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TMI Blog2013 (10) TMI 820X X X X Extracts X X X X X X X X Extracts X X X X ..... der Cenvat Credit Rules, credit can be taken by service recipient on the basis of invoices issued by the service provider. If invoices issued in respect of Architect Services, design service, consulting engineers service are in name of owner of property, prima facie there is no reason to deny the credit to the appellant. - 35% of Cenvat credit availed on input services is not required to be made as pre-deposit. Appellant directed to pre-deposit 35% of the Cenvat credit denied and attributable to inputs and capital goods alone - stay granted partly. - ST/3088 to 3090/2012 - Interim Order Nos. ST/122-124/2013(PB) - Dated:- 24-7-2013 - Archana Wadhwa And Mathew John, JJ. For the Appellant : Shri Lakshmi Kumaran, Adv. For the Respondent : Shri Pramod Kumar, DR All three stay petitions are being disposed of by a common order as the issue involved is identical. 2. After hearing both sides, we find that the following demands stand confirmed against the appellant alongwith imposition of penalties:- Appellants Name Appeal No. Period involved Cenvat Credit Availed Total Availed Utilised (out of Column 7) Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs under the "Works contract services' placed upon them. The appellants contention is that the said inputs, which has been used for the construction of the building, are ultimately used for providing the services of renting of immovable property and as such, are eligible cenvatable inputs in terms of definition of inputs in terms of provisions of Rule 2. For the above proposition, learned advocate has relied upon the Hon'ble Andhra Pradesh decision in the case of Commissioner of Central Excise Visakhapatanam II vs. Sai Sahmita Storages (P) Ltd. [2011 (23) STR 341 (AP)] vide which the Tribunal's decision holding that inputs used for construction of warehousing, for providing services of "storage and warehousing", are eligible cenvatable inputs. Learned Advocate also has drawn our attention to the Tribunal's decision in the case of Navaratna S.G. Highway Prop. Pvt. Ltd. vs. CST, Ahmedabad [2012 (28) STR 166 (Tri-Ahmd)]. The Tribunal in the said decision has allowed the Cenvat credit of Service Tax paid on various inputs services used for providing the output services of renting of immovable property. 5. On the other hand, the Revenue's contention is that such use of cement, glass a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d used by the person who has provided the Works Contract Services for the construction of mall. These inputs do not stand utilised by the appellants. The person who has used the same for construction of the building is also required to pay Service Tax under the category of 'Works Contract Services'. Undisputedly, the Service Tax paid under the category of 'Works Contract Services' provided by the person who has constructed the mall is available as credit to the appellants. However, the dispute in the present case is not in respect of credit of Service Tax paid on the 'Works Contract Services'. The appellants are seeking to avail the credit of Central Excise duty paid on the cement, steel and glass, which stand utilised by the Works Contract Service provider. At this stage, we also take note of the 'Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007. In terms of the said Rule the person providing 'Works Contract Services', stand given an option to pay an amount equivalent to concessional rate provided under the said Rules, subject to the condition that the provider of taxable services shall not take the Cenvat credit of duties or Cess paid on any input used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Visakhaptanam vs. Sai Sahmita Storages (P) Ltd. [2011 (23) STR 341 (AP)], the Hon'ble High Court held that the cement and TMT bars used for construction of warehousing is admissible cenvatable inputs. However, we note that in the said decision, the assessee was providing the services falling under the category of storage and warehousing services. The warehouse was constructed for providing the said services and the credit on the cement and TMT bar was availed for the construction of ware house. The Hon'ble High Court held that such use of inputs for construction of warehouse is with the purpose of providing storage and warehouse services and without construction of such warehouse, it is not possible to provide the said services. We note that the storage and ware housing services are separate services provided under Section 65(102) of the Finance Act and cannot be equated with the renting of immovable property. The construction of warehouse can be equated to the construction of factory for manufacture of goods in which case the inputs used for construction of the building are eligible cenvatable inputs whereas renting of immovable property is a temporary services and a building co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal in the case of Mundra Port and Special Economic Zone Ltd. vs. CCE, Rajkot [2009 (13) STR 178 (Tri-Ahmedabad) has considered an identical situation had held that the credit of excise duty paid on the construction material i.e. cement, steel used for construction of jetty is not available to the provider of Port services, inasmuch as the same are used for output services of construction of building and not for providing port services. For better appreciation, relevant paragraph from the said order are reproduced below:- "6. After considering the submissions made by both the sides on this issue, we would like to reproduce the relevant definitions, as contained in various provisions of the law. Rule 2. Definitions:- In these rules, unless the context otherwise requires, - (a) "capital goods" means :- (A) the following goods, namely :- (i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90 (heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804) of the First Schedule to the Excise Tariff Act; (ii) pollution control equipment; (iii) components, spares and accessor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le service), to a customer, client, subscriber, policy holder or any other person, as the case may be, and the expressions "provider" and "provided" shall be construed accordingly; 6. The main thrust of the appellant's argument is that the definition of input as contained in Rule 2(k)(ii) is all goods "used for providing any output service". It stands contended by them that any item which is required for the ultimate providing of the service, should be considered as an input. The expression used for providing should be construed as "used for the purpose of providing". The expression for the purpose of business stands interpreted by the Hon'ble Supreme Court to be of wide import. As they have contended that jetty is used for providing port services and cement and steel in question are used for construction of such jetty. As such it has to be held that cement and steel stand used for providing the output services. We find that the definition of input is provided in Rule 2(k), in two different clauses i.e. (i) and (ii). Clause (i) refers to the definition of inputs for the purposes of excise duty whereas Clause (ii) refers to the definition of input for the purposes of servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing by the contractor, which service is itself liable to service tax, though the same is exempted under the Notification. As such, it can be safely concluded that the cement and steel stand used for providing the output service of construction of building and not used in providing the port service, such an interpretation would lead to unwarranted results and the definition cannot be so stretched so as to include the use of cement and steel as used for providing the output service of port services. If such a wide meaning is given to the above expression then the cement and steel used for construction of any building which houses the office etc. would become eligible inputs for the purposes of providing output services. As such, we do not agree with the ld. Advocate that such cement and steel can be held to be eligible inputs used for providing the output port service. Accordingly, confirm the demand on this count." Further the Tribunal held that the various input services would get covered under the definition of input services inasmuch as the same are used for the purpose of providing output services and are integrally connected with the port services and other warehouse and stor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. Subject to the deposit of 35% of the duty confirmed against each applicant, within a period of 8 weeks from the date of receipt of the order, the pre-deposit of balance amount of dues and entire amount of penalties shall stand waived and its recovery stayed during the pendency of the appeals. 16. Matter to come up for ascertaining compliance on. All three stay petitions are disposed of in the above manner. (Pronounced in the open court on) 17. I have considered submissions on both sides and I have gone through the order recorded by Ld. Judicial Member and the case records. Since I am not in agreement with the above order I am recording this separate order. 18. To get a better view of the matter it is necessary to restate the figures itself by in crores rounding it off two decimals which is done in the following table: (Figures in Rs.Crores) Appellant's Name; Stay Petition Nos.; Appeal No. Period involved Cenvat Credit Availed Total Availed Utilised (out of Column 7) Not Utilised Input Services Inputs Capital Goods 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons other than appellant themselves say the contractor who executed the work or persons like that. This can be demonstrated by taking an example of SCN dated 22-02-2010 (para 10 of appeal Memorandum) issued to DLF Ltd which is shown in the following table: S. No. Input Service Amount 1 Works Contract Service 16309820 2 Architect's Service 6455084 3 Design Service 1459102 4 Cleaning Service 228836 5 Real Estate Agent Service 2667989 6 Banking and Other Financial Service 2,30,339 7 Consulting Engineer Service 1004074 8 Management Maintenance and Repair Service 186896 9 Security Service 411106 10 Advertisement Service 345106 11 Erection Commissioning and Installation 362894 12 Interior Decorators Service 31160 13 Supply of Tangible Goods 5717 22. I am not able to understand how any of these services cannot be considered to be availed by the appellant himself but by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, 2007 subject to the condition that he would not take credit of duty paid on inputs used in the construction activity so the appellant cannot now claim Cenvat credit. 25. Hon. Judicial Member in para 8 of the order has made an observation that what cannot be achieved directly cannot be achieved indirectly. This argument appears to be not correct in as much as Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 is an optional notification which an assessee need not avail and the contractor-assessee is entitled to avail credit of inputs used in construction and pay service tax utilizing such credit. So it is not as if something which is not permitted in law is being achieved by the appellant supplying the material to the contractor. If at all there is such an issue it is about eligibility for the contractor for the exemption under works contract scheme on account of free material being supplied by the appellant, which issue is under dispute before the Delhi High Court. The other issue raised by Ld. Judicial Member is the subtle difference between expressions "used in providing services" as compared to "used in relation to manufacture of goods" in the defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od Kumar, Jt. CDR for Revenue. 33. There is no difference between two Members on the point that 35% of Cenvat credit availed on inputs and capital goods is required to be pre-deposited by the appellant. Difference between Members is only in pre-deposit in respect of Cenvat credit availed on input services. Member (Judicial) has ordered pre-deposit equal to 35% of credit in respect of input services also whereas Member (Technical) is of the view that there is no need for asking pre-deposit in respect of credit of service tax paid on input service. 34. Member (Judicial) in para-14 of the order has observed that some of input services stand utilised by the Work Contract Service provider in construction of building and other services were utilised by the appellant. I also note that Member (Judicial) is para-7 has taken a view that service tax paid under category of Work Contract service provided by the contractor is available to the appellant. Therefore out of 13 services mentioned in para 21 of the order, according to Member (Judicial) also credit of service tax paid on majority of services including Work Contract Service is available to the appellants. 35. Difference between th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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