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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 ..... orks contract service in dispute were rendered under 81 contracts by 41 contractors/ service providers. The Appellant have not availed any credit in respect of services used for laying of foundation or for making ofstructures for support of capital goods. The only credit on Fabrication of structures that has been availed by them in respect of pipes supports to the tune of Rs. 33,60,790/- as the said pipe supports are themselves regarded as capital goods as per the definition of " Capital Goods" under rule 2(a) of Cenvat Credit Rules, 2004, being pipes or tubes fittings. Likewise, the appellant has also not availed any credit on Construction service or Works contract service in so far as they are used for construction or execution of works contract of building or a civil structure or of a part thereof. The contracts for laying of foundation or making of structures for support of capital goods were separatelyplaced or were separate line items/ deliverables in the contracts, in respect of which credit to the tune of Rs. 275,05,12,910/- has not been availed in respect of the J3 Project. The contracts for installation of machinery as also technological/ industrial structures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned order held that the services availed by the appellant and recorded as ECIS are correctly classifiable as construction service which has been used by the appellant for making of structure for support of capital goods. 2.2 He submits that these findings of the Adjudicating Authority is not contrary to his own finding in para 21.10 where he admits that service provider has correctly classified services but is also at oddwith the law laid down by the Hon'ble Supreme Court in the case of CCE vsMDS Switchgear Ltd reported in 2008 (229) ELT 485 (SC) and SarveshRefactories (P) Ltd vs CCE reported in 2007 (218) ELT 488(SC) to the effect that the authority having jurisdiction over the end of recipient cannot question the classification of service. 2.3 He submits that as against the appellant's contention that once the classification of services in the present case under ECIS and WCS 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S (in respect of ECIS) was never excluded from the scope and ambit of the input service both prior to 01.07.2012 and subsequent to 01.07.2012. Accordingly even as per reasoning canvassed by the revenue the exclusion clause in the definition of input service could not have covered ECIS thus the entire basis of the revenue to dispute availment of credit is untenable. 2.6 He referred to the definition of construction service under clause 30 (a) which was first taxed under Finance Act, 1994 with effect from 10.09.2004. He further submits that the legislature sought to also taxconstruction of residential complex services completely, it is for this reason that in the head of "construction service", a prefix "commercial or industrial" was added to distinguish it from Construction of a residential complex service. He further submits that it is the contention of the revenue that ECIS is an integral part of Construction Service and is 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 lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S and CICS is therefore legally untenable as the services of WCS are completely distinct and different from CICS and ECIS. He submits that the revenue's reliance on the CBIC circular No 80/10/2004-ST dated 17.09.2004 which clarified that erection involves civil work which would otherwise fall under the category of constructions service. However in the case of composite contract of erection commission and installation the erection charges would be termed as ECIS service. The circular does not further the case of the revenue in as much as undisputedly there is no civil work that any of the contractors were required to undertake as part of the ECIS. The activity of civil construction was covered by separate work order and/or separately deliverables or the appellant undertook the same by itself. The services in respect of which the credit has been availed which was classified as ECIS did not have any element of civil construction in the same. Therefore, 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atcredit was availed on any activity of fabrication of technological/industrial structures. The only credit with respect of fabrication that has been availed is in respect of pipes supports which are nothing but pipe fittings and are covered in the definition of capital goods under 2(a) of Cenvat credit rules, 2004. The entirety of the Credit availed by the appellant was only for installing and commissioning the said structure which cannot be said to be the activity of making of structures for support of capital goods. Further, as dealt in the later part the structure which were installed and commissioned were parts, component and accessories of capital goods and were therefore themselves capital goods as per the clause (iii)of 2(a) of cenvat credit rules , 2004. Thus, even the contract for fabrication in respect of which credit was not availed, the same was not making of structure for support of capital goods. 2.12 He submits that the Adjudicating Authority has failed to appreciate that activity of fabrication, erection and installation under the work ordersawarded to the contractor/service provider were separate deliverables for which se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is allegation does not exist in the SCN therefore, this contention is bereft of any merits. He submits that the Adjudicating Authority has alleged that the erection, commissioning and installation of technological structures can be said to be making of structure for support of capital goods. It is his submission that none of the said industrial /technological 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. He takes support of the Hon'ble Delhi High Court judgment in the case of Vodafone Mobile Services Ltd vs. CST reported in 2019(27) GSTL 481(Del.). He also placed reliance on the following judgment in support of his submission that the erection, commission and installation services are in respect of capital goods and do not have support f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative List. In ST-3 Return, in column A9, the "Taxable Services for which tax is being paid" was mentioned without the need of specifying any classification for the services. In the instructions to file the ST-3 return, it was mentioned -"Though with effect from 01.07.2012 classification of services has been dispensed with, the assessee is required to mention the name of taxable services as per Annexure enclosed with this return. 3.2 As there was no requirement of classification of services during the period under dispute, the question of any classification at the end of the supplier and reclassification at the end of the recipient does not arise and is not warranted. In view of this position, the argument of traversing beyond the jurisdiction by the Respondents is nullified. As regard the contention of the appellant that Erection, Commissioning and Installation and works contract services received by the appellant are not construction service and reliance placed on the dictionary meaning of the word "Construction" is untenable. It is submitted that after the introduction of the Negative List regime, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bles, split the credit paid at the service provider end in an artificial manner. The appellants claim they have not availed the service tax paid on Fabrication but availed the same on the ECI. In other words they themselves have considered the corresponding credit as not available to them under the exclusion clause of section 2(l) of Cenvat credit Rules, 2004. It is submitted that the fabrication service and ECI service being a part of the same works order, will be covered by construction service, and whole tax paid by the supplier will be ineligible as credit at the appellants end in terms of exclusion clause of 2(a). In other words a service covered by a work order cannot be vivisected for any taxing purpose. 3.6 As regardthe contention of the appellantthat the Industrial construction erected and installed in the instant case are not civil structures. He submits that the term civil structure has been used in the Finance Act, 1994 from the period even prior to 2012. The same has never been defined in the statute. The appellant has tried to make a distinction between the civil structure and industrial structure. Even the term industrial structure has not been use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the finding portion it has been mentioned that the appellant,in their cenvat credit account has mentioned the details of credit taken under the broad head of 'ECI' and "Works Contract ". It is further mentioned that this wilful suppression was found only when they submitted the information on 08.05.2019 during the course of audit. Therefore it is clear that the Adjudicating Authority has not established the suppression of facts on the basis of late submission of the information at the time of audit. It has only been mentioned that the suppression of fact resorted by the appellant came to notice at the time of audit when the required information was submitted after much persuasion by the department. He placed reliance on the following judgments: * Mahindra Sona Ltd Vs. CCR, Nashik -2016-TIOL-1174-CESTAT-MUM * Tiken India Ltd Vs. CCE , Jamshedpur - 2019-TIOL-641-CESTAT-KOL * CCE, Ghaziabad Vs. Rathi Steel & Power Ltd - 2015 (321)ELT 200 (ALL) 4. We have carefully considered the submission made by both the sides and perused the records. In the present case the appellant's cenvatcredit wasdenied in respect of input services viz. ECIS and WCS. Since out of to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use consumption of any employee.] [Explanation- For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis.]" 4.1 The contention of the adjudicating authority is that the services of ECIS were used for construction of building or a civil structure therefore, the services of ECIS falls under the exclusion clause provided under Clause A of Rule 2 (l) of Cenvat Credit Rules, 2004. In this regard it is necessary to first understand the nature of the capital goods/ structure for which service of ECIS was received to arrive at conclusion that whether these services were provided in execution of Works Contract Service or construction of building or civil structure. The appellant has submitted a pictorial presentation, submitted to the department on 23.04.2019 which is scanned below: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f construction service given in the definition of Finance Act, 1994 even prior to 01.07.2012 willhold goodfor interpretingthe term construction. As per the Finance Act, 1994 the meaning of term construction is as under: [(25b)"Commercial or Industrial Construction" means - (a) construction of a new building or a civil structure or a part thereof; or (b) construction of pipeline or conduit; or (c) completion and finishing services such as glazing, plastering, painting, floor and wall tiling, 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, in relation to building or civil structure; or (d) repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit, which is - (i) used, or to be used, primarily for; or (ii) occupied, or to be occupied, primarily with; or (iii) engaged, or to be engaged, primarily in, commerce or industry, or work intended for commerce or industry, but does not include such services provided in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciple of Ejusdem Generis is applicable whereby the expression civil structure is reference to a structure constructed using steel and cement there being undisputedly no such construction of civil structures being undertaken by the appellant, therefore, the exclusion clause will not apply. The Revenue's reliance on Wikipedia in support of the contention that ECIS is construction is also not tenable. In view of law laid down by Hon'ble Supreme court in the case of CC vs.Acer India Pvt Ltd reported in 2007(2018) ELT 17 (SC) wherein it has been held that Wikipedia is not an authentic source of data and is thus unreliable. We find that the more authentic authority to understand the term construction is the Finance Act, 1994 itself whichwill obviously prevail over the information available inthe Wikipedia. Therefore we don't give any credential to the information taken by the Adjudicating Authority from Wikipedia. We also do not endorse the contention of the Adjudicating Authority that the activity of fabrication, erection and installation is a composite activity. From the reference of the work order it is clear that the structures which were erected and installed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk order embodied several separate deliverables and service providers has paid service tax separately on individual activity cannot be clubbed and treated as composite activity. Therefore, we are of the view that different deliverable i.e. Fabrication, Erection and Installation is an independent activity and the same does not fall under the exclusion clause. The appellant have admittedly not availed cenvat credit which amounts to Rs. 275 Crores in respect of other deliverables such as construction of civil structure and fabrication of structure for support of capital goods. The appellant taken credit only in respect of Erection, Installation of technological structure which are other than civil structure or structure for support of any capital goods. Therefore the ECIS in the present case does not fall under the exclusion clause. 4.7 As regard the reference made of Eiffel Tower by the adjudicating authority that the same being made entirely of metal was nothing but civil structure, this cannot be accepted for the reason that as discussed above the expression civil structure being a term under statute has to be interpreted in context of Finance Act, 1994 and Cenvat Credit Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CE -2016 (44) STR 1360( Tri.- Hyd) "6.The Invoice No. 01/01, dated 9-2-2013 shows the description of service as 'works contract service'. The description of the work mentioned in the invoice is 'underground and over ground pipe works'. The credit availed is Rs. 13,84799/-. The credit has been denied on the ground that the definition of input service w.e.f. 1- 4-2011 excludes the services availed for construction or execution of works contract of a building or a civil structure or a part thereof. The issue that arises for consideration is whether the works of laying of pipes comes within the ambit of works contract which is expressly excluded in the definition of input services. For better appreciation, the definition of input service is noticed as under :- "Rule 2(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 upto the place of removal, and includes services used in relation to modernisation, renovation or repairs of a factory, premises o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or fittings and other similar services, in relation to building or civil structure; or (d) repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit. 8. In the above definition, the two services are given under two different sub-clauses which means that construction of pipeline or conduit cannot be considered to be part of construction of building or civil structure. Similarly, sub-clause (b) of definition of works contract service contained in sub-clause (zzzza) of Section 65(105) of the Finance Act, 1994 is also noteworthy in this regard which is reproduced as under :- "(b) construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purpose of commerce or industry." 9. If one goes through the above provisions, the contention of the appellant that 'construction of a pipeline or conduit' is distinct from the service of 'construction of a building or a civil structure or part thereof' is not without merits. Wherever the Legislature wanted to include the construction of a pipeline or conduit, it has been specifically mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply water to the raw material plant. From the above discussions, I am able to hold that appellant is eligible for credit on service tax paid on works contract services relating to erection/construction of underground pipe and over ground pipelines for supply of water to raw material plant as the work of construction of pipeline or conduit do not fall in the exclusion portion of the definition of input services. 12. The second issue is whether the appellant is liable to pay interest on the amount of credit of Rs. 10,39,634/- which was reversed by them before utilization. The issue is settled in the cases of Bill Forge (P) Ltd. and Strategic Engineering (P) Ltd. Applying the dictum laid in these judgments, I hold that appellant is not liable to pay interest on the credit which was reversed before utilization. Both the issues are found in favour of the appellant. 13. In the result, the appeal is allowed with consequential reliefs, if any." * ORIENT CEMENT LTD VS. CC - 2017 (51) S.T.R. 459 (Tri. - Hyd.) "Period involved in this appeal is March, 2008 to December, 2012. The dispute in appeal involves three issues. (i) Credit on Commercial and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pak Fertilizers & Petrochemicals Corpn. Ltd. - 2013 (32) S.T.R. 532 (Bom.) examined the scope of "Inputs Services" and held as under :- "5. Now at the outset it must be noted that Rule 3(1) allows a manufacturer of final products to take credit inter alia of Service Tax which is paid on (i) any input or capital goods received in the factory of manufacturer of the final product; and (ii) any input service received by the manufacturer of the final product. The subordinate legislation in the present case makes a distinction between inputs or capital goods on the one hand and input services on the other. Clause (i) above provides that the Service Tax should be paid on any input or capital goods received in the factory of manufacture of the final product. Such a restriction, however, is not imposed in regard to input services since the only stipulation in clause (ii) is that the input services should be received by the manufacturer of the final product. Hence, even as a matter of first principle on a plain and literal construction of Rule 3(1) the Tribunal was not justified in holding that the appellant would not be entitled to avail of Cenvat credit in respect of services utilized in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession 'input service' in Rule 2(l).The input services in the present case were used by the appellant whether directly or indirectly, in or in relation to the manufacture of final products. The appellant, it is undisputed, manufactures dutiable final products and the storage and use of ammonia is an intrinsic part of that process." 6. The Tribunal in Welspun Maxsteel Ltd. - 2013 (31) S.T.R. 64 (Tri.-Mum.) upheld the credit on security services received in connection with the pump house for pumping water from the outside situated factory premises. In case of ZF Steering Gear (India) Ltd. - 2015 (317) E.L.T. 580 (Tri.-Mum.), the Tribunal upheld the eligibility of credit of "input services" with reference to annual maintenance of wind mill installed outside the factory premises for generation of electricity." As per our above discussion, we hold that ECIS service is not a construction of building service or civil structure therefore, the same is not covered under exclusion clause. 4.8 Without prejudice to our above finding, we find that the service provider has classified the services under ECIS and not under Construction Service and paid service tax under the head of ECIS. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal product was depressed, then they could have charged the Jalgaon unit with under- invoicing of their product. That has also not been done. The valuation as given by the Sinnar unit was duly approved by the department and the payment of duty was also duly accepted. We find absolutely no substance in the attempt of the learned Commissioner to convert a part of the duty so paid into 'deposit of duty'. There is no legal basis for such presumption. The rules entitled the receipt manufacturer to avail of the benefit of the duty paid by the supplier manufacturer. A quantum of duty already determined by the jurisdictional officers of the supplier unit cannot be contested or challenged by the officers in charge of recipient unit [2000 (38) RLT 179]." 8. Counsel appearing for the Revenue could not assail any of the findings recorded by the Tribunal. 9. That being the position, we agree with the view taken by the Tribunal and find no merit in these appeals which are dismissed leaving the parties to bear their own costs." * SARVESH REFACTORIES (P) LTD vs. CCE - 2007 (218) ELT 485 (SC) Being aggrieved by the order dated 10th September 2001 passed by the Customs, Excise & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd deleted. Rest of the order of the Tribunal restoring the order of the authority-in- original is confirmed. 7. Counsel for the appellant has raised an alternate argument on the interpretation of Rule 57Q of the Rules which had not been raised either in reply to the show cause notice or before any of the authorities below. Under the circumstances, we do not permit the appellant to raise this alternate submission. 8. The appeal is disposed of accordingly with no order as to costs." * BHARAT HOTELS LTD Vs. COMMISSIONER OF SERVICE TAX, DELHI- 2017 (50) S.T.R. 165 (Tri. - Del.) "5. Admittedly, the appellants availed services in terms of the contract for which mainly specifies about grinding and polishing of the marble floor, etc., in their premises. Admittedly also, the provider of service is registered with the Department and discharging service tax on these activities under the category of 'cleaning services'. The appellant took credit under 'management, maintenance or repair services' in respect of service tax paid on these services. The service provider discharged his service tax under cleaning services which is not one of the services listed under Rule 6(5) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the demands. 6. Appeal filed by the appellant is allowed." 4.9 In view of the above judgments, the classification of service i.e. ECIS attained finality at the appellant's end and this be so the same does not fall under the exclusion category hence, the credit is admissible. On this independent ground also. 4.10 Without prejudice to our above findings, we further find that the appellant's factory is admittedly huge existing petroleum industry and working for decades. The ECIS service was used for expansion, renovation and modernization of overall existing petroleum plant. As per inclusion clause of the definition the services relating to modernization, renovation is an admissible input service. In our view, even though service of construction of building or civil structure are falling under the exclusion clause but even if similar service is used for renovation and modernization of existing factory, the credit is admissible. The exclusion applies only in respect of such service as specified therein which are used for initial setting of the factory. It is pertinent to note that when the exclusion was brought in the rules, services relating to setting up of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligible, however, the construction relating to 'modernization, renovation or repair' of the existing plant and machinery inside the factory premises is definitely continued to fall within the ambit of said definition. Consequently, the Service Tax paid on 'construction service' involving modernization, renovation and repair work within the factory is eligible to credit. Before scrutiny of the rival contentions, the relevant old and amended Rule 2(l) of the Cenvat Credit Rules, 2004 are reproduced as below : 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, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, Prior to 1-4-2011 (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, modernizat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee; Explanation. - For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis. 8. A plain reading of the said provisions makes it clear that service utilized in relation to modernization, renovation and repair of the factory are definitely fall within the meaning of 'input service' even though; construction of a building or civil structure or part thereof has been placed under exclusion clause of the said definition of 'input service'. After amendment to the definition of the 'input service', a clarification issued by the Board vide Circular No. 943/4/2011-CX, dated 29-4-2011 whereunder answering to the questions raised on the eligibility of credit of service tax paid on construction service as an 'input service' used in modernization, renovation or repair, it has been clarified that the said services being provided in the inclusive part of definition of 'input service' are definitely e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Cenvat credit on the ground the construction of building or civil structure is falling under the Exclusion Clause contained in the definition of "input service" under Rule 2(1) of the Rules. However, on perusal of the sample copies of the invoices issued by the service provider, I find that the services were provided in relation to the painting of the factory building and plant & machinery, which are appropriately classifiable under category of "renovation or repair of the factory" contained in the inclusive part of the definition of the "input service". Thus, I am of the considered view that such service falls under the purview of the "input service" for the purpose of availment of Cenvat credit. Therefore, denial of Cenvat credit and imposition of penalty on the appellant will not be sustainable." 4.11 In view of the above judgments, it is categorically held that any service of any nature if it is used for modernization and renovation or repair of the existing factory are indeed input services in terms of Rule 2(l) of Cenvat Credit Rules, 2004. On this ground also the appellant are entitled for Cenvat Credit in respect of ECIS which were used in relation to modernizatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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