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TMI Blog2017 (5) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... E/1341/12, E/1341/12 - A/87216/17/EB, M/87217/17/EB - Dated:- 25-4-2017 - Shri Ramesh Nair, Member (Judicial) And Shri Raju, Member (Technical) Shri Prasad Paranjape, Advocate for Appellant Shri Ajay Kumar, Jt. Commissioner (AR) for Respondent ORDER Per Ramesh Nair This appeal filed by the appellant, M/s Larsen Toubro Ltd. against Order-in-Original No.02/COMMR/M-II/2012 dated 25.5.2012 passed by the Commissioner of Central Excise, Mumbai-II. The appellant have also filed a miscellaneous application under Rule 41 of the CESTAT Procedure Rules, 1982. At the time of hearing of the appeal, the said miscellaneous application is withdrawn by the appellant. 2. The fact of the case is that the appellants are engaged in the manufacture of excisable goods falling under Chapter Heading 84, 85 93 of First Schedule to the Central Excise Tariff Act, 1985. They are also availing CENVAT Credit of the duty paid on inputs and input services used for providing output services or used in or in relation to manufacture of final products in terms of the provisions of Cenvat Credit Rules, 2002. The case of the department is that during the course of audit for the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) Radhe Renewable Energy Development Pvt. Ltd. 2015 (37) STR 388 (Tri-Ahmd) (d) Vikrant Cements 2006 (194) ELT 3 (SC) He further submits that in the appellant's own case on the similar issue, the proceedings of show-cause notice has been dropped by the jurisdictional Commissioner vide Order No.05/RD/JC/M-II/2012-13 dated 27.12.2012 and Order No.09/ST/RN/CMR/M-II/2013-14 dated 31.12.2013 whereby the credit on the services used at site has been allowed and the proceedings of the show-cause notice has been dropped. These orders have been accepted by the Revenue as no appeal was filed. 4. Shri Ajay Kumar, learned Jt. Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. 5. We have carefully considered the submissions made by both sides. We find that the output services provided by the appellant either from their Powai premises or at site, the appellant is a sole service provider for such services. The Service Tax is paid by the appellant on the entire services which is provided either from the Powai unit or at site. Therefore, the CENVAT Credit in respect of input and input services used for providing the services at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner (Appeals). 7.1 Regarding the second objection that the service tax credit has been used by the respondents in respect of goods manufactured and cleared by them, there is no merit in the same. Rule 3(1) of the CENVAT Credit Rules permit a 'manufacturer' or a 'service provider' to take credit of duty paid on inputs, capital goods and service tax paid on input service. In the present case, the respondents is both a manufacturer and a 'service provider'. There is no stipulation in the rule that there should be separate CENVAT credit accounts maintained when the respondents are acting both as a manufacturer and a 'service provider'. The CENVAT credit is a kind of common kitty into which (a) credit of CVD paid on imported goods (if any) is taken; (b) credit of duty paid on inputs and capital goods procured locally from the domestic market is taken; and (c) credit of service tax paid on services utilised taken. 7.2 Rule 3(4) provide for manner of utilization of the credit. There is no violation in utilizing the credit from the common kitty for payment of excise duty on goods manufactured and cleared by the respondents and for p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's premises credit is not admissible cannot be accepted. What has to be examined is whether the service provided is in or in relation to manufacture. 4.2 Another point that has been relied upon by the revenue is that service tax credit is not admissible since the erection and commissioning activity is a post removal/post manufacturing activity. I have already mentioned earlier that in the case of service tax what is required to be examined is whether the service has been used in or in relation to manufacture directly or indirectly. While the eligibility for service tax credit on outward transport services is to be examined in connection with place of removal, there is no such requirement as regards other services. In respect of other services what is to be examined is whether they can be held to be rendered in or in relation to manufacture directly or indirectly. Once the whole transaction of manufacture of the machine, erection and commissioning and supply is treated as one transaction and excise duty is charged on the whole transaction value, services rendered for the purpose of completion of this whole transaction has to be treated to have been rendered in or in relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded period and imposition of penalties are attracted against the appellant in the present facts and circumstances 4.1 Definition of Input Services as given in Rule 2(l) of the Cenvat Credit Rules, 2004 during the relevant period after 1-4-2008 was as follows :- 2(l) Input service means any service - (i) used by a provider of taxable service for providing an output service, or, (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and (clearance of final products up to the place of removal), and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit relating, share registry, and security, inward transportation of inputs or capital goods and outward transportation up to the place of removal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is happening in this case is that the supplier of the machine is not only selling the machine but is also providing the service of erection and commissioning. Once erection and commissioning cost is included, in the transaction value, the natural conclusion that would emerge is that the processes undertaken in the buyer 's premises are actually incidental to manufacturing activity undertaken in the manufacturer's premises. What has been sold in this case is the complete machine duly erected and commissioned and operational. The incidental process of erection and commissioning being incidental to manufacture, has to be treated as continuation of the earlier process which started in the manufacturer's premises. In this case even though the position of the machine in CKD condition gets transferred to the buyer when it is removed from the factory as per the contract, the question to be examined is whether such a service is related directly or indirectly to the manufacture of their goods in question. As already mentioned by me earlier, the process of erection and commissioning at the buyer's premises is incidental to the manufacture of the machine and therefore, the ere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the appellant is covered by the main body of definition of Input Service given in Rule 2(l) of the Cenvat Credit Rules, 2004. This part of the definition has not undergone any change either before 1-4-2008 or after 1-4-2008. Case law of CCE, Ahmedabad-II v. Cadila Healthcare Limited (supra) relied upon by the Revenue rather fortifies the above view. In Para 5.1(xix) Hon ble Gujarat High Court has observed as follows :- 5.1(xix) In the facts of the present case the assessee is engaged in the manufacture of medicaments. By their very nature, the drugs manufactured by the assessee prior to final production thereof are required to be subjected to technical testing and analysis before entering into commercial production. For such purpose, the products are manufactured in small trial batches and thereafter, sent for testing and analysis purpose. Undisputedly, when the goods are removed for testing and analysis, excise duty has been paid thereon. Since production of medicaments are subject to approval by the regulatory authorities of various countries to which such drugs are exported, the assessee is required to obtain approval before starting commercial production. Thus t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts and circumstances of the present proceedings as the same were delivered either with respect to eligibility of Cenvat credit as Inputs or for determining assessable value under Section 4 of the Central Excise Act, 1944 and were not with respect to eligibility of Cenvat credit on 'Input Services'. It is now a settled legal position that Cenvat credit on Input Services is also admissible if the same are availed beyond the place of removal provided such services are availed in relation to manufacture. On merits case goes in favour of the appellant and against the Revenue. 5. Appellant has also raised the issue of time bar. Adjudicating authority in Para 3.3 of OIO, dated 15-12-2011 has observed that before 1-4-2008 the wording used in the definition of 'Input Service' was 'from the place of removal'. Further, the issue was contentious one and was decided by this bench in January 2009 in the case of CCE, Vapi v. Alidhara Textool Engineers Pvt. Limited (supra) and no evidence is brought to the notice of the bench that ratio of this case law has been reversed. Reliance placed on this case law decided by this Bench by other CESTAT benches, also fortif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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