TMI Blog2022 (5) TMI 431X X X X Extracts X X X X X X X X Extracts X X X X ..... invoices, service tax @ 4.80% has been charged on the gross value which is nothing but the sum total of steel and cement received by the contractor M/s. Ramavat Energy Pvt Ltd. from the appellant. Based upon the total value of the cement received vide 18 invoices of table No. 1 that the total amount of Rs.3,60,14,605/- has been worked out for cement - Credit availed by the appellant on the total amount of cement issued to the contractor freely by him is Rs.2,55,405/-. Similar are the findings with respect to all other items provided free to the appellant by the contractor and similar are the observations with respect to all 18 number of invoices. The contract price paid to the contractor by the appellant was @ Rs.4.78 per sq ft (26.29 lakh for construction of 5.50 sq ft. The said amount mentioned to have been inclusive of works contact tax / VAT. There is nothing on record to show that from the gross value of the invoices which appears to have been inclusive of VAT, there has been any deduction of the said amount of VAT - the service tax has been deducted based upon the said gross value and the Cenvat Credit has been availed by the appellant on the said amount of service tax. Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh Bhardwaj, Authorised Representative for the Department ORDER The appellant in the present case is the holder of Service Tax registration and is engaged in providing construction of residential complex services, construction of other than residential complex services, Sponsorship, Business Auxiliary Service, etc. During Audit, it was observed that appellant was engaged in construction of residential complex service. They had entered into an agreement dated 19.4.2014 with M/s. Ramavat Energy Pvt Ltd. Jaipur for construction of Trimurty s Ariana Group Housing Project at Ramnagaria, Jagatpura, Jaipur. Vide the said agreement, the following building material was agreed to be provided to the appellant on free issue basis by M/s. Ramavat Energy Pvt Ltd. for construction of Trimurty s Ariana . 1. Cement, 2. TMT Rebars (Reinforcement Steel) 3. Tiles, Granite, Marble, Kota stone, etc. 4. Electrical material 5. Sanitary water supply material 6. Anti-termite wood paints for chakhats 7. 3 thick heat insulation materials 8. Any other material as per contract. The Audit Team observed that the appellant have wrongly availed Cenvat credit of service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order under challenge is prayed to be set aside and appeal prayed to be allowed. 3. While rebutting the submissions, learned Departmental Representative submits that apparently and admittedly the credit has been taken on the gross value mentioned in the invoices. The said gross value admittedly included VAT. Hence, there is nothing wrong in the allegations that the credit has been availed by the appellant on the amount of VAT as well, which is not permissible. Learned Departmental Representative has impressed upon the contract executed between the appellant and the contractor where the contract is for construction of 550000 Sqft @ Rs.778/- per sqft which shall be inclusive of work contract tax (VAT). From the invoices of M/s. Ramavat Energy Pvt Ltd., it is clear that the contractor has included the free issue material. The value of free issue material for charging the work contract service on abatement value of 40%. The said value is inclusive of Central Excise duty and VAT. As per Rule 2A of Determination of Value Rules, the total value for the purpose of paying the service tax shall not have included the value of material. It is submitted that due to these reasons, there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the appellant. Based upon the total value of the cement received vide 18 invoices of table No. 1 that the total amount of Rs.3,60,14,605/- has been worked out for cement. RUD 4 shows that the said amount of VAT of Rs. 45,60,802/- has been paid including the credit availed with respect to total amount of cement issued to the contractor. Credit availed by the appellant on the total amount of cement issued to the contractor freely by him is Rs.2,55,405/-. Similar are the findings with respect to all other items provided free to the appellant by the contractor and similar are the observations with respect to all 18 number of invoices. 7. As pointed out by learned Departmental Representative, the contract price paid to the contractor by the appellant was @ Rs.4.78 per sq ft (26.29 lakh for construction of 5.50 sq ft. The said amount mentioned to have been inclusive of works contact tax / VAT. There is nothing on record to show that from the gross value of the invoices which appears to have been inclusive of VAT, there has been any deduction of the said amount of VAT. As already observed above, the service tax has been deducted based upon the said gross value and the Cenvat Credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the decision of Ranbaxy Labs Ltd. vs CCE, Chandigarh reported as [2006-TIOL-438-HC-P H-CX]. Another decision in M/s. V G Steel Industry vs CCE reported as [2011-TIOL-338-HCP H-CX] also it was held that when the duty is paid in excess of what was payable Cenvat credit cannot be denied unless excess duty paid has been refunded. The claim of Cenvat Credit cannot at all be denied as department is not allowed to have duty twice. Question of recovery of interest on the said amount also does not arise. Hon ble High Court of Karnataka in the case of CCE vs. Pearl Insulation Ltd. reported as [2012 (281) ELT 192 (Kar)] and in case of CCE vs Strategic Engineering Pvt. Ltd. reported as [2014 (310) ELT 509 (Mad)] has held that provision of Rule 14 of Cenvat Credit Rules, 2004 for recovery of interest on said Cenvat Credit i.e. the credit availed on excess amount of service tax paid will not be attracted. Hence the Revenue s stand for recovery of interest under said Rule and imposition of penalty can not succeed. 9. Based upon the entire above observations, order under challenge is set aside. Consequential thereto, the appeal stands allowed. (Pronounced in the open Court on 10-05-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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