2019 (8) TMI 70 - AT - Service Tax

CENVAT Credit - inputs/capital goods - angles shapes sections and channels etc. used for erection of Unipoles /hoardings which are fixed to the earth and on which the appellant/assessee displays advertisement - assessee renders advertisement services - case of Department is that these are not goods - HELD THAT - The issue is no longer res integra. It has been held by the jurisdictional High Court of Andhra Pradesh in the case of COMMR. OF C. EX. VISAKHAPATNAM-II VERSUS SAI SAHMITA STORAGES (P) LTD. 2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT that steel and cement used in erecting structures which were in turn used for rendering services are eligible inputs for availing Cenvat credit. Also it is only with effect from 07.07.2009 cement angles channels CTD bars and TMT bars etc. have been excluded from the definition of inputs under Rule 2(k). Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal ST/2610/2011: Denial of Cenvat credit for advertisement services.
- Appeal ST/2757/2011: Non-imposition of penalties.

Analysis:
1. Appeal ST/2610/2011 (Cenvat Credit Denial):
The main issue in this case was whether the assessee, providing advertisement services, is entitled to Cenvat credit on materials like angles, shapes, sections, and channels used for erecting "Unipoles"/hoardings. The department argued that these materials were not eligible for Cenvat credit as they were fixed firmly to the earth and ceased to be goods. The assessee contended that prior to 07.07.2009, they were entitled to the credit as the materials were not fixed to the earth until after the structure was completed. The assessee also cited the judgment in Solid & Correct Engineering Works to support their claim that the materials did not cease to be goods when attached to the earth.

2. Legal Precedents and Interpretation:
The counsel for the appellant referred to the judgment in Sai Samhita Storages Pvt Ltd, where it was held that materials like steel and cement used for erecting structures for rendering services are eligible for Cenvat credit. Similar decisions in Mundra Ports & Special Economic Zone Ltd, Thiru Arooran Sugars, India Cement Ltd, Vimala Infrastructure India P Ltd, and Vandana Global Ltd were also cited to support the eligibility of Cenvat credit on such materials. The departmental representative, however, maintained the position that the appeal should be dismissed.

3. Judgment and Decision:
After considering the arguments and legal precedents, the Tribunal found that the issue was no longer res integra. Referring to the judgment in Sai Samhita Storages Pvt Ltd and other cases, it was established that materials like steel and cement used in structures for providing services were eligible for Cenvat credit. The exclusion of certain materials from the definition of inputs under Rule 2(k) from 07.07.2009 was noted. Consequently, the Tribunal allowed the assessee's appeal for Cenvat credit and rejected the department's appeal for imposing penalties.

4. Operative Part of the Order:
The Tribunal pronounced the operative part of the order in the open court, allowing the assessee's appeal with consequential relief and rejecting the department's appeal.

In conclusion, the judgment by the Appellate Tribunal CESTAT HYDERABAD resolved the issues of Cenvat credit denial for advertisement services and non-imposition of penalties by considering legal precedents, interpretations of relevant rules, and the arguments presented by both parties.