Custom, Excise & Service Tax Tribunal
Tvs Motor Company Ltd vs Commissioner Of Central Excise on 26 October, 2017
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal Nos.E/42054/2016 & E/42055/2016
[Arising out of Order-in-Appeal No.143 & 144/2016 (CXA-I) dt. 26.7.2016 passed by the Commissioner of Central Excise (Appeals-I), Chennai]
TVS Motor Company Ltd.
Appellant
Versus
Commissioner of Central Excise,
Chennai-III Respondent
Appearance:
Shri Raghavan Ramabhadran, Advocate For the Appellant Shri A. Cletus, ADC (AR) For the Respondent CORAM:
Honble Ms. Sulekha Beevi C.S. Member (Judicial) Date of hearing/decision :26.10.2017 FINAL ORDER No. 42454-42455 / 2017 The appellants are manufacturers of two wheelers and three wheelers and were availing the facility of cenvat credit on inputs and capital goods and input services. During verification of their accounts, it was noticed that appellants have availed cenvat credit of service tax paid under the category of 'Construction Services' used in their factory. The department entertained a view that such services are not eligible for credit and a show cause notice was issued proposing to disallow the credit and recover the amount of credit availed along with interest and also for imposing penalties. After adjudication, the original authority confirmed the demand along with interest and imposed penalties. In appeal, the Commissioner (Appeals) upheld the same. Hence this appeal.
2. On behalf of appellant, Ld. Counsel Shri Raghavan Ramabhadran opened his arguments by adverting to the definition of "input services" contained in Rule 2 (l) of the Cenvat Credit Rules. He submits that the first part of the definition includes services used in relation to the modernization, renovation or repairs of the factory premises and the appellant has availed the said services for repair and maintenance of the factory. He submitted that the authorities below have been carried away by the exclusion part of the definition and the Commissioner (Appeals) in para 6.3 of the order has erroneously observed that all work contract services would be excluded from the definition of "input services" even though they are availed for repairs, maintenance or modernization of the factory. He relies upon the decisions of the Tribunal in the following cases :
1. Alliance Global Services IT India (P) Ltd. Vs CCE & ST Hyderabad 2016 (44) STR 113 (Tri.-Hyd.)
2. Sarita Handa Exports (P) Ltd. Vs CCE Gurgaon 2016 (44) STR 654 (Tri.-Chan.)
3. Alliance Global Services IT India P. Ltd. Vs CC, CCE & ST Hyderabad-IV 2017 (49) STR 235 (Tri.-Hyd.)
4. Zydus Nycomed Healthcare Pvt. Ltd. Vs CCE Belapur - 2013 (30) STR 197 (Tri.-Mumbai.)
3. Against this Ld. A.R reiterated the findings in the impugned order.
4. Heard both sides. On looking into the definition of "input services" as it stands after 1.4.2011, the same has two parts. The first part includes the words "services used in relation to modernization, renovation or repairs of factory". The second part has the exclusion part wherein it states that the service portion in the execution of a works contract and construction services in so far as they are used for construction or execution of works contract of a building or civil structure or a part thereof is excluded. The appellants have submitted that the services were availed for repair and maintenance of the factory and not for construction of a building of the factory or a part thereof. Lower authority in para 6.3 has observed that even if the work contract services are availed for repairs or maintenance services, the same would fall under the exclusion part of the definition. The said issue has been analyzed in decisions rendered by the Tribunal in the case of Alliance Global Services IT India (P) Ltd. (supra), wherein the Tribunal observed as under :
"6. Commercial Training or coaching service was availed? for imparting training to the employees. Such trainings help to update their knowledge and information. This service is expressly mentioned in the inclusive part of the definition. Courier Service was utilised for sending important documents. Customs House Agents Service was used for clearance of computer equipments, which were imported to be used in providing output services. Management, Maintenance or repair service was availed for maintenance and upkeep of premises and equipments. Telecommunication Services were used for establishing communication with clients and internet usage. Lastly, the appellant availed works contract services for doing minor works like making and fixing of wooden door, door closer, lock, handles, tower bolt, providing and fixing gypsum partition cladding, fixing of glass windows with rubber wood beading and polishing, etc. The learned consultant drew attention to the exclusion portion of the definition introduced w.e.f. 1-4-2011. It excludes service portion in the execution of a works contract and construction services including service listed under clause (b) of Sec. 66E of the Finance Act, 1994, in so far as they are used for (a) construction or execution of works contract 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. That in the present case, the works done as per the invoice though classified as works contract services in the invoices would not fall in the exclusion portion as it is not for construction of building, civil structure or part thereof or for laying foundation or structures for capital goods. These services were used for fixing doors, etc. which is nothing but renovation, repair of premises of the service provider. These arguments put forward by the learned consultant is not without substance. I am convinced that the subject services qualify as input services and that they do not fall in the exclusion portion of the definition."
5. In Sarita Handa Exports (P) Ltd. (supra), similar view was taken by the Tribunal in respect of construction service used for repair and maintenance of factory premises :
"4. On careful? consideration of the submissions made by both sides, I find that the usage of services have to be examined and thereafter, it is to be decided whether the appellant is entitled to credit or not. Therefore, all services are dealt with separately.
(a) ..
(f) Construction service:
9. This service has been used for repair and? maintenance of factory premises is specified as an admissible input service under Rule 2(l) of Cenvat Credit Rules, 2004, therefore, the same is allowed."
6. In Alliance Global Services IT India P. Ltd. (supra), another decision of Tribunal, the Tribunal discussed the issue as under :
"7.?In respect of Works Contract Service, the appellant has averred that they use this service for doing minor works like making and fixing of wooden door fixing of wooden partition cladding, providing and fixing of glass windows etc. They have submitted an invoice of Trends Infra Products dated 29-7-2011, billing the said works and indicating the service tax payment of Rs. 3,003.48, which in fact in the disputed amount under this head. In any case, these input services are not hit by the exclusion Clause of 2(l) of the Cenvat Credit Rules, which excludes service portion in the execution of a works contract and construction services insofar as they are used for (a) construction or execution of a works contract of a building or civil structure or a part thereof; or (b) laying of foundation or making of structures of capital goods. Hence I hold that the Works Contract services received by the appellant are eligible input services."
7. In Zydus Nycomed Healthcare Pvt. Ltd. Vs CCE Belapur case, the Tribunal observed as under :
"6.?. As regards the construction service, in the instant case, it is towards repairs and maintenance of the factory premises and the invoices submitted by the appellant available in the records, also indicate that the same is towards repair and maintenance of the factory premises and therefore, these are also eligible input services. In view of the above, the finding of the lower Appellate authority that these are not input services has no merits."
8. Following above decisions I am of the view that denial of credit is unjustified. Impugned order is disallowing credit is set aside. Appeals are allowed with consequential relief, if any, as per law.
(dictated and pronounced in open court) (Sulekha Beevi C.S.) Member (Judicial) gs 7 Appeal No.E/42054, 42055/2016