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TMI Blog2024 (9) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... truction or execution of works contract of a building or a civil structure or a part thereof. In view of the statutory provisions, it is opined that the Commissioner was correct in holding that any service tax paid by the service providers on such mobilization advance received towards rendition of such construction services, would not qualify to be eligible as Cenvat credit, as the services so received are not eligible input services in terms of the provisions of Rule 2(l) of Cenvat Credit Rules, 2004. The question of taxability on mobilization advances has been well settled and in the case of M/S GJF CONSTRUCTION CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, HYDERABAD [ 2018 (8) TMI 323 - CESTAT HYDERABAD] and in the case of THERMAX INSTRUMENTATION LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [ 2015 (12) TMI 1222 - CESTAT MUMBAI] , the Tribunal held that mobilization advance received by the assessee is not chargeable to service tax, if it is in the nature of an advance. In view of the same, the appellant was not entitled to take credit of service tax paid on such mobilisation advances. Consequently, the demand confirmed in the impugned order upheld. Confirmatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Service tax of Rs. 0.618 Crore) to M/s Ajnara Infrastructure Pvt. Ltd. Mobilization advances of Rs. 15.618 Crore (Including Service tax of Rs. 0.618 Crore) to M/s Straight Edge Contracts Pvt. Ltd. The appellant adjusted the part of mobilization advances against the invoice issued on or after July 2012 by the above mentioned 2 contractors availed the credit of service tax on such mobilization advance. 2.1 Consequent to the audit for the period 2012-13 to 2014-15, show cause notice dated 19.10.2015 was issued to the appellant wherein the department raised the following demands:- a) Availment and utilization of Cenvat credit on Service tax paid on mobilization advance during the year 2010-11. Similarly in some cases, Cenvat credit has been availed and utilized for service tax on those input services which pertained upto June 2012 which resulted into inadmissible availment and utilization of Cenvat credit of Rs. 91,01,452/- b) Scrutiny of service tax return for the period from 2012-13 to 2014-15 revealed that the appellant had shown an amount of Rs. 1,33,26,258/- as any other credit taken on account of Reversal of service tax amount paid in earlier month in respect of booking cancelled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thholds information in spite of requisition to provide the same, with intent of evading service tax. In support of his submission, the appellant has relied on the judgement in the case of Naresh Kumar Co. (P) Ltd. V. Union of India (2015) 37 STR 451). 3.2 The appellant has further submitted that the impugned service remained subject to litigation from 2010 to 2017. Therefore, the extended period of limitation cannot be invoked due to confusion prevailing in the industry as well as judiciary during impugned period. Maharashtra Chamber of Housing Industry and another Versus Union of India and others- Bombay HC Suresh Kumar Bansal vs. Union of India (2016) 70-taxmann.com 55 (Delhi)-Delhi High Court Retrospective amendment w.e.f. 01.07.2010 made in service tax law vide following Act 2017 3.3 The appellant has also submitted that impugned service is eligible input service as per the definition given under Rule 2(l) of CENVAT Credit Rules, 2004. The department in the order-in-original dated 23.03.2017 has held that upto the period 30.06.2012, scope of definition of Input Services as enumerated under Rule 2(l) of Cenvat Credit Rules, 2004 did not cover the services specified under commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used for construction of a building or a civil structure or a part thereof for the period upto 30.06.2012. 4.1 Further, the Learned AR submitted that for the period 01.07.2012 onwards, the scope of input service definition excludes 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 in so far as they are used for construction or execution of works contract of a building or a civil structure or a part thereof. Hence, the Constructions service as well as Work Contract Service has been tested as a declared service but the same has been specifically excluded as 'input service' as per Rule 2(1) of CENVAT credit Rules 2004. Hence the service provided by the contractors to the assessee do not qualify as input service and is inadmissible for availment of Cenvat credit and the assessee is liable to deposit of Rs. 91,01,452/-. 5. We have heard the Ld. AR and perused the appeal paperbook. The facts of the case are that the appellant had given mobilisation advance to its contractors and Service Tax was paid on the same during the year 2010-11. They utilized the CENVAT credit of Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng complex from M/s Straight Edge Contractors Pvt. Ltd. and M/s Ajnara Infrastructure Pvt. Ltd. from July 2012 onwards. This service was used for providing output services of Construction of Complex Services . For the purpose of Construction, the appellant had paid Mobilization Advance of Rs. 15.618 Crores each to both the companies during the year 2010-11. They started claiming Cenvat credit on input services received, with effect from 1.7.2012. The mobilization advance was adjusted against the bills raised by the contractors w.e.f. 1.7.2012 and such services of Works Contractor , received by the assessee, fall under the purview of input services defined under Rule 2(I) of CCR, 2004. We note that the admissibility of Cenvat credit on input services is governed by Rule 2(l) of Cenvat Credit Rules, 2004 to March 15 which read as under: 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 modernization, renovation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny Limited vs. CCE, Hyderabad and in the case of Thermax Instrumental Limited vs. CCE, the Tribunal held that mobilization advance received by the assessee is not chargeable to service tax, if it is in the nature of an advance. In view of the same, we hold that the appellant was not entitled to take credit of service tax paid on such mobilisation advances. Consequently, we uphold the demand confirmed in the impugned order. 5.4 We now address the submissions of the appellant in respect of the confirmation of interest under Rule 14 of the Cenvat Credit Rules, 2004. In the instant case, we find that there was no service tax liability on such mobilisation advances. Therefore, the credit taken on such tax paid was not admissible. Rule 14 of CENVAT Credit Rules, 2004 provides for recovery of CENVAT Credit, which is reproduced as under: Where the CENVAT credit has been taken and utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of Sections 11A and 11AB of the Excise Act or Sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch credit, if he had not paid the duty which is legally due to the Government, the Government would have sustained loss to that extent. Then the liability to pay interest from the date the amount became due arises under Section 11AB, in order to compensate the Government which was deprived of the duty on the date it became due. Without the liability to pay duty, the liability to pay interest would not arise. The liability to pay interest would arise only when the duty is not paid on the due date. If duty is not payable, the liability to pay interest would not arise. ( emphasis supplied ) 5.6 We also note that the Hon ble High Court has held that mere wrong availment of CENVAT Credit is different from CENVAT Credit that was wrongly taken or wrongly utilised. The word taken as used in Rule 14 is considered on a different footing from the word availed . In view of the submissions made that the appellant had balance of Cenvat Credit higher than Rs. 91,01,452/-, we hold that no interest is liable to be paid. 5.7 We now address the submissions with regard to the penalty imposed under Section 77 and 78 of the Finance Act, 1994. We note that the impugned order has imposed penalties under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it is clear that the consistent position of law with regard to applicability of the proviso to Section 73(1)/Section 11A ibid has been that suppression cannot be established where material facts were within the knowledge of the Revenue. Accordingly, where there is no suppression, the pre-condition for applicability of proviso to Section 73(1) cannot be said to be met and hence, extended period of limitation contemplated therein cannot be invoked. On the contrary, where the ingredients for invoking proviso to Section 73(1) are established or admitted and thus the pre-conditions for applicability of such proviso stands satisfied, and only in such cases, the period of 5 years is required to be computed from the date when the evasion came to the knowledge of the Department. 11. In the case in hand, since the modus operandi adopted by the appellant for selling its products were known to the Department and based on the information/documents furnished by the appellant in 2005, the show cause proceedings were initiated by the Department on 12-3-2009, seeking confirmation of service tax demand under 'Franchise Service' for the period October' 2003 to March' 2007, we are o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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