TMI Blog2021 (10) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... has been taken away by the legislature. The services used for setting up of the factory even after 01.04.2011 would be eligible for credit. The Ld. Commissioner has allowed credit on certain invoices assuming the same to be pure services and disallowed the credit on remaining portion by considering the same to be in the nature of civil portion. We find that this Tribunal has been consistently applying the user test to decide the credit eligibility as laid down by the Hon ble Supreme Court. The Tribunal in B S Sponge Pvt Ltd vs. CCE, Raipur [ 2019 (2) TMI 850 - CESTAT NEW DELHI] . Also, the mode of valuation adopted by the Contractor to discharge service tax on 40% of the contract value is in accordance with law contained in Service Tax Valuation Rules and cannot be disputed while deciding credit eligibility at the appellant s end. When service tax has been levied only on 40% of the total value, it essentially means that service tax has been paid only on the service portion. CENVAT Credit availed by the appellant for setting up of CHP, which is used for evacuation of coal by rapid loading process, cannot be legally denied - appeal allowed - decided in favor of appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusive supply of goods for construction of SILO cannot be defined as input service . 3 (i). The Ld. Advocate for the appellant submitted that the Commissioner has disputed the payment of service tax by the service provider on 40% of the total contract value including goods and services. He submitted that the Ld. Commissioner has failed to appreciate that the appellant has no control on the value to be adopted by the Contractor, i.e. service provider, for payment of service tax. He relied on the following decisions to submit that availment of credit cannot be disputed by the Department at the recipient s end when the valuation has not been disputed at service provider or manufacturer/supplier s end:- CCE vs. MDS Switchgear 2008 (229) ELT 485 (SC) Sarvesh Refractories 2007 (218) ELT 488 (SC) CCE vs. Purity Flexpack Ltd vs. 2008 (223) ELT 361 (Guj) Newlight Hotels and Resorts Ltd vs. CCE 2016 (44) STR 258 (Tri-Ahm) (ii) He further submitted that credit has been allowed on the portion of the contract which the Department assumed to be pure services e.g. planning, designing, etc. He submitted that by allowing the said credit, the Department has in-principle agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chhattisgarh) wherein the dispute pertained to the period after 01.04.2011 and the Hon ble High Court held that the construction of Palletising Plant for modernisation purpose is eligible for credit as the same has been specifically covered in the definition of input service. The Ld. Advocate further relied on the Tribunal s decision in the case of B S Sponge Pvt Ltd vs. CCE, Final Order no. 50231/2019 dated 08.02.2019 wherein the user test principle , as laid down by Hon ble Supreme Court in catena of decisions, has been considered to allow the credit on goods and services used in civil structure. He also relied on the following decisions:- The Ramco Cements Ltd vs CCE (Madras High Court Order dated 11.10.2017 in Civil Misc Appeal no. 2629 of 2012) Shiruguppi Sugar Works Ltd vs. CCE 2019-TIOL-821-CESTAT-BANG Ultratech Cement Limited vs. CCE 2017-TIOL-2442-CESTAT-BANG Nuvoco Vistas Corporation Ltd vs. CCE 2019-TIOL-2063-CESTAT-CHD (v) The Ld. Advocate also referred to the terms of the tender contract to show that the whole purpose of setting up of CHP is to modernise the coal evacuation system from the collieries, which includes electrical, mechanical works and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ushing of ROM coal, storage of crushed coal in a self flowing above ground bunker, rapid loading system, dust suppression and extraction, fire fighting, automatic coal sampling, etc. The plan showing the location of the CHP is given on the drawing bearing no In case of any construction amongst these parts/sections of the Bidding Documents, the owner should be contracted for clarification. Also where there are discrepancies in the text and drawings, the data given in the text is to be followed. All the equipment and facilities are to be supplied by the successful bidder within the estimated time period. All equipment / system shall be designed, fabricated and selected as per relevant necessary international standards and up to date engineering practices and necessary inspections / test certificates shall be submitted alongwith equipment supply to certify the quality and genuineness of critical components and capacity and other technical parameters of the equipment / systems From the above, it appears that the purpose of setting up of the CHP is to load the coal into the railway wagons in an automated manner after the coal is crushed into the desired size. It is not in di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture is not defined in the Rules, the definition under the Central Excise Act, 1944 must be considered. Section 2(f) of the Central Excise Act defines manufacture as follows: 2(f) manufacture includes any process i) incidental or ancillary to the completion of a manufactured product; ii) which is specified in relation to any goods in the Section or Chapter notes of the Fourth Schedule as amounting to manufacture; or iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer; the word manufacturer shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account. 20. Thus, the term manufacture itself is very wide and includes anything incidental or ancillary to manufacture. 21. For a service to qualify as input service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r test to decide the credit eligibility as laid down by the Hon ble Supreme Court. The Tribunal in B S Sponge Pvt Ltd vs. CCE, Raipur (Final Order no. 50231/2019 dated 08.02.2019) while considering the user test principle as laid down by the Supreme Court observed as follows:- 5. After hearing both the parties and keeping in view the various Orders at each stage of this litigation and the case law as relied upon by the appellant, I am of the opinion that the issue has been dealt by various adjudicating authorities and it has now been clearly settled that structures like Ms angle, Ms channels, Ms joists, chequered plates or similar steel structures used in fabrication of supporting structures if are merely the civil structures for supporting the machines/ apparatus used in manufacture of final product stands excluded from the definition of capital goods.But if such structures satisfies the user test principle as appreciated by Hon ble Apex Court in Rajasthan Spinning Weaving Mills Ltd. (supra) case, all these structural items are as good as spare parts of the capital goods as mentioned in Clause 3 of Section 2(a) of Cenvat Credit Rules, 2004 and thus are eligible inputs/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other High Court decisions, has ruled that the assessee is entitled to avail credit on construction of railway siding which is used for providing cargo handling services during the period covered under the amended Cenvat Credit Rules post 01.04.2011. In view of the decisions of the various High Courts and the Tribunal wherein the user test principle has consistently been followed, we are of the view that Cenvat availed by the appellant for setting up of CHP, which is used for evacuation of coal by rapid loading process, cannot be legally denied. 9. Further, the said CHP has been set up with the view to modernise the coal loading process in the mines also satisfies the definition of input service. Moreover, since the credit has been allowed by the Department on certain invoices raised by the Contractor, the Department has in-principle found the service to be eligible for credit. We also agree with the submission made by the appellant that the mode of valuation adopted by the Contractor to discharge service tax on 40% of the contract value is in accordance with law contained in Service Tax Valuation Rules and cannot be disputed while deciding credit eligibility at the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X
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