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TMI Blog2015 (3) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... with the object behind insertion of the word erection to the definition of Commissioning or Installation. It would be incorrect to interpret that after addition of the expression, structure-pre-fabricated or otherwise to the existing list of objects of levy of plant, machinery or equipment, it brought significant change in the said entry so as to result an interpretation that activity of erection of structure standing alone, would be leviable to service tax. On the contrary, the purpose for which the word erection was inserted continued to be the same as was applicable to plant, machinery or equipment even after addition of the expression structure-pre-fabricated or otherwise. Validity and enforceability of circular - Circular No 80/10/204-ST dated 17.09.2004 and 123/5/2010-TRU dt.24.05.2010 - Held that:- the circulars issued by the Board explaining/clarifying the meaning of Erection, Commissioning or Installation Service, cannot be ignored, while interpreting the same and applying it to the facts and circumstances of the present case - Decision in the case of Paper Products Ltd. Vs. Commissioner of Central Excise, [1999 (8) TMI 70 - SUPREME COURT OF INDIA] followed. - The De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act, 1994. On adjudication, the demand notices have been confirmed and penalties imposed on the respective appellants by the adjudicating authority and in one case the appeal carried out by the appellant against the order of additional Commissioner which was rejected by the ld. Commissioner (Appeals). Aggrieved by these orders the appellants preferred the present appeals before this forum. For understanding the issues, instead of narrating the facts of each of the Appeals, it would suffice to discuss the facts mentioned in Appeal No.ST/A/366/12 filed by M/s. Mackintosh Burn Ltd. M/s NPCC. 3. M/s. Mackintosh Burn Ltd., during the relevant period i.e.2007-08 to 2009-10, were issued work Order by M/s. National Project Construction Corporation Ltd., Silchar (NPCC Ltd.), for construction of Border Out Posts (BOP) for Border Security Force (BSF) and road along Indo-Bangladesh Border under packages MZ-18, MZ-19, MZ-L3 and MZ-L5 in the State of Mizoram. Broadly, under the work Orders, the contractors were required to supply tools, plants etc. as required for the said Project; besides the job comprises of clearing of jungles, vegetation, grasses, trees, removal of rubbish, prep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that on a plain reading of the dictionary meaning of these words, it could be discerned that these words standing alone could not be considered as rendering of the services of erection, commissioning or Installation. Thus, the conjunction OR contained in the said definition of erection, commissioning or installation, be read as AND , so as to bring the said activities under the scope of the said service of Erection, Commissioning or Installation Services. 7. He drew support to the aforesaid argument from Board s Circulars bearing No.80/10/204-ST dated 17.09.2004 and 123/5/2010-TRU dated 24.05.2010. It is his contention that in both the circulars, while clarifying the doubts raised from time to time, whether certain activities would come under its scope, it is stated that to bring an activity/service under the scope of Erection, Commissioning or Installation Service , it is quite essential that all the three activities must be carried out under a composite contract. In the present case, since the Appellant had only carried out the activity of Erection , therefore the construction of Boarder Outposts(BOP) for fencing the border would not come within the definition of Erection, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. The word, Structure , read in the cognate sense and keeping in mind the company it keeps, would draw its colour from its companion, which is covered under clause (i) of Section 65(39a) of the Finance Act, 1994 and not civil structures covered under the scope of Section 65(25b) of the said Act, which deals with immovable properties only. Further, rebutting the contention of the Department that under clause (ii) of Section 65(39a) of the said Act, plumbing, drain-laying or other installations are covered, hence the activities thereunder, are not only confined to plant, machinery, equipment etc., but it would include civil structure also. The ld. Advocate further submits that the installation like plumbing, drain-laying or similar such installation under sub-clause (b) of clause (ii) of the said Section, is not meant for discharge of rain-water/waste water, as is understood in the common parlance, but for transmission of fluid, the said Section ought to be read in the context of plant, machinery and equipment. Further, he has argued that the services rendered by the Appellant are Construction Services being not Commercial Construction , therefore, not leviable to service tax. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12, had clarified that the activity of border-fencing is covered under the Centrally Sponsored Scheme (CSS) and directly implemented by the Central Government/State Government Agencies. The Finance Ministry, vide its letter F.No.137/39/2010-CX-4 dated 25.03.2010 addressed to the Ministry of Home Affairs, had opined that the activity of border-fencing is taxable under Section 65(39a) of the Finance Act, 1994. 12. Arguing for M/S. Engineering Projects (India) Ltd., the executing Agency, the Ld. Adv. has submitted that under the MoU, the Appellant were required to carry out (i) Detailed survey of the plot of land etc.; (ii) Finalization of alignment in consultation with BSF/DM; (iii) Executing work as an Executing Agency; (vi) Rectification of defects during defect liability period etc.; and (viii) Liaisoning with State Government/Local Authorities for land acquisition, forest environment clearance etc. Consequently, M/s EIL had floated and awarded Works Contracts to different contractors for construction of border road and fencing along the Indo-Bangladesh Border on behalf of the MHA. The ld. Advocate submits that under the said MoU, the Appellant did not carry out the activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 2012 (286) ELT 321(SC), Naturalle Health Products (P) Ltd. v. CCE, Hyderabad 2003 (158) ELT 257(SC), Commissioner of Trade Tax, UP vs. Kartos International 2011 (268) ELT 289 (SC), CCE, Hyderabad vs. Fenoplast (P) Ltd. (II) 1994 (72) ELT 513(SC), Dabur India Ltd. vs. CCE, Jamshedpur 2005 (182) ELT 290(SC). Also he has referred to a circular of the CBEC bearing No.57/2003-CUS dated 27.6.2003 where it is verified that if a taxing statute does not define a term it has to be interpreted in accordance with the meaning of the term In common trade parlance. In view of the aforesaid principle of law, the word structure since not been defined in the Finance Act, 1994, hence its meaning should be understood in the sense it is used by the people in the trade. Further, he has submitted that the expression erection, commissioning and installation is being used by the trade in relation to erection, commissioning and installation of plant and machinery and it is not used in relation to fencing of structure . Further referring to para 14 of the Circular dated 17.09.2004, he has submitted that erection would refer to the civil works of installation/commissioning of a plant or a machinery. 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. Further, he has submitted that extended period of limitation cannot be invoked in the present case as the issue involved is interpretation of law.In support he has referred to the decision of Hon ble Supreme Court in the case of Uniflex Cables Ltd. vs. CCE, Surat-II 2011 (271) ELT 161(SC). 15. The ld. Advocate, Smt.Shruti Pradhan, appearing for the Appellants, M/s Suprada Industries Ltd. (Appeal Nos.ST-357/12, ST-358/12, ST-354/12 ST-360/12), submitted that the Appellants have been awarded the job by the National Project Construction Corporation Ltd. ( M/s NPCCL), who was an executing Agency for construction of border fencing at different location along the Indo-Bangladesh Border. Consequently, NPCCL had floated trader and awarded works to the Appellants for construction of border fencing along with Indo Bangladesh Border of Tripura, which included composite work of fencing, road on existing ground, link road on embarkment, construction of pipe culvert, foot track on raised ground, earth work in cutting filling for leveling. She has more or less subscribed to the arguments of the ld. Advocate, Shri Kurmy, that the activity of erection standing alone, is a construction ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies refer to fencing as structure, the benefit of doubt on its meaning should be in favour of the tax payer. In any sense, fencing is never referred to as a structure and structure essentially means a large opaque edifice or building for machinery where fencing is not. Similarly, referring to the meaning of word structure in various dictionaries, the Ld. Advocate submits that structure does not include fencing. Structure essentially means and refers to a complex edifice, entity, construction, building plans or even human body. Further, he has submitted that Border Fencing work carried out by Ministry of Home Affairs at different parts of India including international borders like Indo-Bangladesh, Assam-Bangladesh and Western states like Jamika, Punjab and Rajasthan, Gujrat with Pakistan, the fencing work has not been subjected to levy of Service Tax on the concept that this is commercial and industrial work and hence not taxable service. If Service Tax is levied only for fencing work in the region Meghalaya and Tripura which would give rise to discrimination. 18. The Ld. C.A. subsequently submitted a letter dated 3rd December, 2014 obtained from NBCC under RTI Act wherein it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the primary use of distribution of water Act does not attract Service Tax. Further, she has submitted that the act of Border Fencing does not wholly attribute to the act of erecting, fencing but also involves laying cables alongside the roads, clearance of jungles as well as the act of shifting the overhead cables and also the construction of roads as much as widening the road etc. The Ld. Advocate referred to the circular of the Board bearing No. 123/5/2010-TRU dated- 24th May, 2010 with aforesaid activities do not attracts Service Tax under Section 65 (105) (zzzd) of the Act. Further, she has referred to the judgment of National Building Construction Ltd. Vs. CCE of the Patna High Court dated 4th May, 2011. The contractor M/s. Avantika which has rendered site formation to M/s. NBCC pursuant to a contract of M/s. NTPC; NBCC was held liable to tax under the Finance Act and not M/s. Avantika contractor as the former was actually rendering services to M/s. NTPC although the agreement entered into between them on principal to principal basis. So advancing the alternative argument, the Ld. Advocate submitted that in the event the Border Fencing services is classified as taxable ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lternatives and disjunctive in the absence of any legislative intent to the contrary. In support, he refers to the judgment of the Hon ble Supreme Court in the case of Municipal Corporation of Delhi vs. Tek Chand Bhatia, AIR 1980 SC 360 and Fakir Mohd. (Dead) by LRs vs. Sita Ram, (2002) 1 SCC 741. It is his submission that in the present case, the Appellant had failed to establish that there had been a manifest intent of the legislature, as could be evident from any part of the same statute, so as to justify the interpretation of the disjunctive word, or as and . Therefore, he submits that the ld. Adjudicating Authority has correctly held that the words, Erection inserted w.e.f.10.09.2004, in the definition, Commissioning or Installation Services under sub-clause (zzd) of Section 65(105) of the Finance Act, 1994 read with sub-clause (39a) of Section 65 of the said Act, ought to be interpreted as an alternative and not cumulative, in view of the word, OR . 23. He contends that the Board s Circulars bearing Nos.80/10/204-ST dated 17.09.2004 and 123/5/2010-TRU dated 24.05.2010, referred to by the ld. Advocate, are in the nature of clarifications, hence should not be read as statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said Act, till 16.06.2005. After insertion of the word, Erection 65(39a) of the Act ibid, with effect from 10.09.2004, and the word, Structure , from 01.05.2006, it would be only logical to construe that erection of structure would be covered by the definition of Erection, Commissioning or Installation in Section 65(39a) of the said Act, for purposes of classification of the said service under sub-clause (zzd) of Section 65(105) of the said Act. Further, distinguishing the Circular dated 24.05.2010, the ld. Special Counsel submitted that it is clarificatory in mentioning that if an activity does not result in emergence of an erected, installed and commissioned plant, machinery, equipment or structure, the same is outside the purview of the taxable service, which cannot be understood to mean that word, OR be read as AND in Section 65(39a) and in sub-clause (zzd) of Section 65(105) of the said Act. Further, he submits that in case, OR in clause 65(39a) of the Act ibid, is read as AND in both places, resulting into erection, commissioning and installation of plant, machinery and structure respectively, then any of the activities would not satisfy the definition of Erection, Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal in the case of Shakumbari Sugar Allied Industries Ltd., 2012(283)ELT 216(Tri.Del.). He also contends that erection of structure cannot be read ejusdem generis with commissioning or installation of plant, machinery or equipment, since to plead the terms, machinery, equipment or structure succeeding the term plant in Section 65(39a) of the said Act, should be read ejusdem generis with plant, would amount to rendering those terms, as redundant. 26. The ld. Special Counsel also contends that the contention of the ld. Advocates for the Appellants that the services provided by them under Centrally Sponsored Scheme (CSS) were not taxable, does not hold good, as after exchange of correspondences between the Ministry of Home Affairs and Ministry of Finance, it was communicated by the Revenue Secretary through its letter dated 08.07.2010, that the matter was under the process of adjudication, and the decision to levy service tax cannot be reviewed. Also in view of the Board s Circular No.354/59/2006-TRU dated 10.11.2006 to the effect that wherever the service-provider is mentioned as any person , it would include government also, and therefore, there is no doubt in levying servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that service tax was required to be discharged on the activities carried out by them, therefore, the ld. Commissioner has rightly confirmed the demands, invoking the larger period of limitation. 28. Heard Advocates for the Appellants and the Spl. Counsel, Shri A.K.Raha for Revenue at length. From the factual matrix narrated, we find that the Ministry of Home Affairs by entering into Memorandum of Understandings (MOUs in short) with M/s. National Projects Construction Corporation Ltd. (M/s. NPCC in short), M/s. Engineering Projects (India) Ltd. M/s. EPIL in short), the execution Agencies, entrusted the work of construction of Border Out Posts (BOPs in short) along the Indo-Bangladesh Border. A sample MoU is reproduced below: MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding (MOD) is entered on the 14th day of December 2004. BETWEEN MINISTRY OF HOME AFFAIRS BORDER MANAGEMENT DIVISION NORTH BLOCK NEW DELHI-110011 (Hereinafter referred 10 as 'MHA' which expression shall unless repugnant to the context or meaning thereof be deemed to mean and include its successor and permitted assignees.) ENGINEERING PROJECTS (INDIA) LTD. CORE 3, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per type required) with access gates iv) Retaining Wall, earth filling, earth cutting v) IBB Roads as per type required vi) Link roads/access roads to BOP and from PWD roads vii) Pipe Culverts viii) Patrolling track along the fencing ix) Cost of land acquisition x) Cost of Security cover xi) Other enabling works xii) Provision of contingencies, local charges, agency charges etc xiii) All as required for assessing the completion cost of the works 4. The estimate shall be submitted to the Border fencing and roads cell under ADG (Border), CPWD for vetting. The approved cost for this work shall be as per estimates scrutinized by the Technical Committee and approved by the High Level Empowered Committee. The approved cost should not exceed during execution provided there is no change in specification, scope of work or site condition during execution of works from the provisions envisaged at the time of preparation of estimates. 5. EPI shall take up this work on Deposit Basis' as per provisions of CPWD manual. EPI shall be paid agency charges at 10% of the actual cost of the work. The actual cost of the work incurred plus EPl's agency charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of defects during defect liability period of 12 months after completion of the works. EPI shall appoint a Nodal Officer at Delhi who shall co-ordinate the various activities of Co-ordination and Monitoring of the projects. While further details and estimates are being processed. EPI shall start the pre-construction activities on the basis of this MOU. Signed at New Delhi on this day as mentioned above. For and on behalf of For_and on behalf of Sd/- Sd/- (P.K.PATHAK) (A.S.KHARB)) Ministry of Home Affairs Addl. General Manager New Delhi Engineering Projects (India) Ltd. For MINISTRY OF HOME AFFAIRS (A Govt. of India Enterprise) Core-3, Scope Complex Lodhi Road, New Delhi-110033 FOR ENGINEERING PROJECTS (I) LTD. 29. Consequent to the said MOU, the Executive Agencies namely, M/s. NPCC, M/s. EPIL floated tenders for execution of the aforesaid work of construction of BOPs, and the successful bidders were appointed as the contractors. The contactors were allotted different work as per the tenders. In one of the sample work Order, issued to Sibu Saha, broadly, the scope of work mentioned therein reads as below: ENGINEERING PROJECTS (INDIA) LTD. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Fencing of the Boarder. It is relevant at this stage, to mention that the service receiver in this case, is Ministry of Home Affairs(MHA) who had appointed M/s. NPCC and M/s. EPIL for execution of the Project of Construction of BOPs. The said executing Agencies and the Contractors/sub-contractors in turn, appointed by the Executive Agencies, for carrying out various works are the service providers. 31. Ld. Advocates for the Appellants assailed the impugned Orders on merit broadly on two counts. It is argued that the activities of boarder fencing carried out by the contractors as well as by the Executive Agencies, were not in the nature of Erection, Commissioning or Installation of plant, machinery, equipment or structures whether pre-fabricated or otherwise. It has been their contention that fencing could loosely be called as a structure, but the services rendered by them are not in the nature of Erection, Commissioning or Installation , but in the nature of civil construction. In support of the said contention, the Appellants have mainly relied on the Circulars issued by the Board from time to time. Secondly, it is also argued that the structure is not defined under the Finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - (39a) erection, commissioning or installation means any service provided by a commissioning and installation agency in relation to erection, commissioning or installation of plant, machinery or equipment (29) commissioning and installation agency means any agency providing service in relation to erection, commissioning or installation (105) taxable service means any service provided or to be provided - (zzd) to a customer; by a commissioning and installation agency in relation to erection, commissioning or installation; ( C) with effect from 16-6-2005: Section 65. Definitions - In this Chapter, unless the context otherwise requires,- (39a) erection, commissioning or installation means any service provided by a Commissioning or Installation agency, in relation to (i) Erection, Commissioning or Installation of plant, machinery or equipment; or (ii) Installation of - (a) Electrical and electronic devices, including wiring or fittings therefore; or (b) Plumbing, drain laying or other installations for transport of fluids; or (c) Heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work; or (d) Thermal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld. Special Counsel for the Revenue has vehemently argued that after insertion of the expression, structure whether pre-fabricated or otherwise , the scope and scheme of levy of service tax under the category of Erection, Commissioning or Installation Service , has undergone a total change. In other words, his argument is that, even though the word structure is also mentioned in the definition of Commercial or Industrial construction service , but when erected, would fall under the scope of Erection, Commissioning or Installation Service after 01.05.2006, the effective date from which the expression structure-pre-fabricated or otherwise has been inserted. This argument, in our opinion, at the first blush though sounds attractive, but is devoid of merit when read with the object behind insertion of the word erection to the definition of Commissioning or Installation . 37. The word, erection has been inserted into the existing meaning of Commissioning or Installation Service with effect from 10.09.2004 and a new service viz. Commercial or Industrial Construction Services , was also introduced from the said date. Needless to mention, the Circular issued after introduction of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislature to tax the activity/service of erection separately in relation to the objects of levy viz. plant, machinery or equipment, but it is a necessity to be taxed being carried out along with commissioning or installation service, and when the charges thereof are composite. Therefore, it would be incorrect to interpret that after addition of the expression, structure-pre-fabricated or otherwise to the existing list of objects of levy of plant, machinery or equipment, it brought significant change in the said entry so as to result an interpretation that activity of erection of structure standing alone, would be leviable to service tax. On the contrary, the purpose for which the word erection was inserted continued to be the same as was applicable to plant, machinery or equipment even after addition of the expression structure-pre-fabricated or otherwise . 40. This intention is further manifested In the subsequent Circular bearing No.123/5/2010-TRU dt.24.05.2010 at para2(ii) as: (ii) Under Erection, commissioning or installation services , the activities relevant to the instant issue are (a) the erection, commissioning and installation of plant, machinery, equipment or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory provision. The ratio of the judgment of this Court further precludes the right of the Department to file an appeal against the correctness of the binding nature of the Circulars. Therefore, it is clear that so far as the Department is concerned, whatever action it has to take, the same will have to be consistent with the Circular which is in force at the relevant point of time. 44. Hence, the circulars issued by the Board explaining/clarifying the meaning of Erection, Commissioning or Installation Service , cannot be ignored, while interpreting the same and applying it to the facts and circumstances of the present case. 45. The other plea of the Appellants that OR used in the meaning/definition of Erection, Commissioning or Installation , should be read as AND . We do not find any reason to read OR as AND in the said definition. While introducing the levy w.e.f.14.05.2003, initially it was the service of Commissioning or Installation , that were held to be taxable, but later the word, Erection , has been added to it. While adding the word, Erection , it was not mentioned as Erection or Commissioning or Installation , but Erection, Commissioning or Installation . Bes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of something, make, construction Chamber s Dictionary n. manner of building; construction; a building in a substance; manner of organization; an organic form. Strouds Judicial Dictionary 1. In its ordinary sense, means something which is constructed in the way of being built up as is a cuilding (SouthWales Alluminium Co. V. Neath Assessment Committee) 2. An advertising sign of a sheet metal nailed to the outside of a frame which is put on a wall does not constitute a wooden or other structure or erection , within s. 18(1) at the Manchaster Corporation Act, 1891 (54 55 Vict., C.CCVII) (Borough Billposting Co. V Manchester Corporation, [1948] 1 All AIR 807)] 47. A simple reading of the afore said definitions do not help much in throwing light, whether the border fencing- structure would come under the scope structure-pre-fabricated or otherwise as mentioned under the definition of Erection, Commissioning or Installation . Thus, it is necessary to understand the scope of these words, in the context in which it appears. Emphasizing the said tool of interpretation, the Hon ble Supreme Court in the case of Reserve Bank of India vs. Peerless General Finance I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or otherwise , in most of the cases, would refer to mechanical structure whether fabricated at site, or brought in pre-fabricated condition for erection, commissioning or installation, but it would also include civil structures necessary for erection, commissioning or Installation of plant, machinery, or equipment . Thus, fence, even though a structure, cannot be read in isolation but has to be read along with erection, commissioning or installation and also with the objects of service tax levy i.e. Plant, machinery or equipment. 49. The Ld. CA appearing for the Appellant M/s R.K.Grover Co. (Appeal No. ST/A/70961/2013-DB during the course of hearing submitted that the demand of service tax on the activity of Border Fencing in the Indo Bangladesh Border has only been issued and confirmed and no such demands were issued for carrying the same activity in Indo-Pak Border for the same period. In support, he has r filed on 15.12.2014 a communication/ letter dt.03.12.2014 issued by M/s NBCC in response to an RTI application filed. The relevant portion reads as follows:- Reference your afore-mentioned RTI application wherein you have desired to have certain information whether ..... X X X X Extracts X X X X X X X X Extracts X X X X
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