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TMI Blog2022 (4) TMI 729X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of a building or a civil structure. Therefore, the ECIS in the facts of the present case do not fall under exclusion category. We agree with the submission of the appellant in as much as the construction of the building or civil structure which is in the nature of building. However, in the present case ECIS was used not for constructing any building or civil structure whereas the ECIS /WCS was used only for plant and machinery which are the capital goods. It is clear that the construction means commercial or industrial construction of a building or a civil structure or a part there of. However, the exclusion provided in the definition in respect of roads, airports, railway, transport terminal, bridge, tunnel, and dam etc further reinforce the contention of the appellant that only those constructions which is in respect of building and civil structure will fall under construction. However, in the present case the ECIS services were not used for construction of building or a civil structure, it is admittedly used for erection installation of plant and machinery therefore the ECIS were not used for construction of building or civil structure. The revenue relied upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to modernization and renovation of the existing factory - In the facts of the present case the appellant being the manufacturer of excisable goods availed the credit on ECIS. In these circumstances the exclusion clause is not applicable to the appellant. For this reason also the denial of credit on ECIS is not sustainable. Extended period of Limitation - HELD THAT:- The information sought for during the audit was details of Cenvat credit on the service availed in relation to construction of civil structure and for support of capital goods. As per the submission of the appellant, it is their bona fide belief that no credit whatsoever has been availed by it on any construction services let alone the service which has been used for construction of civil structures or for making the structure for support of capital goods would not have furnished the information called for. Therefore, it cannot be said that the appellant have suppressed the fact wilfully with intent to take wrong cenvat credit - it cannot be said that the appellant have wilfully suppressed the facts with intent to avail wrong credit - the demand for the extended period is not sustainable on the ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or installation of machinery as also technological/ industrial structures such as handrails, ladders , staircases, platformsetc entered into by the appellant were pure service / labour work orders/ contracts wherein all the material required was made available by the appellant to the service provider as free issue. The aforesaid services were provided by the service provider under the head of mainly in respect of ECIS and in few case under WCS. On these services the appellant had availed theCenvat credit. Based on audit conducted by the department the appellant was issued a Show cause notice dated 07.06.2019 alleging that the Cenvat credit availed by the appellant in respect of services of ECIS and WCS (relating to installation and commissioning) received by it, for the four categories of work,enumerated below was inadmissible. According to the Notice, the services availed were construction services or service portion in the execution of WCS which were used for construction of a building or civil structure or a part thereof and/or making structure for support to capital goods, and that these services were covered by the exclusion clause in the definition of input service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was finalized at the service provider end, the same cannot be disturbedat the service recipient end, the revenue s contention is that with effect from 01.07.2012 there is no requirement of classification of service during the period under dispute. The question of classification at the end of the supplier and re-classification at the end of recipient does not arise. He submits that the revenue over looks the fact that section 70 of the finance Act 1994 stipulates that every assessee required to furnish a statutory return to Superintendent of Central Excise in such form and in such manner and at such frequency as may be prescribed. Rule 7 of the Service Tax Rules, 1994 stipulates that everyassesseeshall submit a half yearly return in form ST-3.For the period of the dispute the return in ST-3 form requires the assessee to declare the description of the taxable service for which the tax is paid. He submits that the Annexure to the ST-3 return specified 110 services which were specified in section 65 (105 )of the Finance Act, 1994. In the said Annexure, construction service, ECIS and Works Contract Service are listed separately therefore, the contention of the revenue that after 01.07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus covered by the exclusion clause. This contention of the revenue overlooks the fact that legislation has chosento tax the construction service as a distinct and different from ECIS orSite formation, clearance, excavation. There is no legal justification to obliterate the specific mandate under statute and interpret construction service as covering activity which were otherwise separately specified as taxable service under the Finance Act, 1994. He place reliance in the case of Reserve Bank of India vs. Peerless General Finance Investment Co. Ltd, AIR 1987 (SC )1023 where it was held that the expression present in the statute may be interpreted in text and context of that particular statute. 2.7 In the view of the said judgement the revenue was not justified on relying upon the dictionary meaning of the expression Construction without appreciating the text and contexts in which expression Construction service has been used in the service tax enactments and the Cenvat Credit Rules, 2004.He also refers to the CBIC circular No. 151/2/2012-ST dated10.02.2012where in it was clarified that construction services are services falling under clauses(zzq) (zzzh) of section 65 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the circular has not adversely affected the eligibility of Cenvat credit on ECIS to the appellant. 2.9 He further submits that the activity undertaken should be that of construction of civil structure or making of structure for support of capital goods. Other than these activities no other activity is covered by the exclusion clause. The expression civil structure used in the exclusion clause would draw color from the definition of CICS which covers within its ambit construction of building or acivil structure orpart thereof. It is thus evident that applying the principle of Ejusdem Generis, the expression civil structure is a reference to astructure constructedusing steel and cement.There being undisputedly no such construction of civil structures being undertaken by the service provider inthe instantcase theexclusion clause will not apply. He submits thatthe adjudicatingauthority contended that the expression civil structure in the absence of any definition has to be understood as non- military structure. There is no basis for arriving at any such conclusion. Further, the reliance placed on Wikipedia by the Adjudicating Authority in support of this contention is also unt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciate that activity of fabrication, erection and installation under the work ordersawarded to the contractor/service provider were separate deliverables for which separate considerations had been held by the service providers. The AdjudicatingAuthority ought to have appreciated that merely because one contract/ work order embodied several separate deliverables . the same will not and does not render the activities undertaken under such deliverables as a composite activity. In view thereof the entire basis of the adjudicating Authorities finding to hold that the activity offabrication, erection and installation is a composite activity is untenable. 2.13 He takes us to some work orders and submits that on the basis of the Work Order the Adjudicating Authority contended that the services of Construction or Civil structures were support of capital goods. He pointed out that there are separate deliverables in the work order i.e. for construction of civil structure and fabrication, erection and installation. The appellant have not taken cenvat credit on deliverables such as construction of civil structures and fabrication of structures for support of capital goods. The credit was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and do not have support for the structure of capital goods. Nayara Energy Ltd vs. CCE reported in MANU / CS/ 0003/2020(Tri.Ahd) Ultratech Cement Ltd vs. CCE reported in MANU /CE/0679/2016 (Tri. Del) Jindal Vijaynagar Steels vs.CCE reported in 2005(191) ELT 459 (Tri. Bang) JP Bala Plant vs. CCE reported in MANU/CE/ 0988/2003/ (Tri. Del) 2.15 He also submits that the demand for the extended period is hit by limitation. The only reason assigned for invocation of the extended period of limitation is that the appellant did not provide the information sought for during the audit. It is settled law for invoking the extended period of limitation that it has to be established that there was wilful suppression at the time when the credit was availed by an assessee and not on the basis of what information was furnished or not furnished by the assessee at the time of audit. Secondly, the information sought for during the audit was details of Cenvat credit on the service availed in relation to manufacture of civil structure and for support of capital goods. The appellant being of the bona fide belief that no credit whatsoever has been availed by it on any construction serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Industrial Construction (CIC) service, Construction of Complex (COCS) service and construction relating to public works such as roads, bridges, airports etc. In the absence of any specific definition of Construction Service in the statute, the reliance on the dictionary meaning is tenable. 3.3 He submits that the appellant s reliance in definition of Construction Service i.e. CIC, COCS and WCS prevailing prior 2012 should be considered therefore any service other than these services cannot be subsumed in the service of construction. He submits that the argument that these services are mutually exclusive and cannot be part of any other service whether prior to 2012 or after 2012 is erroneous. The definition of Works Contract , prior to 2012 or even afterwards , itself indicates that various individual services such as construction ,ECI etc can be part of other separately defined services i.e. works contract. 3.4 He invited our attention to Board Circular No. 80/10/2004-ST dated 17.09.2004 and submitted that the circular deals with the extension of service tax on Installation and Commissioning to Erection Services. It is mentioned therein that erection would refer to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ics differentiating both the terms. It is also not the arguments that two are mutually exclusive. 3.7 He further submits that even in the definition of Commercial and Industrial Construction relied upon by the appellant the terminology of building or civil structure has been used and the same is in relation to use in Commerce or Industry. Therefore any structure used in industry can be a civil structure. He submits that as regard the reliance of the appellant on TRU circular 80/10/2004-ST dated 17.09.2004 in as much as the appellant contended that a building or civil structure in the construction where at least cement and steel is used. The same argument has been advanced, based on the common parlance understanding as per which such building or civil structure should be made of cement, mortar, stones etc. This argument is not correct. With the advent of modern technology, there are structures such as Industrial sheds, warehouses etc which are made of steel with hardly any use of cement, mortar etc and the same are accepted as civil structures in common parlance. In this context the Adjudicating Authority has given the example of Eiffel Tower . 3.8 He submits that the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under and WCS will be dealt separately. The credit on ECIS was denied onthe ground that this serviceis falling under the exclusion clause in the definition of input service under Rule 2 (l) of Cenvat credit rules, 2004 which is reproduced below: [(l) input service means any service,--- (i) used by a provider of [output service] for providing an output service, or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacturer of final products and clearance of final products up to the place of removal, and includes services used in relation to 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, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; but excludes [(A) service portion in the exec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was received is clearly in respect of the plant and machinery which are itself capital goods. Therefore, it is not coming out from the fact as reproduced above that the ECIS services were received for execution of Works contract and/or construction of building or civil structure. The Adjudicating Authority in his finding has contended that the works contract and /or construction of building does not mean only a building which is made of cement, steel etc but building of any nature falls under the category of construction in general. We do not agree with this contention of Adjudicating Authority for the reason that if this contention is accepted then ECIS used for any purpose will amount to construction which will be very absurd contention. In the present case ECIS is in respect of plant and machinery which does not amount to construction of building and which by any stretch of imagination cannot be amount to construction of a building or a civil structure. Therefore, the ECIS in the facts of the present case do not fall under exclusion category. We agree with the submission of the appellant in as much as the construction of the building or civil structure which is in the nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices in relation to residential complex such as glazing , plastering, painting, floor and wall tilling, wall covering and wall papering wood and metal joinery and carpentry , fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services or (c) Repair, alteration , renovation or restoration of or similar services in relation to residential complex] 4.4 From the above meaning of construction it is clear that the construction means commercial or industrial construction of a building or a civil structure or a part there of. However, the exclusion provided in the definition in respect of roads, airports, railway, transport terminal, bridge, tunnel, and dam etc further reinforce the contention of the appellant that only those constructions which is in respect of building and civil structure will fall under construction. However, in the present case the ECIS services were not used for construction of building or a civil structure, it is admittedly used for erection installation of plant and machinery therefore the ECIS were not used for construction of building or civil structure. The revenue relied upon the Board Circular No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the ECIS service is in respect of technological, mechanical or industrial structure, the fabrication of such structure by any stretch of imagination cannot be construed as construction of civil structure. As per the Finance Act, 1994 reference to civil structure is construction using steel, cement, sand etc and to a similar building, road, dam, airport etc. therefore there is a vast difference between the civil structure, building, etc. and technological structure which in the present case, the appellant have erected and installed by using ECIS. It is not in dispute that the appellant have not availed the Cenvat credit in respect of residential complex and Works Contract Service used for making of structure for support of capital goods and also on any activity of fabrication, technological/industrial structure used for support of capital goods. The appellant have availed credit with respect of fabrication in respect of pipe supports which are nothing but pipe fittings and are covered under the definition of capital goods under Rule 2(a) of Cenvat Credit Rules, 2004 admittedly the appellant availed the Cenvat Credit only for installing and commissioning of the technological s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical structures have been used for support of any capital goods. The said structure which were being erected and installed are gratings, cable trays, platforms, ladders, staircases, access structures, handrails etc which are nothing but parts, accessories or components of the capital goods and are thus covered by the definition of capital goods. The submission of the appellant is convincing as looking to the nature of the structure, it is clear that these structures are not for support of capital goods but by itself is the capital goods covered by definition of capital goods. The issue of admissibility of cenvat credit on ECIS in identical facts was considered in the following judgments: THERMAX LTD VS. CCE -2020(35) GSTL 118 (Tri.- Ahmd) 4 . I have gone through the rival submissions. I find that exclusion clause A of the definition of term Input Service appearing in Rule 2(l) of the Cenvat Credit Rules reads as under :- (A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) insofar as they are used for - ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; but excludes services, - (A) specified in sub-clauses (p), (zn), (zzl), (zzm), (zzp), (zzzh) and (zzzza) of clause (105) of section 65 of the Finance Act (hereinafter referred as specified services), insofar as they are used for - (a) construction of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services; It is the case of appellant that the exclusion portion of the definition excludes only those services specified in sub-clauses (p), (zn), (zzl), (zzm), (zzp), (zzzh) and (zzzza) of Clause (105) of Section 65 of the Finance Act, insofar as they relate to :- (a) construction of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for support of capital goods. 7 . The main argument of the appellant is that the works contract service relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GSPL India Transco Ltd. (supra) had occasion to analyse similar issue. The observations in the said decision is reproduced as under :- Rule 3(1) of Cenvat Credit Rules, 2004 13. inter alia envisages that a provider of output service shall be allowed to take credit of Service Tax leviable under Section 66B of the Finance Act, 1994, paid on any input service by the provider of output services. There is no doubt that the applicant is provider of output service i.e. transport of gas through pipeline and therefore, eligible to take credit of service tax paid on input service i.e. construction/erection, installation and commissioning by EPC contractors/third party. Further, as per rule 2(l) ibid, input service inter alia means any service used by a provider of output service for providing an output service. However, it excludes services portion in the execution of works contract and construction services. It has been correctly pointed out by the applicant that service of laying of pipeline is different from construction of building or a civil structure, as under erstwhile Section 65(25b) of the Finance Act, 1994, commercial and industrial service meant (a) construction of a n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commissioning of various plants and equipments for the enhanced capacity. (iii) Credit in respect of services availed outside factory premises related to maintenance of railway siding, etc., amounting to ₹ 36,31,644/-. The appellants have accepted and there is no dispute in respect of demand amounting to ₹ 12,19,544/- and the same was reversed by them. Therefore, only an amount of ₹ 24,12,100/- is disputed in this appeal. 4. Coming to Issue No. 2, concerning erection, commissioning and installation services, it is seen that these are in no way expressly stated in the definition of input services under Rule 2(l) of Cenvat Credit Rules, 2004, before or after the amendment brought about aforesaid. The ld. Counsel has adverted to the agreement which details that the work order was for erection, installation of machinery and equipment. In the circumstances, the denial of credit on this account amounting to ₹ 4,17,51,024/- is not in order and hence is set aside . ORIENT PAPER MILLS vs. CCE 2016 (45) STR 178 (Tri. Del) 5 . The short point for decision is that eligibility of the appellant for service tax credit paid on the services a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to the manufacture of final products. The words directly or indirectly and in or in relation to are words of width and amplitude. The subordinate legislation has advisedly used a broad and comprehensive expression while defining the expression input service . Rule 2(l) initially provides that input service means any services of the description falling in sub-clauses (i) and (ii). Rule 2(l) then provides an inclusive definition by enumerating certain specified services. Among those services are services pertaining to the procurement of inputs and inward transportation of inputs. The Tribunal, proceeded to interpret the inclusive part of the definition and held that the Legislature restricted the benefit of Cenvat credit for input services used in respect of inputs only to these two categories viz. for the procurement of inputs and for the inward transportation of inputs. This interpretation which has been placed by the Tribunal is ex facie contrary to the provisions contained in Rule 2(l). The first part of Rule 2(l) inter alia covers any services used by the manufacturer directly or indirectly, in or in relation to the manufacture of final products. The inclusive pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r challenged at the end of service recipient particularly for denial of cenvat credit. Once the classification is finalized at the service provider end, the same cannot be altered at the service recipient end. This issue has been considered by the following judgments:- COMMISSIONER OF CENTRAL EXCISE CUSTOMS vs. MDS SWITCHGEAR LTD - 2008 (229) E.L.T. 485 (S.C.) 4 . The Revenue issued a show cause notice dated 4-11-1999 to the assessee being of the opinion that they have deliberately entered into practice of raising value of semi-finished goods by adding Modvat element and rounding off the value to higher figure so as to pass on the excess Modvat credit. The said notice was, thus, issued to show cause as to why Modvat credit amounting to ₹ 13,08,701/- should not be disallowed under Rule 57-I of the Rules read with proviso to Section 11A(1) of the Central Excise Act, 1944 and to show cause as to why interest and penalty should not be levied and as to why plant, machinery, building etc. should not be confiscated. 5 . By the order-in-original dated 30th October 2000, the Commissioner of Central Excise Customs, Aurangabad confirmed the demand of ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appeal. 2 . The appellant purchased Loadall from M/s. Escorts JCB Ltd. The cost element of the Loadall included excise duty to the tune of ₹ 1,79,328/-. The appellant claimed Modvat credit in respect of the said item under Rule 57Q of the Central Excise Rules, 1944 (for short, the Rules ). 3 . Since the said item had been classified by M/s. Escorts JCB Ltd., the manufacturer and supplier, under Heading 84.29 and had paid duty under the said heading, the authority-in-original, viz., Dy. Commissioner disallowed the Modvat credit to the appellant by observing that the said Heading 84.29 has been specifically ousted from the definition of capital goods under Rule 57Q of the Rules. The Dy. Commissioner also imposed a penalty of ₹ 50,000/- under Rule 173Q(bb) of the Rules. 4 . On appeal filed by the appellant, the Commissioner (Appeals) observed that Loadall being an improvised version of material handling equipment would properly fall under Heading 84.27 and not under Heading 84.29. It was further observed that forklift truck or crane or similar material handling equipments have been held to be eligible capital goods. On this finding, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the terms of contract. If considered in that perspective, it is his submission, that they have taken correctly credit under management, maintenance or repair service. 6 . We note that the service tax for the input service has been discharged by the provider under the cleaning service which is not the listed service. We also note that the recipient of service is taking credit on such tax paid to the Government and it is not open to the recipient to reclassify the service when the tax has been paid already under a particular category by the provider of service. Neither the appellant nor the officers in the jurisdiction of the appellant have legal sanction to revise classification of service received, even if the said classification is thought to be made incorrectly by the provider of service. The correct course will be to get the classification corrected with valid basis at the source and to get the documents to that effect. We note that the invoices issued by the provider of service indicate that service tax registration under cleaning service though the description of service in the body of the invoice is indicated as marble maintenance . As mentioned above, the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direct nexus of the service mentioned in the exclusion clause and setting up of the factory. It is important to note that the legislature consciously continued the services of renovation, modernization, repairs appearing in the inclusion clause of definition of input service. This clearly shows that any service relating to modernization, renovation of the existing factory is admissible as input service which is the direct case of the appellant. This aspect has been considered in various judgments which are reproduced below:- BHARAT COKING COAL LTD VS. COMMR. OF CENTRAL EXCISE S.TAX, RANCHI - MANU/CK/0036/2021 9 . Further, the said CHP has been set up with the view to 'modernise the coal loading process in the mines' also satisfies the definition of input service. Moreover, since the credit has been allowed by the Department on certain invoices raised by the Contractor, the Department has in-principle found the service to be eligible for credit. We also agree with the submission made by the appellant that the mode of valuation adopted by the Contractor to discharge service tax on 40% of the contract value is in accordance with law contained in Service Tax Val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vertisement 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 rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation up to the place of removal; From 1-4-2011 (l) input service means any service, - (i) used by a provider of output service for providing an output service; or (ii) used by a 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 modernisation, renovation or repairs of a factory, premises of provider of output service share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation up to the place of removal; but excludes, - (A) service portion in the execution of a works contract and construction services including service listed under clause (b) of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (a) relating to construction service of the definition of input service , it is clear that the construction service relating to modernization, renovation and repair of the factory continued to be within the meaning of input service and accordingly, the Service Tax paid on such service is eligible to credit. Undisputedly, the appellant carried out modernization/renovation work to meet USA, FDA guidelines for manufacture of their products therefore, the service tax paid on such construction service is eligible to credit. In the result, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per the law. MUSADDILAL PROJECTS LTD. Vs.COMMR. OF C. EX., CUS. S.T., HYDERABAD-I -2017 (4) G.S.T.L. 401 (Tri. - Hyd.) 15 . The department has denied credit alleging that all these services are for setting up of premises of the appellant and therefore not admissible. It is the case of appellant that the input services were not availed for setting up of the premises, but the services were availed only for modernization and renovation of the premises. From the table itself it is clear that the services are not per se for construction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant is not a provider of service of construction of a building or a civil structure nor maker of structure for support of capital goods. The appellant is a manufacturer of various excisable goods; the credit taken on ECIS is attributed to the manufacture of excisable goods considering the status of the appellant. In our alternate view the exclusion is applicable to the service provider of construction of a building or a civil structure or maker of structure for support of capital good. In the facts of the present case the appellant being the manufacturer of excisable goods availed the credit on ECIS. In these circumstances the exclusion clause is not applicable to the appellant. For this reason also the denial of credit on ECIS is not sustainable. 4.13 The appellant strongly raised the issue of demand for the extended period is hit by limitation. As per the submission of the appellant the extended period was invoked only on the ground that the appellant did not provide the information sought for during the course of audit. It is also their submission that for invoking the extended period of limitation it has to be established that there was wilful suppression at the time when t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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