation Rules would no longer be available as an option to the service provider if non-obstanteclause employed in Rule 3(1) of Composition Rules is read in the manner Revenue wants us to read. In our view, this can neither be the intention of the legislature and no such interpretation can be done which renders a statutory provision nugatory. In our view, Rule 3 of Composition Rules is merely one of the option provided to the service provider to discharge of Service Tax liability vis-a-vis options available in Section 67 of the Finance Act, 1994. 17. Further, as there is no dispute to the facts that ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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