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TMI Blog2021 (8) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... HU and other heat exchange equipment. Plant Area-Movable 3. Piping works Piping with insulation-supported on fabrication. Plant Area-Non Movable 4. Ducting & Insulation work Supported from ceiling or on fabrication structure-so there is no vibration. Plant Area-Non Movable 5. HVAC related ELE-work Cables on cable trays and control panel are fixed at location. Plant Area-Movable 6. Process Water System Chiller+Pumping system for cooling process equipment-so that it can provide better efficiency. Plant Area-Movable 7. Moulding Area Exhaust System Supported from ceiling or on fabrication structure-so that there is no vibration. Plant Area-Movable 8. GF-Assembly Area Exhaust System Supported from ceiling or on fabrication structure-so that there is no vibration. Plant Area-Movable 9. HVAC BMS Only controller and PC. Plant Area-Movable 10. Tool Room Process Water System Chiller + Pumping system for cooling process equipment-so that it can provide better efficiency. Plant Area-Movable 11. Tool Room Process Water System-Sensor & Controller Only controller. Plant Area-Movable 12. Moulding M/c.Process Water System-Sensor & Controller. Only controller. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,-- (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; (b) he has received the goods or services or both. Explanation.-For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; (c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and (d) he has fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Includes such foundation and structural supports. (iv) Section 17(5)(c)/(d) attracted only in case of Immovable Property: On combined reading of Section 17(5)(c)(d), it can be inferred that clause(c) and (d) of Section 17(5) shall be applicable only in case of immovable property i.e. if something is movable then blockage of input tax credit is not attracted under the said clauses and that in case of movable property, the entitlement to input tax credit shall be governed by Section 16(1) of the CGST Act. As per Section16(1), every registered person shall be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business. Thus, in case of movable property, full input tax credit shall be eligible as per Section 16(1) of the CGST Act. (v) Section 17(5)(c)(d) not attracted in case of movable plant and machinery: Based on the above discussions, it can be inferred that the blockage of input tax credit under section 17(5)(c)/(d) is not attracted in case of movable plant and machinery. (vi) Section 17(5)(c)(d) not attracted in case of immovable plant and machinery: Further, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the levy or excise duty. The activity is amount to manufacture. (b) In CCE, Chennai vs. Kone Elevators India ltd.[2001 (6) TMI 142-CEGAT, Chennai-2001 (138) ELT 635 (Tri-Chennai)], it was observed and held that the assessee's activity of entering into contracts with the customers for supply of lifts by installation and commissioning of the same at buyer's site with warranty of certain period would not be goods classifiable under Chapter 84.28. The tribunal has gone through various stages of installation of the lift in the building and has come to the conclusion that erection brings into existence as immovable property and is not goods. (c) In Sirpur Paper Mills ltd. vs. Collector of Central Excise, Hyderabad[1998 (97) ELT.3 (SC)-1998 (1) SCC 400] the question was whether paper-making machine which was assembled and erected by the appellant using duty paid components and by fabricating certain parts in their factory, was liable to excise duty. The CEGAT recorded the finding that the whole purpose behind attaching the machine to a concrete base was to prevent wobbling of the machine and to secure maximum operational efficiency and also for safety. The SC held that in view of tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsonance with accepted meaning of excisable goods and its eligibility to duty. (f) In Mittal Engineering Works(P)ltd. vs. Collector of Central Excise, Meerut[1996 (88) ELT.622 (SC)-1997 (1) SCC 203], Mono vertical crystallisers are used in sugar factories to exhaust molasses of sugar. The component parts of mono vertical crystallisers were cleared on payment of excise duty from the premises of the appellants therein and they were then assembled, erected and attached to the earth at the site of the customers' sugar factory. The process involved welding and gas cutting. The CEGAT held that the mono vertical crystalliser was complete when it left the factory and upheld the demand of excise duty on clearance thereof. The SC pointed out that the mono vertical crystalliser, had to be assembled, erected and attached to the earth by a foundation at the site of the sugar factory and it was not capable of being sold as it is, without anything more. Bharucha J., speaking for the Court, observed 'The erection and installation of a plant is not excisable and to so hold would, impermissibly, bring into the net of excise duty all manner of plants and installations." (g) In Triveni Engg. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioning units, however, would continue to remain dutiable as per the Central Excise Tariff. Thus, centralised air conditioning unit is a combination of various components comprising of compressors, ducting, pipings, insulators and cooling towers etc. which results into immovable plant and machinery. 4. The applicant has stated that on the basis of the above discussions, it can very well be concluded that the basic premise whether to claim ITC on goods and/or services which are procured by applicant company will depend on the fact that whether such Capital goods/Plant and Machinery is movable or not. * If Capital goods/Plant & Machinery is movable then full ITC shall be eligible as per Section 16(1) of the CGST Act, 2017. * If Capital goods/Plant & Machinery is immovable then also blockage of ITC under Section 17(5) of clause (c) and (d) is not attracted. Thus, ITC should be eligible in this case also. 5. The applicant vide additional submission dated 8-7-21 has submitted the following details in respect of the Air Conditioning and Cooling System as well as the Ventilation System: (a) Write up and photographs.(Pages 1 to 40). (b) Annexures-1 to 5 (List of invoices and copi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd machines (mentioned in para-3 above) including the service of installation and commissioning the same in terms of the provisions of Section 16 and 17 of the CGST Act, 2017." Personal hearing: 7. Shri Chitresh Gupta, CA appeared for hearing (video conferencing) on 17-6-21. Further, as requested by the applicant another hearing was granted on 30-6-21, wherein Shri Chitresh Gupta, C.A. and Shri Anil Kumar appeared for the hearing and reiterated the contents of the application. FINDINGS: 8. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and GGST Act, 2017 are in parimateria and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the GGST Act. 9. We have carefully considered all the submissions made by the applicant. We observe that the issue boils down to whether: i. AC & Cooling system and ii. Ventilation system of the applicant are admissible for ITC. Gist of the single Work Order to understand the scope of Supply: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connections, access doors, frames, bracing etc. b. Levelling and alignment, fixing of all supports. c. Cleaning the duct from inside and blanking off open ends temporarily to prevent entry of dust and dirt, if necessary. Electric Panels and Cabling: a. Permanent supporting and clamping of cables in position. b. Fixing of glands and lugs and terminating the cables on the terminals of equipment/panel. c. Levelling, alignment and assembly of sections of the panel in its final location and fastening the same to foundation. Cleaning the panel from inside and outside and verification of all components. 10.1 In the Tender, the system description and basis of design in the factory area, admin building and canteen building are described as follows: a. Factory area: AC requirement in factory AC area shall be air-conditioned by chilled water system. Chilled water pumping system shall comprise of chilled water pump to circulate chilled water. b. Admin & Canteen Building: AC requirement shall be air conditioned by VRV/VRF type air-conditioning system. Various capacities of indoor units will be used for air conditioning of the AC areas. Each outdoor unit of VRF system shall con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defuser with fixed deflectors, Thick thermal insulations valued at Rs. 17,53,182/- (3) Invoice No.944/2020-21 dated 31-3-2021 pertaining to labour charges for ducting work, grill with VCD, swirl defuser with fixed deflectors, , swirl defuser with fixed deflectors, structure steel for support, Thkammasound, Thk insulation, Anchor Fasteners, Threaded rods, GI PU coatee channel, Special clamp purlin valued at Rs. 20,48,099/- (4) Invoice No.152/2020-21 dated 31-5-2021 pertaining to labour charges for ducting work, Grill with VCD, Canvas Flexible connections, diffusers, insulation Anchor fastener, threaded rod, Sp. Round clamp valued at Rs. 26,26,120/-. It is noticed that invoices do not describe the nature of supply but the description used is either of goods or labour charges. 10.4 The applicant vide: (i) purchase order No.7471066 dated 30-12-2020 issued to M/s. SKAI has requested for supply of one unit of compressed air piping for plant area and separate purchase order No.74710667 dated 30-12-2020 for installation, commissioning and testing of compressed air piping. (ii) 2 purchase orders No.7471080 and 7471081 both dated 15-1-2021 issued to the above entity requesting for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customs Tariff Heading). We note that Air conditioning unit, however, is dutiable as per HSN but not Air conditioning plant. We find no merit to assume the central air conditioning system as a machine. We find it apt to refer to CBEC Order No. 58/1/2002-Cx dated 15-1-2002 issued for the purpose of uniformity in connection with classification of goods erected and installed at site. This said CBEC order was issued in wake of plethora of judgments appear to have created some confusion with the assessing officers, the matter was examined by the Board (CBEC) in consultation with the Solicitor General of India and the matter was clarified vide said Order and the relevant extract is reproduced as follows and we hold that its rationale and concept are relevant under GST scheme of law also. "5 (iii) Refrigeration/ Air Conditioning Plant :These are basically systems comprising of compressors, ducting, pipings, insulators and sometimes cooling towers etc. They are in the nature of systems and are not machines as a whole. They come into existence only by assembly and connection of various components and parts. Though each component is dutiable, the refrigeration/air conditioning system as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act service. iv. When Hon'ble Supreme Court [2011 (267) ELT (435) (S.C.)] has termed Air conditional Plant as an immovable property, we find no reason to dwell on this issue further. We refer to Article 141 of our Constitution, "141. Law declared by Supreme Court to be binding on all courts: The law declared by the Supreme Court shall be binding on all courts within the territory of India". v. We rest on the foundation laid down by the Supreme Court with respect to test of permanency and with respect to terming air conditioning system an immovable property. We are bound by the law of the land, as per Article 141 of our Constitution. We note that is supply of works contract. We find supply of centralised air conditioning plant covered at Section 17(5)(c) CGST Act. We note that section 17(5) CGST Act is a Non obstante sub section, overriding the provisions of section 16(1) and Section 18(1) CGST Act. (ii) Ventilation system We find that the work order awarded to Skai Air Control pvt.ltd. isfor HVAC works and this covers the 'Ventilation system' too. However, since the applicant has raised the 'Ventilation system' separately, the same is taken up for discussion. The ventilatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgments appear to have created some confusion with the assessing officers, the matter was been examined by the Board (CBEC) in consultation with the Solicitor General of India. For issuance of this said CBEC Order, a number of Apex Court judgments delivered on this issue in the recent past was considered by CBEC and some of the important ones were mentioned in the said CBEC order dated 15-1-2002 which are reproduced a follows: "Para 3(i) Quality Steel TubesPvt. Ltd. v. CCE [1995 (75) E.L.T. 17 (S.C.)] (ii) Mittal Engineering Works Pvt. Ltd. v. CCE, Meerut [1996 (88) E.L.T. 622(S.C.)] (iii) Sirpur Paper Mills Limited v. CCE, Hyderabad [1998 (97) E.L.T. 3 (S.C.)] (iv) Silica Metallurgical Ltd. v. CCE, Cochin [1999 (106) E.L.T. 439(Tribunal)] as confirmed by the Supreme Court vide their order dated 22-2-99 [1999 (108) E.L.T. A58 (S.C.)] (v) Duncan Industries Ltd. v. CCE, Mumbai [2000(88) ECR 19 (S.C.)] (vi) Triveni Engineering & Industries Ltd. v. CCE [2000 (120) E.L.T. 273 (S.C.)] (vii) CCE, Jaipur v. Man Structurals Ltd. [2001 (130) E.L.T. 401 (S.C.)] 13. We also find that the applicant has referred to various decisions of the Supreme Court to support their contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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