9911796707
TMI Blog2019 (12) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... clusion of 'cement', 'angles', 'channels', etc, used in construction of building, among the exclusions in Explanation - II to rule 2(k) of CENVAT Credit Rules, 2004 came into effect only from 7th July 2009. It is further contended that the definition of 'input services' in rule 2(l) to CENVAT Credit Rules, 2004 did not exclude the services utilized by them. It is further contended that the erroneous emphasis has been placed by adjudicating authority on the binding nature of circular no. 98/1/2008-ST dated 4th January 2008 of Central Board of Excise and Customs which, on a reference made to it, had clarified that 'Right to use immovable property is leviable to service tax under renting of immovable property service. Commercial or industrial construction service or works contract service is an input service for the output namely immovable property. Immovable property is neither subjected to central excise duty nor to service tax. Input credit of service tax can be taken only if the output is a 'service' liable to service tax or a 'goods' liable to excise duty. Since immovable property is neither 'service' or 'goods' as referred to above, input credit cannot be taken.' in the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Musaddilal Projects Ltd v. Commissioner of Central Excise, Customs & Service Tax [2017 (4) GSTL 401 (Tri.-Hyd.)], that, while considering the availment of CENVAT credit on 'inputs' and 'input services' for the period between October 2008 and March 2012 it was held that CENVAT credit availed up to 1st April 2011 was not barred for availment as per rule 2(k) of CENVAT Credit Rules 2004 as it then existed. The objection of Revenue that eligibility of certain inputs stood restricted with effect from 7th July 2009 was discarded thus '10. The major objection put forward by the Department is that w.e.f. 7-7-2009 an amendment is brought forth in the definition of inputs, restricting the eligibility of credit 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 v. CCE, Raipur [2010 (253) ELT 440 (Tri.-LB)] to deny the credit on inputs such as cements and steel used prior to 1-4-2011 and also for the period after. On bare perusal of the definition of inputs and the Explanation 2, introduced w.e.f. 7-7-2009 makes it clear that Explanation 2 deals with the use of cement and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... providing any output service, would be treated as "input" and covered under the said definition. Further, the particular 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 "service provider" and the "manufacturer" respectively. The present case relates to output service provider. The expression "any service", if read with "used by a provider of taxable service for providing an output service" in Clause (i) of Rule 2(l) of the Rules, 2004 had widened the scope of "input service" in respect of output service provider. It is well-settled that literal interpretation would prevail, where the plain words of statute are clear, unambiguous and not absurd or unjust. An attempt was made by the learned authorised representative for the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lify as "input" This presupposes that the clement of "manufacture" must be present. 8. Yet again considering the inclusive part of the definition of "input", it was held as follows : All these considerations become relevant only when they are read with the expression "used in or in relation to the manufacture of final product" in the substantive/specific part of the definition. In each case it has to be established that inputs mentioned in the inclusive part is "used in or in relation to the manufacture 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 would become eligible for credit only when used in or in relation to the manufacture of final product. Hydrogen gas used in the manufacture of sodium cyanide is an eligible input, since it has a sig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 2(l) of Cenvat Credit Rules, 2004, (prior to 1-4-2011) 'input service' means any service. (i) Used by a provider of taxable service for providing an output service, or (ii) Used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or Capital goods and outward transportation upto the place of removal." From the above definition of input service, any service used by a provider of taxable service for providing an output service is admissible 'input service'. Input service specifically includes amongst others services used in relation to sett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t service'. In the case of input service, the definition includes input services used by a provider of taxable service for providing an output service. Therefore the definition of inputs and input service are pari materia as far as the service providers are concerned. That being the position, the decision of the Hon'ble High Court of Andhra Pradesh would be applicable to the present case. In that decision of the Hon'ble High Court took the view that without use of cement and TMT bars for construction of warehouse assessee could not have provided 'storage and warehousing service'. In this case also, without utilizing the service, mall could not have been constructed and therefore the renting of immovable property would not have been possible. The issue involved is squarely covered by the decision of the Hon'ble High Court of Andhra Pradesh. Since the service tax demand itself is not sustainable, the question of imposition of penalty does not arise. The appeal is allowed with consequential relief to the appellants" Relying on the aforesaid judgment, this Tribunal in the case of Laxmi Enterprise and Varun Industries taken the consistent view and allowed the Cenvat credit in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court of Andhra Pradesh would be applicable to the present case. In that case also, the Hon'ble High Court took the view that without use of cement and TMT bars for construction of warehouse assessee could not have provided 'storage and warehousing service'. In this case also, without utilizing the service, mall could not have been constructed and therefore the renting of immovable property would not have been possible. The issue involved is squarely covered by the decision of the Hon'ble High Court of Andhra Pradesh. Since the service tax demand itself is not sustainable, the question of imposition of penalty does not arise. The appeal is allowed with consequential relief to the appellants." The above reproduced view was followed by this Bench of the Tribunal in the case of Vamona Developers Pvt. Ltd. by referring to the judgment of Hon'ble High Court of Karnataka in the case of mPortal India Wireless Solutions Pvt. Ltd. - 2012 (27) STR 134 (Kar.) and the judgment of Hon'ble High Court of Andhra Pradesh in the case of Sai Sahmita Storages Pvt. Ltd. - 2011 (270) ELT 33 (A.P.) and held in the favour of the appellant. We do not find any reason to deviate from such a view already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered the definition of the input and input service and took a view that using cement and TMT bars for construction of warehouse, the CENVAT credit on cement and TMT bars would be admissible. The Honble High Court observed as follows: 6. The only allegation against the assessee is that they claimed CENVAT credit irregularly with reference to cement and TMT bars used in the construction of warehouses through which the storage and warehousing services are provided by the assessee. Section 65(102) of the Finance Act defines storage and warehousing as to include storage and warehousing services for goods including liquids and gases but does not include any service provided for storage of agricultural produce or in service provided by cold storage. As per Section 65(105)(zza), read with Section 66 of the Finance Act, there shall be levied tax on storage and warehousing services at 12% of the value of taxable service. The service tax payable is determined in accordance with Section 67(4) read with the Service Tax Rules, 1994 made in exercise of the powers under Section 94 of the Finance Act. There is no dispute that every provider of taxable service is entitled to claim CENVAT cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Central Excise, Delhi-III, (2009) 9 SCC 193 = 2009 (240) E.L.T. 641 (S.C.) the Supreme Court laid down as follows: 9. Coming to the statutory definition of the word input in Rule 2(g) in the CENVAT Credit Rules, 2002, it may be noted that the said definition of the word input can be divided into three parts namely: (i) specific part (ii) inclusive part (iii) place of use 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 presupposes that the clement of manufacture must be present. 3.2 The definition of inputs is limited to the definition of input services as can be seen from the definition given above. Credit of duty paid on inputs is available when the inputs are used for providing an output service. Therefore, there is a need to say that the inputs have been used for providing an outp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aside and we do so. ' 8. As reliance was placed by the original authority on circular no. 98/1/2008-ST dated 4th January 2008 of Central Board of Excise and Customs, it may be necessary to examine the applicability of the intent of that clarification to the present dispute. The issue that was raised therein was whether 'commercial or industrial construction service' could be treated as 'input service' for the output service of 'renting of immovable property' and, while clarifying that 'commercial or industrial construction service' is an input service for the output, viz., immovable property, the view taken was that 'right to use' of the immovable property, being the output liable to service tax and not the property per se, credit would not be available. It was clearly held in the decision supra of the Tribunal that, without the establishing of the property, 'right to use' would not come into being. It is inconceivable that a structure which is to be utilized for service can be alienated from the 'right to use'. It was in such context that the decision of the Tribunal interpreted the clarification contained in the circular referred to in the impugned order. In re Dymos India Auto ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
