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2019 (3) TMI 818

to the fact that appellant was awarded a contract for constructing airport on build, operate, own and transfer basis; he had given various sub-contracts to others to construct airport facility; procure cement and steel on their own and gave it sub-contractors for construction of airport and avail CENVAT credit on such cement and steel, various input services were used during the construction of airport and hence availed CENVAT credit. It is also on record that appellant had been filing regularly returns with the authorities. - This factual position of discharging the service tax liability on the airport services is not denied. The issue of availment of CENVAT credit on various items like steel and cement and other input services which are used for construction of airport is covered by the ratio laid down by the Hon’ble High Court of Gujarat in the case of Mundra Ports & Special Economic Zone Ltd [2015 (5) TMI 663 - GUJARAT HIGH COURT]. In view of the foregoing, the adjudicating authority’s order of denying CENVAT credit is incorrect and unsustainable. - CENVAT credit of central excise duty paid on inputs capital goods and input services in respect of hotel (Novotel) constru .....

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ion of demand along with interest is correct and needs to be upheld - Since we have disposed of the major demand of irregular availment of CENVAT credit on merits as well as we find that there is no reason to sustain penalties imposed on the appellant - Appellants are directed to pay/reverse the amount of CENVAT credit with interest. - Appeal disposed off. - ST/2101/2010-DB - A/30346/2019 - Dated:- 14-3-2019 - Mr. M.V. Ravindran, Member (Judicial) And Mr. P. Venkata Subba Rao, Member (Technical) Mr G. Shivdas Sr Adv, Mr sudeshna Benerjee and ADV for the Appellant. Mr A.V.L.N. Chary A.R. for the Respondent. ORDER Per: M.V. Ravindran. This appeal is directed against order-in-original No. 02/2010ST dated 29.01.2010. 2. The relevant facts that arise for consideration are appellant has entered into concession agreement for development, construction, operation and maintenance of Hyderabad International Airport with Ministry of Civil Aviation, Govt of India. The project was undertaken and executed through Public-Private Sector approach. An agreement was entered between DGCA and the appellant herein wherein it granted concession to the appellant with a direction that appellant s activi .....

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is challenged before the Bench. 3. Learned senior counsel appearing on behalf of the appellant, after giving overall picture of the dispute in hand, submits that the entire demand can be put into 9 major heads which is as under: Sl. No. Allegations Demand (in Rs.) as per SCN Demand (in Rs.) as per OIO 1. Irregular availment of CENVAT credit on Steel & Cement used in the construction of Airport 6,56,15,007* 6,56,15,007* 2. Irregular availment of CENVAT credit on input services (i.e. availing of input services on 16 services used in construction of the Airport) 10,81,22,098 10,81,22,098 3. Irregular availment of inputs, capital goods and input services in respect of Hotel (NOVOTEL) construction 5,67,60,264 5,67,60,264 4. Irregular availment of credit on Capital goods and inputs used in Hotel (NOVOTEL) construction 2,60,00,996 2,60,00,996 5. Irregular availment of CENVAT credit on input service - Construction of Fuel Farm 99,75,358 99,75,358 6. Ineligible credit on Air Turbine Fuel (ATF) 31,04,102 31,04,102 7. Irregular credit on services not connected with provision of taxable output services (services consumed/ used by the individuals/other than registered premises) 4,00,83,247 .....

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gh Court of Haryana in the case of State of Haryana Vs Dalmia Dadri Cement Ltd [2004(178)ELT 13 (SC) and Pipavav Shipyard Ltd Vs CCE [2016(41)STR 151 (Tri-Ahmd)]. He would submit that the inclusive definition of input services specifically covers services used for setting up of premises of a service provider and include services used in relation to business. A law which has been settled by the Tribunal in the case of Coca Cola India Pvt Ltd Pune Vs CCE Pune-III[2009(242)ELT 168 (Tri-Bom)] and CCE Vs Ultra Tech Cement Ltd [2010(20)STR 577(Bom)]. iii. As regards Item No 3 & 4 in the table reproduced hereinabove, it is his submission that they had received capital goods, inputs and input services which were used for construction of hotel (Novotel). CENVAT credit has been sought to be denied by the adjudicating authority on the ground that hotel is not a part of the Airport, therefore not used for providing air-port services, Contractor constructing the hotel has availed abatement extended by Notification No. 1/2006-ST dated 01.03.2006 while discharging the service tax liability under the construction services and the hotel is a immovable property. It is his submission that hotel i .....

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e used for providing airport services inasmuch the Volvo chassis is used for movement of equipment which are required during fueling the airlines with ATF. viii. As regards CENVAT credit availed on invalid documents, he would submit that this also needs to be reconsidered by the lower authorities. 3. It is his further submission that the adjudicating authority has improperly considered the submissions made by them on the limitation part. It is his submission that intention to avail CENVAT credit on various inputs and input services during the construction of airport was disclosed to Authorities on 24.04.2006 itself and hence extended period cannot be invoked as department is aware of availment of credit from October 2004 onwards. Further, the service tax records of the appellant are audited regularly and in the year 2007 also audit took place and there were no adverse paragraphs. 4. It is his further submission that the issue involved in this case being interpretation of complex legal provisions, penalties imposed needs ot be set aside so also the interest. 5. Learned A.R. on the other hand submits that CENVAT credit availed on steel and cement and other input services for the cons .....

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arious input services were used during the construction of airport and hence availed CENVAT credit. It is also on record that appellant had been filing regularly returns with the authorities. 8. On this factual matrix it now requires whether appellant is eligible for the availment of CENVAT credit or otherwise itemwise as indicated by the learned counsel and reproduced by us in paragraph No 2. 9. As regards availment of CENVAT credit on Item No 1 & 2 (of table at Paragraph No. 2) it is undisputed that steel and cement which has been procured by the appellant has been handed over to the contractors for construction of airport. This construction of airport is undertaken by the appellant by entering into a concessional agreement with the Ministry of Civil Aviation for overall construction, operation and maintenance of Hyderabad International Airport. We find that subsequent to opening of the airport, appellant has been discharging the service tax liability under the category of airport services or the services which are rendered by them within the airport area. This factual position of discharging the service tax liability on the airport services is not denied. We find that the is .....

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charged. The entire dispute in the case is regarding the central excise duty paid on the fuel which is required and maintaining minimum level of stock of fuel in order to fill the fuel in the aircraft. We find that CENVAT credit on the fuel farm cannot be denied to the appellant herein as the same qualifies as an input services in terms of Rule 2(l) of the CENVAT Credit Rules 2004 as it is an activity relating to business. 12. As regards CENVAT credit availed at Sl No. 7 (of table to Paragraph No. 2), we find that voluminous documents are produced before us to justify that these services are output services. In our view these documents needs to be considered by the adjudicating authority to come to a conclusion whether appellant s eligible for availment of CENVAT credit or otherwise. In our view this exercise would have to be done by the adjudicating authority. Accordingly without expressing any opinion on the merits of this point we remand the matter back to the adjudicating authority to reconsider the issue afresh on this point as well as Point No. 9 after following the principles of natural justice. 13. As regards availment of CENVAT credit on Volvo chassis Sl No. 8 (of table to .....

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