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TMI Blog2017 (11) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... service i.e renting of immovable property. The same was used for providing construction service which is not the output service of the appellant, therefore the cenvat credit is not admissible. Moreover, w.e.f. 7.7.2009 the said goods were excluded from the definition of input service - demand upheld. Capital goods - denial on the ground that on the ground that these capital goods after installation become immovable goods, therefore the credit is not admissible - Held that: - all the capital goods were cleared by the supplier on payment of duty therefore the capital goods as such can not be said that it is immovable goods. Merely by installing the capital goods it does not become an immovable goods. If this contention of the adjudicating authority is accepted then all the capital goods such as machinery, equipments, appliances installed in the factory for production will not be eligible for cenvat credit. Therefore merely by installation of duty paid capital goods, it can not be said that it is immovable goods all the capital goods were used in the shopping mall to facilitate the shop owners for operation of the mall, who have been given the shops on rent by the appellant. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid by utilising the cenvat credit again confirmed for recovery is not legal and proper. Therefore the demand of service tax amounting to ₹ 2,06,67,771/- is set aside. Appeal allowed in part. - ST/876/12 - A/90392/17/STB - Dated:- 30-10-2017 - Shri Ramesh Nair, Member (Judicial) And Shri Raju, Member (Technical) Shri R.G. Sheth, Advocate for Appellant Ms. P. Vinitha Sehkar, Joint Commr. (A.R) for respondent ORDER Per : Ramesh Nair This appeal is directed against Order-in-Original No. 09/ST/2012 dt. 24.9.2012 passed by Commissioner of Central Excise Customs and Service Tax, Nashik, whereby he passed the following order: ORDER (i) I disallow the inadmissible Cenvat Credit availed on inputs /capital goods /input services totally amounting to ₹ 5,46,82,044/- (Rupees Five Crores Forty Six lakhs Eighty Two Thousand Forty Four only), and order recovery of the same in terms of provisions of Rule 14 of the Cenvat Credit Rules,2004 read with Section 73(2) of the Finance Act,1994; (ii) I order appropriation of the amount of ₹ 1,37,88,388/-, paid against the amount confirmed in (i) above; (iii) I order recovery of appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant submits that the credit in respect of doors, windows, frames tiles, cement etc. used for construction of shopping mall are the inputs which was used for construction of the shopping mall which was contended that the said inputs was used for providing the service of Renting of Immoveable Property Service. Therefore the said inputs were used though indirectly but for providing output service hence it is admissible for cenvat credit. As regard the cenvat credit of ₹ 2,26,36,646/- the said credit was availed on the capital goods such as Lift, Escalator, Chillers, DG Sets, Heat Exchangers Wire, Cables, Fire Equipments, Water Pumps etc. which was installed in the mall for renting of the shops in the mall. Accordingly, all these items falling under Chapter Heading 82,84, 85 90, in terms of definition of capital goods qualified as capital goods. The adjudicating authority denied the Credit only on the ground that all these capital goods became immovable property, hence the credit is not admissible. He submits that all these capital goods are independent equipments/appliances which are not immovable but installed in the shopping mall. These capital goods already manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Guj.) (x) Commissioner of Central Excise Bolpur Vs Ratan Melting 2008 (231) ELT 22 S.C. The appellant also referred to his submission submitted on the date of hearing i.e. 30.06.2017 and subsequently filed additional submission of dated 17th July, 2017 which were taken on record. 4. Ms. Vinitha Sekhar, Ld. Jt. Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. She submits that the renting of immovable property service become taxable w.e.f. 1.6.2007 where as the inputs i.e. doors, windows, frame, tiles, cement steel, TMT bars, angles, channels etc., used prior to 1.6.2007 for construction of shopping mall, shall not be eligible for Cenvat credit. She further submits that all input and input service used for construction of shopping mall is for providing the service of construction and not for providing the service of renting of immovable property. Therefore the credit of input/input service used for construction is not admissible for cenvat credit. She submits that exactly same issue was taken up by the board circular No. 98/1/2008-S.T. dated 4.1.2008 wherein it was clarified that the construction and related services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) Galaxy Mercantiles Ltd. Vs Commissioner of Customs, Central Excise Service Tax. - 2014 (33) STR 3 (All.) (iv) Galaxy Mercantile Ltd. Vs Commissioner of Central Excise, Noida - 2014 (33) STR 39(Tri Delhi). (v) Vandana Global Ltd. Vs Commissioner of Central Excise, Raipur - 2010 (253) ELT 440 (Tri LB.). 5. We have carefully considered the submissions made by both the sides. The issue involved in the present case to be decided is the admissibility of the cenvat credit on various input, input services and capital goods. As regard cenvat credit of ₹ 1,63,67,075/- on the goods namely steel cement, doors, windows etc. used for construction of shopping mall, these goods were inputs for the service namely construction of shopping mall, however the same goods is not the input for providing output service i.e. renting of immovable property. Therefore in view of Hon ble High Court of Bombay judgement in the case of Bharti Airtel Ltd. (Supra) , the cenvat credit is not admissible on the goods used in the construction of mall. As per the definition of input for the purpose of providing service, it is clear that only on those inputs Cenvat is allowed whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 upto 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 upto 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 rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal; From the above definition it can be seen that the services used for setting up the premises of output service provider is admissible input service. In the present case the appellant are output service provider and got the shopping mall set up which was rented out, therefore the renting of immovable property is an output service and the various services such as construction work serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the 'input service' is not limited to the services for providing output service, but it also includes the service for setting up the premises of provider of output service. In the present case the input services are Architect Services, Consulting Engineers Services, Management Consultancy Services etc. used for setting up the premises i.e. stadium of provider of output service i.e. the appellant. The output service is renting of stadium and other miscellaneous services. In view of this undisputed position of law, the services, used by the appellant for setting up the stadium, are input services and squarely covered by definition of 'input service' as reproduced above. The Board Circular appears to have travelled absolutely contrary to the clear and plain language of the definition of the input service. It is very pertinent that legislators knowing fully that there is no tax or excise duty on the constructing premises of the output service provider, included services used for setting up of the premises of provider of output services, for the simple reason that if the premises are used for providing the output service, the credit of input services used for setti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immovable properties which were used for renting services. In another case of Sai Samhita Storages Pvt. Ltd., passed by Tribunal's Bangalore bench which was upheld by the Hon'ble High Court of Andhra Pradesh, the fact was that cement and TMT bars were claimed as inputs for construction of warehouse which was used for providing 'storage and warehouse services'. The Hon'ble High Court held that without use of cement TMT bars 'storage and warehouse services' could not have been provided, accordingly Cenvat Credit was allowed on cement and TMT bars. In view of the above findings, not only by this Tribunal but also endorsed by the Hon'ble High Court of Andhra Pradesh that the Cenvat Credit on inputs and input services are admissible for construction, which is used for providing output services. We are also of the considered view that in the present case the appellant has clearly entitled for Cenvat Credit in respect of all the services used for construction/setting up the stadium which is admittedly used for providing the output services. 10. In view of above discussion, we set aside the impugned order and allow the appeal, with consequential relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Andhra Pradesh in the case of Sai Samhita Storages Pvt. Ltd. -2011 (270) ELT 33 (A.P.) 2010-TIOL-1751-CESTAT-BANG and held in the favour of the appellant. We do not find any reason to deviate from such a view already taken on this issue. 8. As regard the judgment relied upon by the departmental representative in the case of Galaxy Mercantile Ltd. (supra), we find that Hon'ble High Court of Allahabad has only affirmed a prima-facie view on pre-deposit of amount. The view expressed by the Hon'ble High Court is only prima-facie view. In the case of Navratna S.G. Highway Properties (P) Ltd (supra) and various judgments, the Tribunal has taken the final view while disposing the appeals. 9. In view of the foregoing, we find that the impugned orders are liable to set aside and the appeals are allowed with consequential relief, if any. (iii) Vamona Developers Pvt. Ltd. (supra) 5. We have carefully gone through the facts as well as submissions made by both sides. The factual position is that in 2011 the appellant declared their intention of availing Cenvat Credit on input services for discharging the service tax liability on the output service namel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainforcement Expenses Surveyor Telephone and Mobile Expenses Temp Tiolet Installation Work Testing Lab Work Travelling Expenses Wall Panel Fixing Work Water Proofing Work According to Revenue, the services above have not been used for providing Renting of Immoveable Property Service but used for construction of the mall which is not excisable and, therefore credit is not admissible. We find that the High court of Andhra Pradesh in the case of Commr. Of C. Ex., Visakhapatnam-II Vs. Sai Sahmita Storages (P) Ltd. held that- 6. The only allegation against the assessee is that they claimed CENVAT credit irregularly with reference to cement and TMT bars used in the construction of warehouses through which the storage and warehousing services are provided by the assessee. Section 65(102) of the Finance Act defines storage and warehousingas to include storage and warehousing services for goods including liquids and gases but does not include any service provided for storage of agricultural produce or in service provided by cold storage. As per Section 65(105)(zza), read with Section 66 of the Finance Act, there shall be levied tax on storag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of inputs or capital goods and outward transportation upto the place of removal. 7. A plain reading of both the above definitions would show that, unless excluded, all goods used in relation to manufacture of final product or for any other purpose used by a provider of taxable service for providing an output service are eligible for CENVAT credit. In Maruti Suzuki Ltd. v. Commissioner of Central Excise, Delhi-III, (2009) 9 SCC 193 = 2009 (240) E.L.T. 641 (S.C.) the Supreme Court laid down as follows. 9. Coming to the statutory definition of the word input in Rule 2(g) in the CENVAT Credit Rules, 2002, it may be noted that the said definition of the word inputcan be divided into three parts, namely: (i) specific part (ii) inclusive part (iii) place of use 10. Coming to the specific part, one finds that the word input is defined to mean all goods, except light diesel oil, high speed diesel oil and petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not. The crucial requirement, therefore, is that all goods used in or in relation to the manufacture of fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by entities such as MITC Rolling Mills Pvt. Ltd. and Unity Infra Projects Ltd., we were informed that even these entries related to the service portion and not material portion of the input activity. In any case, as we have noticed above, in Sai Sahmita Storages (P) Ltd. judgment, service tax credit was allowed even on TMT bars and cement. On another query from the Bench whether the input services were received for discharge of service tax liability on Architects service in Mumbai registration the reply was in the negative. Applying the ratio of Sai Sahmita Sorages case case, the service tax credit cannot be denied. Reliance is also placed on the Hon ble High Court of Gujarat decision in the case of Mundra Ports Special Economic Zone Ltd. (supra). 5.2 We do find that for the input services for which input service tax credit was availed at Pune, the invoices are addressed to their Bombay office. However this will not be a bar in availing the credit as the appellant had taken centralized registration at Pune before availing the credit and they did not avail credit on any input services in Mumbai as reflected in the relevant ST-3 returns. It was also submitted by them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion order has not given any finding to the effect that the Credit was transferred from Mumbai to Pune without observing the conditions of Rule 10 of the Cenvat Credit Rules as was alleged in the show cause notice. Even on other issues there appears to be a mismatch between the allegations in the show cause notice and the findings in the adjudication order. The show cause notice does not question the availment of Cenvat Credit nor does it say that the documents were not provided before the issue of show cause notice whereas the adjudication order holds that the appellant avoided the submission of the required documents to draw a conclusion as to the correctness of the availment of Cenvat credit. The discussion that the appellant availed 75% abatement in terms of Not. No. 1/2006 has been satisfactorily replied in that they had excluded 20% of the credit on input services and capital goods which pertained to the 20% of the constructed area sold by them. In any case there is no confirmation of demand on this aspect. 7. It is obvious from the definition of input serviceas it stood prior to 11.4.2011 and after 1.4.2011 that, in the earlier period there was no restriction on use of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore the same is input service for providing the service of renting of immovable property service. We also observed that the adjudicating authority has not given clear reasoning for denying this particular credit. Accordingly we set aside the demand of cenvat credit of ₹ 55,01,660/-. As regard demand of service tax amounting to ₹ 2,06,07,771/- this demand was confirmed on the ground that the service tax was paid to the extent of this amount by utilising the cenvat credit which was held in admissible. In this regard we are of the view that once demand was of wrongly cenvat credit is proposed, there cannot be an another demand of recovery of service tax which was discharged by utilizing so called wrongly availed credit for the reason that by recovery of the wrongly availed credit whatever service tax paid by utilizing cenvat credit will hold good, no further recovery can be made. Therefore the demand of service tax even though paid by utilising the cenvat credit again confirmed for recovery is not legal and proper. Therefore the demand of service tax amounting to ₹ 2,06,67,771/- is set aside. As per our above discussion, the appeal is partly allowed in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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