2015 (12) TMI 16 - AT - Service Tax

Waiver of pre deposit - benefit of abatement - service of laying pipelines - installation or commissioning service - Held that - No hearing was held in respect of the Show Cause Notice dated 15.10.2012 and therefore prima facie the demand of ₹ 14,81,645/- has been confirmed in violation of principles of natural justice which warrants full waiver and stay in respect thereof. As regards the remaining demand of ₹ 52,72,521/-, we find that the benefit of abatement in the Notification No. 15/2004-ST has been denied on the ground that the value of free supplies has not been included in the assessable value. In this regard we note that in the case of Bhayana Builders (P) Ltd. & Ors. vs. CST, Delhi & Ors. 2014 (7) TMI 1049 - CESTAT NEW DELHI , it has been held that the benefit of abatement is available even when the value of free supplies is not included in the assessable value. Thus, prima facie, the appellants are eligible for the benefit of abatement rate of 67% under Notification No. 15/2004-ST / No.1/2006-ST. - Installation of plumbing, drain laying or other installation for transport of fluid is covered under the definition of Erection, Commissioning or Installation Service (ECIS) - Partial stay granted.

Issues:
1. Confirmation of service tax demand for laying pipelines under installation or commissioning service.
2. Violation of principles of natural justice in confirming demand without personal hearing.
3. Denial of abatement benefit in assessable value.
4. Eligibility for abatement rate under Notification No. 15/2004-ST.
5. Applicability of judgment in the case of Indian Hume Pipe Co Ltd.
6. Pre-deposit requirement under Section 35F of the Central Excise Act 1944.

Analysis:
1. The judgment deals with an appeal against the confirmation of service tax demands for laying pipelines under installation or commissioning service. The demands were confirmed for rendering the service of laying pipelines, which was held to be covered under Section 65 (105) (zzd) read with Section 65 (39a) of the Finance Act, 1994.

2. The appellant contended that one of the demands was confirmed without granting a personal hearing, leading to a violation of natural justice principles. The Tribunal noted that no hearing was held for this specific demand, warranting a full waiver and stay due to the violation of principles of natural justice.

3. Regarding the denial of abatement benefit in the assessable value, the Tribunal found that the benefit of abatement had been denied because the value of free supplies was not included in the assessable value. However, the Tribunal referred to a previous case where it was held that the benefit of abatement is available even when the value of free supplies is not included in the assessable value.

4. The Tribunal determined that the appellants were prima facie eligible for the benefit of the abatement rate of 67% under Notification No. 15/2004-ST / No.1/2006-ST. It was established that the installation of plumbing, drain laying, or other installations for fluid transport falls under the definition of "Erection, Commissioning, or Installation Service" (ECIS).

5. The Tribunal discussed the applicability of a judgment in the case of Indian Hume Pipe Co Ltd., stating that the discussion regarding this judgment could be taken up at the time of the final hearing, indicating that it could impact the final decision in the case.

6. Finally, the Tribunal ordered a pre-deposit of &8377; 17.5 lakhs within four weeks to meet the requirement of Section 35F of the Central Excise Act 1944, read with Section 83 of the Finance Act 1994. Compliance was to be reported by a specified date, and recovery of the remaining adjudicated liabilities was stayed during the pendency of the appeal, with a warning that failure to comply with the pre-deposit would result in the appeal being dismissed.

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