9911796707
TMI Blog2024 (11) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... ject in dispute. Hence the decisions relied on this aspect do not merit any consideration. In the impugned order after considering the inputs and input services against which the appellant have claimed the credit in light of the definitions of inputs and input services as per Rule 2 (k) and 2(l) respectively Commissioner have recorded the finding to effect that these inputs and input services fall within the exclusion clause of the said definition, and hence have denied the said credit. In certain decisions relied upon by the appellant it has been held that though these goods and services are covered by the exclusion clause, but the credit should be allowed as it gets covered by the definition clause. In case of SOLAR INDUSTRIES INDIA LTD. VERSUS COMMISSIONER OF CE CUSTOMS NAGPUR [ 2018 (7) TMI 768 - CESTAT MUMBAI] , Mumbai Bench while explaining the scope of exclusion clause observed ' Something which may be covered has got to be excluded by way of exclusion. In view of the exclusion clause the arguments with regard to the coverage, the services under the definition clause first part would not be correct.' This decision of Mumbai bench was affirmed by Hon ble Bombay High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant was undertaking repair, modernization or repair of existing factory. They were asked to provide the evidence in respect of the closure of the factory in 2007 on account of labour unrest, or the returns filed by them during the prior period to show that they factory was existing and producing goods and clearing the same. As it is observed they have produced returns for the period from September 2011 onwards where in the production and clearance was indicated as Nil till February 2012. First time any production and clearance has been show is in Month of March 2012. Thus it cannot be accepted that the contention raised by the appellant to the effect that the works undertaken by them were in relation to repair, modernization or renovation of the existing factory. The only issue that needs to be examined in present case and on the basis of various decisions sited by the appellant is whether these activities were in relation to setting up of the factory or in relation to renovation, repair or modernization of existing unit - In absence of any evidence we are not in position to agree with the claim made by the appellant to effect that these activities were in relation to reno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is set aside - appeal allowed in part. - MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) AND MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) Shri Dhruv Tiwari, Advocate for the Appellant Shri Santosh Kumar, Authorised Representative for the Respondent ORDER This appeal is directed against Order in Original No. MP (Dem-23/2013) 11 of 2014 dated 07.07.2014 of the Commissioner Central Excise Customs Service Tax Lucknow. By the impugned order following has been held: ORDER 1 I disallow the cenvat credit in total amounting to Rs. 85,98,001.00 ( Rupees Eighty five lakhs ninety eight thousands and one only) taken by the party on various ineligible input and input services and order for recovery of the same under the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11 (A) (1) of Central Excise, Act, 1944. 2 I appropriate the amount of Rs 81,44,372.00 (Rupees Eighty one lakhs forty four thousands three hundred seventy two only) already reversed by the party towards demand being confirmed at (1) above. 3 I impose a penalty of Rs 10,00,000.00 (Rupees Ten lakhs only) on M/s Pepsico India Holdings Private Limited, A-36, UPSIDC, Sathariya Industrial Area, Jaunpur-222202 under Rule 15 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and verify compliance with the clients specification. The scope of work involved in site preparation includes excavation work trenching and backfilling. dewatering, clearing of drainage Setting up security fencing, demolition of buildings, Structures and equipment, concrete related work and asphalting. The PMT then undertakes construction of a building or the structure to house the operations of the plant, workforce, and supplies. The building work involves concrete flooring, building of masonry wall, drywall construction, building of roof, building of ceiling, pre-cast building doors and windows installation and waterproofing. the party have availed and utilized Cenvat Credit against input services received for setting up of the factory. However the project was completed in March'12. On going through the details of Agreement, letter of intent (LOI) and particulars mentioned on invoices issued by the service providers, it appears that these services fall under excluded category i.e. related to setting up of factory or construction of building or structure and most of Cenvat credit on input service pertains to setting up factory prior to March, 2012. By a written submission date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thariya/CSD/2010/001/Rev-00 dated 8th June, 2010, they (the service provider) have undertaken works such as Architectural, Civil, Structural, PEB, Statutory approvals , MEP Services Similarly, Ms Rao Engineering Enterprises, as per REF/Satharia/CSD/20 10/005/Rev-00 dated 7th July 2010 have undertaken the flooring work. The particulars of work mentioned in LOL is as under :- Scope of Work Mobilisation of men and equipments to site, shifting of equipment from one site to another and back to Delhi store. Sinking 3 boreholes to 10 m depth Carrying out Dynamic Cone penetration test (DCPT) Parameters to be adopted for design of foundations. Geo-Technical Consultancy Services, as per invoice No.172/22.10.11 Entry No. Invoice No./date Particular of work 171 172/ 22.10.11 Sub-soil investigation by hand boring of 150 mm dia size, collection of disturbed and undisturbed samples etc. including report recommendation of foundation, depth and allowable bearing capacity. These activity appeared to fall under the category of industrial construction used for building, which is not admissible as per Rule 2 (l) of the Cenvat Credit Rules, 2004 Appellant took input service credit of Rs.1,99,279.17 agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment with the service provider, it appeared that the activity fell under the category of architect service used for construction of building as well as related to setting up of the factory. The credit on such input service is not admissible as per Rule 2(l) of the Cenvat Credit Rules, 2004. Appellant took input service credit of Rs.71,509.39 for Service charges of termi-seal service, pre- construction anti termite treatment at plant and warehouse . The description of work mentioned in invoices issued by M/s Pest Control of India Pyt. Ltd. indicates that these activities have been carried out as are pre-requisite for construction of plant and as such appeared to fall under the category of construction of building, and therefore the credit of service tax paid on these services appeared to be not admissible as per Rule 2(l) of the Cenvat Credit Rules, 2004. Appellant took input service credit of Rs.1,32,915.45/- against invoices showing work as equipment hiring and construction of Chimney at the plant of the party. Invoices issued by Ms Krishna Traders show services as DG rent, operating charges whereas invoices of M/s Sonu Builders show construction of chimney. These activities relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Agency service on the strength of Goods Receipt (GRs).The GRs issued of the transporters indicate fright only and not_ service tax payable. In case of credit against GTA services, Challans evidencing payment of service tax are specified document under Rule 9(1) (e) of the Cenvat Credit Rules, 2004. On query the party stated that freight has been paid by their Lucknow office. However they could not produce the Challans /GAR-7s evidencing payment of service Tax on freight or ISD invoices issued by their head office. As such the credit taken on non specified document Rule 9(1)(e) of the Cenvat Credit Rules, 2004 appeared not admissible to them. 2.4 During investigation, the party agreed to reverse inadmissible credit taken against the input service invoices issued by M/s Phenix Infra, M/s M.R. Wareker, M/s Khuntia Brothers and M/s A.G. Developers. They reversed the inadmissible credit as detailed below: (i) Sept 12 Rs 23, 91193.24 (Rs.767329.99 +1623863.25) (ii) Dec' 12 Rs.1818931.42 (iii) Jan 13 Rs. 705878.21 (iv) Feb' 13 Rs. 243489.81 Total Rs.51,59,492.68 2.5 Thus revenue authorities were of the view that appellant has taken credit against input/ input service, wrongly in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... geration Ltd. [2016 (41) S.T.R. 824 (Tri. - Chan.)] Reliance Industries Ltd. [2022 (4) TMI 729 - CESTAT Ahmedabad] Jai Balaji Industries Ltd. [2022 (8) TMI 468- CESTAT Kolkata] Affirmed by the Hon'ble Calcutta High Court as reported at [2023 (5) TMI 92- Calcutta High Court] Godavari Power Ispat Ltd. [2023 (11) TMI 719- CESTAT New Delhi] General Motors India P Ltd. [2023 (9) TMI 713-CESTAT Ahmedabad] Simbhaoli Sugars Ltd. [2024 (5) TMI 618- CESTAT Allahabad] Jaypee Rewa Plant [2018 (9) TMI 633- CESTAT New Delhi] Mangalam Cement Limited [2023 (4) TMI 601- CESTAT New Delhi] Cenvat Credit on Manpower Supply services and project management services is admissible; Mangalam Cement Limited [2023 (4) TMI 601 CESTAT DELHI] Unique Chemicals [2019 (8) TMI 200 CESTAT Ahmedabad] Hindalco Industries ltd. [2023 (4) 601 CESTAT New Delhi] Credit on Anti termite Treatment services is admissible; Hindustan Petroleum Corpn Ltd. [2017 (47) STR 136 (T-Hyd)] Hindustan Petroleum Corpn Ltd. [2019 (5) TMI 1088 CESTAT Hyd] Cenvat Credit on Security Services is admissible; Triveni Engineering Industries Ltd. [2017 (3) GSTL 140 (T-ALL)] Mangalam Cement Limited [2023 (4) TMI 601 CESTAT DELHI] Extended period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es the findings recorded in the impugned order. 4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments. 4.2 Impugned order records the findings as following: DISCUSSION AND FINDING: 36. I have gone through the Show Cause Notice dated 22.03.13, the party's defence reply dt. 36. 16.04.14 and the record of personal hearing held on 17.04.14. Having complied with the requirements of natural justice, I now proceed to adjudicate the case. 37. The Show cause notice intends to deny cenvat credit taken by the party on inputs and input services, in total amounting to Rs. 85,98,001.00. On persuasion during investigation, the party have reversed credit amounting to Rs.23,91,193.24 in Sept'12, Rs.18,26,242.61 in Dec'12, Rs.7,05,878.21 in Jan' 13 and Rs.2,43,489.81 in Feb'13, in total amounting to Rs.51,66,803.87 though under protest Subsequently, they have further reversed credit amounting to Rs.29,77,568.18 in March'13. The party have claimed that this amount of Rs. 29,77,568.18 has been paid by them before issue of SCN whereas, factually the reversal of Rs. 29,77,568.18 was made on 27.03.13 i.e. after issua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty on the aforesaid chemicals. 39. On proceeding further, I find that the aforesaid credit of Rs.7,67,657/- taken by the party is the only credit taken by them on inputs. The other credits taken by the party which are covered in the instant SCN, are of service tax paid on input services Since it is relevant, the provisions of Input service under Rule 2(l) of CCR, 2004 as they existed during the material time i.e. March, 2012 to Dec, 2012, are reproduced below:- 01.04.11 to 30.06.12:- Input Service means any service- a. used by the provider of taxable service for providing ouput service; or b. used by a manufacturer whether directly or _indirectly in relation to manufacture of final product and clearance of final product upto the place of removal. And includes services in relation to Modernization or renovation or repairs of the premises of provider of output service or an office relating to such 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, share registry and security, business exhibition, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing or a civil structure or a part thereof; or b. laying of foundation or making off structure for support of capital goods, except for the provision of one or more of the specified services. Now, in the succeeding paragraphs, I take up the specific service tax credits taken by the party and which the instant SCN intends to deny 40. Erection of pre-Engineered Building As per facts of the case on record, input service credit of Rs.17,19,787.76 has been taken by the party against the services provided by one M/s Phoenix Infra. The description of work in invoices is mentioned as erection of PreEngineered Building . As per agreement with the service provider, the service actually provided is installation of complete building (including caged ladder / polycarbonate sheets / Jack beam system) as per technical specifications, find that very clearly, the services provided by the service provider to the party are covered under Commercial or Industrial Construction Service [ (Section 65 (105) (zzq) ] which have been used for *construction of building . As per provisions of law, Commercial or Industrial Construction services used for construction of building are clearly barred for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... looring 'UCRETE' on smooth sound and dry RCC floor after removing all dust and dirt with the help of hard brushers / grinders / shot blasting complete as per manufacturer's recommendations Clearly, the services provided by the service provider fall under the Commercial or Industrial Construction Service [ (Section 65 (105) (zzq) ] and have been used for construction of building . However, as already discussed in para-40 earlier, such services when used for construction of building are barred for the purposes of credit as these services are not covered under the definition of input service . In the defence reply the party has not contested the allegation thereby admitting the non-admissibility of the credit taken on this count. Thus, in the light of definition of input service under Rule 2 (l) as quoted above and the discussions above, I hold that the credit of Rs. 1,99,279.17 availed by the party is irregular and is liable to be reversed / recovered from the party. 43. Erection work of polycarbonate false ceiling of plant:- As per facts of the case, the party has taken input service credit of Rs.83,368.98 on erection work of polycarbonate false ceiling of the plant unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave taken input service tax credit of Rs. 10,44,261.69 on Project Management Consultancy provided by M/s Johnson Control Pvt. Ltd. As per agreement, the scope of work consists of (i) Design Development (ii) Tendering procurement process and (iii) Project execution. It has been alleged in the SCN that the service provided by Ms Johnson Control Pvt. Ltd. falls under the category of Architect Service used for construction of building and thus not eligible for input service credit. In the defence reply, the party contested the allegation and submitted that the nature of work carried out by the vendor relates to managing the execution of the project of renovating/ revamping of the plant and thus covered under Modernization or renovation or repairs of the premises' and thus they are eligible for credit on the said service and as such requested for re-credit of the amount reversed by them. In support of their contention, the party has placed reliance on judgment of the Hon'ble Tribunal in the case of M/s Shree Bhawani Paper Mills Ltd. Vs Commissioner of Central Excise, Lucknow, reported at 2012(28) S.T.R.409 (Tri.-Delhi). I have examined the contention of the party. I find that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce charges for termiseal service Preconstruction Anti Termite treatment. 102/30.8.11 Service charges for termiseal service Preconstruction Anti Termite treatment 348/29.12.2011 Service charges for Bee safe service at plant 88/24.06.11 197/24.09.11 Service Charges for warehouse pest management service at W/H Puramufti Allahabad It has been alleged in the SCN that he description of work mentioned in invoices issued by M/s Pest Control of India Pvt. Ltd. indicates that these activities had been carried out as pre- requisite for construction of plant and as such fall under the category of construction of building, and therefore the credit of service tax paid on these services is not admissible as per Rule 2(l) of the Cenvat Credit Rules, 2004. The party has contested the allegation on the ground that the Pest Control Services are considered a prerequisite to health and safety standards at the plant and thus cannot be considered to be related to construction of building I have examined the contention of the party. On going through the description of work mentioned on invoices, I find that the treatment undertaken by the party has been clearly termed as pre-construction anti-termite trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the light of definition of input service under Rule 2(l) of CCR, 2004, I hold that the services provided by M/s Tetra Pak India Pvt Ltd are ineligible for input service credit. Further, entire service has been provided prior to the operation of the factory. Thus, these credits are irregular and liable to be recovered from the party. 49. Manpower Supply Service As per facts of the case, the party have taken input service credit of Rs.2,96,573.82 on services of man power supply provided by M/s Aqeel Enterprises and M/s ADECCO INDIA. These services were availed during the period when the factory had not started manufacturing operation M/s Aqeel Enterprises and M/s ADECCO INDIA have provided manpower to M/s Pepsico India Holdings (P) Ltd. during project work i.e, setting up of the factory and other services like loading charges at Allahabad guest house/ warehouse at Kaushambi, leaning charges, transport charges, other work expenses, Trailer freight charges etc. It has been alleged in the SCN that credit o input services are available only when such input services are used by the manufacturer in or in relation to the manufacture of final products. As the alleged credit on manpower sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,94,243.66 against invoices. on services of security, availed during the period when the factory had not started manufacturing operation. M/s Security and Intelligence Services Ltd. and M/s Ravi Securities have provided security services from Jan'11 to Feb' 12, during the period of setting up/ renovation of the plant. It has been alleged in the SCN that credit on input services are available only when such input services are used by the manufacturer in or in relation to the manufacture of final products. As the alleged credit on security service was taken during the period when manufacturing of final products had not commenced, the credit is inadmissible. In their defence reply the party has contested the allegation submitting herein that the security service has been specifically enlisted as eligible input service under the definition of input services under Rule 2(l) of CCR, 2004. They further contended that the definition of Input service provided under Rule 2(l) of the CCR Rules, nowhere lays down a specific restriction that no Cenvat credit can be availed on services availed prior to manufacture of final products. I have examined the contention of the party in the lig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of law and is liable to be recovered from the party. 52. Equipment Hiring and Construction of Chimney As per facts of the case, the party have availed input service credit of Rs.1,32,915.45 on the equipment hiring service provided by M/s Krishna Traders and construction of chimney undertaken by M's Sonu Builders. Invoices issued by M/s Krishna Traders show services as DG rent, operating charges whereas invoices of M/s Sonu Builders show the description of the work as construction of chimney. It has been alleged in he SCN that these activities relate to setting up of factory and construction work and as such are not entitled for credit as input service defined under Rule 2(1) of the Cenvat Credit Rules, 2004 The party has contested the allegations on the ground that the services availed by them in relation to hiring of generators for providing electricity was meant for carrying out necessary execution of revival project of plant in order to make he plant fit for carrying out the commencement of commercial production. Since hiring of generators for providing electricity was an integral part of the project, it would be incorrect to say that the same are ineligible as input ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by them total amounting to Rs. 85,98,001.00 have never been utilized and that since they have already reversed substantial amount of cenvat credits taken on various inputs / input services, no interest is payable under Section 11 AA. I have examined the issue. I find that Rule 14 of CCR, 2004 providing for recovery of irregular cenvat credit and interest thereon, has been amended w.e.f, 1,4.2012 vide Notfn. No. 18/2012-CE (.T.) dt. 17.03.12 where it has been clearly stated that where the cenvat credit has been taken and utilized wrongly or has been erroneously refunded the same alongwith interest shall be recovered. Thus for charging interest, the irregular credit should not only have been taken / availed but utilized too. Merely taking of credit is not, at all, sufficient for claiming of interest. The demand in the present case pertains to the period from March'12 to Dec'12. The fact regarding utilization of credit by the party has been got verified from the concerned R.O., Sathariya Range, Central Excise Division-I, Allahabad, who has, vide his report submitted under C.No.20-CE/Misc/Sath/06/2012 dated 03.07.14 furnished the closing balance of cenvat credit of the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, they are still insisting that the recovered credits be allowed to be re-credited by them. Obviously there is a dichotomy in the stand of the assessee. If the credits were taken by them mistakenly out of bonafide belief, then they should not be insisting for allowing re-credit of the same and if they insist on re-credit being allowed then clearly the credits have been taken by them intentionally on purpose and not by 'mistake', as they are insisting I find the very fact that the party have reversed the credit, only under protest', demonstrates that they generally believe that the aforesaid credit are available to them. Thus, I hold, that the aforesaid credits have been taken by the party intentionally, filly well knowing that they were not eligible for the same. This contention that credit' has been taken by them under bonafide 'belief is all a sham, put forward on afterthought. In conclusion, I hold that the aforesaid credits have been taken by the party on purpose, fully well knowing that they were not eligible for the same. The referred provisions of law have been contravened by the party intentionally and for the same, they are liable to imposition of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,67,657.00 BSF India Ltd October 11 to March 12 2 Erection of pre engineered buildings 17,19,787.7 6 Pheonix Infra July 11 to September 12 3 Consultancy services of Architecture, Civil Strutural and Statutory Approvals 21,57,497.0 0 Rao Engineering works September 10 to August 12 M R Warekar 4 Construction of Flooring Services 1,99,279.17 A G Developer November 11 to March 12 5 Erection of false Ceiling 83,368.98 Shiv Shakti February 12 6 Sanitary work services 4,08,831.85 Khuntia Brothers July 11 to April 12 7 Project Management Consultancy Services 10,44,261.69 Johnson Central March 11 to Nov 12 8 Anti Termite treatment services 71,509.39 Pest Control India February 11 to January 12 9 Work Construction and Line Fabrication Services 11,97,166.83 Esskey Industries February 11 to March 12 Ranjeet Engineering Works 10 Installation and Commissioning of Plant 1,64,366.00 Tetra Pack April 12 11 Manpower Supply Services 2,96,573.82 Aqeel Enterprises February 11 to December 12 ADECCO 12 Security Service 2,94,243.66 Ravi Security April to November 12 Security Intelligence Services 13 Goods Transport Agency Services 60,543.21 February 11 to March 12 14 Equipment Hiring and construction of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant has claimed relying on a series of the decisions that the demand is time barred and extended period of limitation is not invokable. From the tables drawn in para 4.4 and 4.5 on the basis of the ER-1 returns and other details furnished by the appellant it is evident that appellant is only misstating the facts before this tribunal. The credit in respect of the inputs and services have been for the first time taken in the month of March 2012 and reflected in the return filed for that month. The return for the month of March 2012 would have been filed in the Month of April 2012, and the normal period for making the demand would be one year from the date of filing the return. The Show Cause Notice has been issued to the appellant on 22.03.2013 well within the normal period of limitation. The Show Cause Notice has been issued without invoking the extended period of limitation. Had appellant claimed any credit in any month prior to this month the same would have been reflected in the ER-1 return for that month. The submission made by the appellant on limitation only shows the ill intention of the appellant to mislead the bench. Thus the decision relied upon by the appellant on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of rent a cab service is not admissible. 7. Learned Counsel placed reliance on the decision of this Tribunal in the case of Reliance Industries Ltd. (supra). Specifically he relied upon the paragraph 6.3 which is reproduced below:- 6.3 Now the question that arises is regarding services which were excluded by the amendment after 2-4-2011 to the definition of Rule 2(l) of the Cenvat Credit Rules, 2004. The said services are - 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 such as Leave or Home Travel Concession. The amendment indicates when such services are used purely for personal use for consumption of any employee, the Cenvat credit cannot be allowed. On perusal of the records, we find that the appellants have been taking a consistent stand that in their case Outdoor Catering services, Club or Association service, Health and Fitness Services are three services on which Cenvat credit from 1-4-2011 is sought to be denied relying upon the said amendment to Rule 2(l) of the Cenvat Credit Rules, 2004, which is incorrect as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt with the view taken by the High Court. Similarly Hon ble Karnataka High Court has in case of Toyota Kirloskar Motors [2021 (50) G.S.T.L. 286 (Kar.)] held as follows: 15. The undisputed facts make it very clear that the period involved in the present appeal is admittedly of post-2011 period and after the amendment to the provisions of Rule 2(l) defining the input service and the amendment to the provision of Rule 2(l) defining the input service came into effect w.e.f., 1-4-2011. The definition of input service post amendment contains exclusion clause and exclusion clause was effected w.e.f. 1-4-2011. Clause (c) of the said exclusion clause specifically excludes the services provided in relation to outdoor catering services. It is certainly not in dispute that said services prior to 1-4-2011 have been held to be covered by the definition of input service , however, after the amendment came into force in the light of specific exclusion clause, outdoor catering service is not at all covered under the definition of input service . 16. Heavy reliance has been placed upon a judgment delivered by the Madras High Court in the case of Ganeshan Builders Ltd., (supra). In the aforesaid case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finition of input service under Rule 2(l) post-amendment w.e.f., 1-4-2011 provides that outdoor catering services falls under the exceptionary services in Rule 2(l)(c) of the Cenvat Credit Rules, 2004. Hence, the Tribunal was justified in dismissing the appeal preferred by the assessee. 21. A Taxing Statute has to be strictly construed and in Taxing Statute one has to look merely at what is clearly said. Justice G.P. Singh in his land mark work on Principles of Statutory Interpretation, 14th Edition under the heading Strict Construction of Taxing Statute, has observed as under : General Principles of strict construction A taxing statute is to be strictly construed. The well-established rule in the familiar words of LORD WENSLEYDALE, reaffirmed by LORD HALS-BURY and LORD SIMOND, means : The subject is not to be taxed without clear words for that purpose; and also that every Act of Parliament must be read according to the natural construction of its words (Re, Micklethwait, (1885) 11 Ex 452, p.456. In a classic passage LORD CAIRNS stated the principle thus : If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to supply any assumed deficiencies. Affirming this decision Hon ble Supreme Court as reported at [2021 (55) G.S.T.L. 129 (S.C.)] held as follows: 2 . The statutory provision - Rule 2(l) defining Input Service post 1-4-2011 is very clear and the out-door catering services when such services are used primarily for personal use or consumption of any employee is held to be excluded from the definition of Input Service . 3 . In that view of the matter, it cannot be said that the High Court has committed any error in denying the input tax credit and holding that such a service is excluded from input service. Thus in view of the above decisions the goods or services which have been excluded by way of exclusion clause in the definition, could not have been said to be covered by the definition, by referring to the main clause of the definition. As observed in case of Solar Industries all such decisions which have held so are per incuriam and have no precedent value. 4.11 Admittedly in their appeal, at B.8 appellant while putting up the case for allowing the credit in respect of chemicals as input has stated B.8 The Appellants submit that these chemicals were used for the proper construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises. Thus the activities of Modernization or renovation or repairs of a factory will be covered by the inclusion clause of the definition and those in relation to the setting up of the factory will be covered by the exclusion clause. It is settled law that the while interpreting a Fiscal Statute the statute should be interpreted strictly on the basis of the words used in the statute. Hon ble Supreme Court has in case of Dilip Kumar Company [2018 (361) E.L.T. 577 (S.C.)] observed as follows: 19 . The well-settled principle is that when the words in a statute are clear, plain and unambiguous and only one meaning can be inferred, the Courts are bound to give effect to the said meaning irrespective of consequences. If the words in the statute are plain and unambiguous, it becomes necessary to expound those words in their natural and ordinary sense. The words used declare the intention of the Legislature. In Kanai Lal Sur v. Paramnidhi Sadhukhan, AIR 1957 SC 907, it was held that if the words used are capable of one construction only then it would not be open to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est, non debet admitti voluntatis quaestio . Following such maxim, the Courts sometimes have made strict interpretation subordinate to the plain meaning rule [Mangalore Chemicals case (Infra para 37).], though strict interpretation is used in the precise sense. To say that strict interpretation involves plain reading of the statute and to say that one has to utilize strict interpretation in the event of ambiguity is self-contradictory. 4.13 Board has issued the Circular dated 29.04.2011, clarifying the matter, stating as follows: S No Issue Clarification 4 Is the credit of input services used for repair or renovation of factory or office available Credit of input services used for renovation or repair of factory or office is allowed. Services used in relation to renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, are specifically provided for in the inclusive part of the definition of input service. 4.14 We have seen the decisions relied upon by the appellant in the submissions made before us. We find the real test which is laid down in all the decisions is to determination whether the activities were in rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the subject/assessee or should such ambiguity should be construed in favour of the revenue, denying the benefit of exemption to the subject/assessee? There are catena of case laws in this area of interpretation of an exemption notification, which we need to consider herein. The case of Commissioner of Inland Revenue v. James Forrest, [(1890) 15 AC 334 (HL)] - is a case which does not discuss the interpretative test to be applied to exemption clauses in a taxation statute - however, it was observed that it would be unreasonable to suppose that an exemption was wide as practicable to make the tax inoperative, that it cannot be assumed to have been in the mind of the Legislature and that exemption from taxation to some extent increased the burden on other members of the community . Though this is a dissenting view of Lord Halsbury, LC, in subsequent decisions this has been quoted vividly to support the conclusion that any vagueness in the exemption clauses must go to the benefit of the revenue. Be that as it is, in our country, at least from 1955, there appears to be a consistent view that if the words in a taxing statute (not exemption clause) are ambiguous and open to two interp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f India, which came to be charged with the duty of purchasing those goods should also come within the purview of the exemption. The Court while repelling the aforesaid interpretation, reasoned as under : We are unable to accept this line of reasoning. This interpretation will unduly narrow the scope and ambit of the exemption by limiting it to sales of only those goods as, at the date of the Act, used to be sold to those two departments and sales of other goods even to those two departments, however necessary for the prosecution of the war, would not get benefit of the exemption. Such could not possibly be the intention of the Legislature as expressed by the language used by it in framing the Section. 31. The aforesaid placitum is suggestive of the fact that the Courts utilized the rule of strict interpretation in order to decipher the intention of the Legislature and thereafter provide appropriate interpretation for the exemption provided under the provisions of the Act which was neither too narrow nor too broad. It may be noted that the majority did not take a narrow view as to what strict interpretation would literally mean; rather they combined legislative intent to ascertain t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, thought at times, some latitude can be shown, if there is failure to comply with some requirements which are directory in nature, the noncompliance of which would not affect the essence or substance of the notification granting exemption. 39. The Constitution Bench then considered the doctrine of substantial compliance and intended use . The relevant portions of the observations in paras 31 to 34 are in the following terms - 31. Of course, some of the provisions of an exemption notification may be directory in nature and some are mandatory in nature. A distinction between the provisions of a statute which are of substantive character and were built in with certain specific objectives of policy, on the one hand, and those which are merely procedural and technical in there nature, on the other, must be kept clearly distinguished... Doctrine of substantial compliance and intended use 32. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably be expected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irements relate to the substance or essence of the statute, if so, strict adherence to those requirements is a precondition to give effect to that doctrine. On the other hand, if the requirements are procedural or directory in that they are not of the essence of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance with those factors which are considered as essential. 43. There is abundant jurisprudential justification for this. In the Governance of rule of law by a written Constitution, there is no implied power of taxation. The tax power must be specifically conferred and it should be strictly in accordance with the power so endowed by the Constitution itself. It is for this reason that the Courts insist upon strict compliance before a State demands and extracts money from its citizens towards various taxes. Any ambiguity in a taxation provision, therefore, is interpreted in favour of the subject/assessee. The statement of law that ambiguity in a taxation statute should be interpreted strictly and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which read as follows : How then should the Courts proceed? The expressions in the Schedule and in the notification for exemption should be understood by the language employed therein bearing in mind the context in which the expressions occur. The words used in the provision, imposing taxes or granting exemption should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them. It is, however, necessary to bear in mind certain principles. The notification in this case was issued under Rule 8 of the Central Excise Rules and should be read along with the Act. The notification must be read as a whole in the context of the other relevant provisions. When a notification is issued in accordance with power conferred by the statute, it has statutory force and validity and, therefore, the exemption under the notification is as if it were contained in the Act itself. See in this connection the observations of this Court in Orient Weaving Mills (P) Ltd. v. Union of India, 1962 Supp 3 SCR 481 = AIR 1963 SC 98. See also Kailash Nath v. State of U.P., AIR 1957 SC 790. The principle is we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not fall in the first clause of the notification there was no question of giving the clause a liberal construction and hold that production of goods by respondent mentioned in the notification were entitled to benefit. 46. The above decision, which is also a decision of twoJudge Bench of this Court, for the first time took a view that liberal and strict construction of exemption provisions are to be invoked at different stages of interpreting it. The question whether a subject falls in the notification or in the exemption clause, has to be strictly construed. When once the ambiguity or doubt is resolved by interpreting the applicability of exemption clause strictly, the Court may construe the notification by giving full play bestowing wider and liberal construction. The ratio of Parle Exports case (supra) deduced as follows : Do not extend or widen the ambit at stage of applicability. But once that hurdle is crossed, construe it liberally . 47. We do not find any strong and compelling reasons to differ, taking a contra view, from this. We respectfully record our concurrence to this view which has been subsequently, elaborated by the Constitution Bench in Hari Chand case (supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the period prior to March 2012, we are constrained to agree with the findings recorded in the a impugned order for denying this credit. We also observe that appellant has during the Month of February 2012 and March 2012 have taken huge amount of CENVAT Credit against capital goods both imported and indigenously procured. We have detailed the said credit in table in para 4.5. Thus what so ever credit has been availed by the appellant in respect of these services upto March 2012 is not admissible as the said credit is attributable to the service received for construction and setting up of the plant. 4.19 We also find that appellant has availed CENVAT credit in respect of the Manpower Supply Services (April 2012 to December 2012) and Security Services (April 2012 to November 2012). This credit has been availed by the appellant after the commencement of production activities. As these services have been received by the appellant during the period after commencement of production, the denial of credit by attributing the same to setting up of the manufacturing unit cannot be justified. Thus, credit of Rs.2,94,243.66/- taken by the appellant against security services and the credits tak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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