Custom, Excise & Service Tax Tribunal
The Commissioner vs M/S Madras Cements Ltd on 19 February, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench Single Member Bench Court I Appeal No.E/27008/2013 (Arising out of Order-in-Appeal No.30/2013(H-III)CE, dated 30-07-2013 passed by Commissioner of C&CE(Appeals) Hyderabad) For approval and signature: Honble Ms. Sulekha Beevi, C.S. Member(Judicial) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? The Commissioner. C&CE, Hyderabad-III ..Appellant(s) Vs. M/s Madras Cements Ltd. Nalgonda District ..Respondent(s)
Appearance Shri P.N.Rao, AR for the Appellant Shri R.Parthasarthy, Advocate for the Respondent Coram:
Honble Ms. Sulekha Beevi, Member(Judicial) Date of Hearing : 19/02/2016 Date of decision: 19/02/2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.]
1. The above appeal is filed by Revenue challenging the order passed by Commissioner(Appeals), which allowed credit on service tax paid on civil construction works, prior to the period 01-04-2011.
2. The respondents are engaged in repacking of cement from bulk packs into retail packs and are also availing the facility of Cenvat credit on input and input services. During the course of audit, it was observed that the respondent availed the credit on service tax paid on construction works for non-plant structure, including fixing of sanitary fixtures, water supply, and construction of workers quarters and other similar structures during the period March, 2009 to February, 2010. A show cause notice was issued proposing to deny the credit and recovery of the same along with interest, besides proposing to impose penalty. After due process of law, , the original authority confirmed the demand, interest and imposed equal amount of penalty. The appellants carried the issue in appeal and vide order impugned herein the Commissioner (Appeals) allowed the appeal filed by the respondents. The Revenue has thus preferred the present appeal.
3. The issue involved is whether the respondents are eligible for service tax credit of Rs.10,30,340/- availed on various construction services. The learned AR relied upon the judgment laid in CCE Vs Sundaram Brake Linings [2010(19)STR-172(Tri.Chennai)] and CCE, Nagpur Vs Manikargarh Cement[2010(20)STR-456(Bom)]. He argued that the service did not qualify as input services, as there was no nexus between the service and the business of the respondents. At this juncture, it would be worthwhile to reproduce the findings of the Commissioner (Appeals) in the impugned order which is as under:
I find that there is enormous force in the contention of the respondents that the subject services qualify themselves as input services in terms of rule 291) of CCR as it existed prior to 1-04-2011. I am convinced of their contention that the subject services such as civil Construction works for non-plant structure which included fixing of sanity fixtures, water supply, construction of workers residential premises & other similar structures and construction of roads, dams, embankments of roads etc. and that the expenditure was being incurred by the company as a part of their business activity in order to produce their finished goods and to promote their sales. Further, I accept the contention of the appellant that in construction of cement packaging plant, the roads inside the cement packaging plants, dams and embankment of roads etc are essential as vehicles carrying raw materials and finished products would be plying regularly within the precincts of cement packaging plant and therefore, construction of roads and dams, which withstand the load is pre-requisite. Without proper roads and dams, the packing plant cannot carryon their day to day activity of receiving bulk cement in bulkers (Tankers) and dispatching packed cement in transport vehicles. It requires water, therefore they had to create a storage area by using the terrain and by constructing a bund which looks like a small dam. The residential quarters were provided within factory for operational staff, where the sanitary fittings were fitted. Similar fittings were fitted in the toilets in the work area as well
4. From the above, it is clear that the constructions were carried out for the purpose starting production in the factory. These services are very much included in services necessary for setting up, modernization of factory/premises. The decisions relied by the Revenue is not applicable to the present case as in Sundaram Brake Linings the issue under consideration was the eligibility of credit on outdoor catering services. Further, in Liugong Indian Pvt.Ltd Vs CCE&ST, Indor [2015(38)-STR- 96(Tri.Del)], the coordinate bench of the Tribunal has held that the credit on services availed for setting up of the factory is admissible prior to 01-04-2011. Following the dictum laid therein, I find that there is no infirmity in the impugned order.
5. In the result, the appeal is dismissed.
(Pronounced in open court)
( SULEKHA BEEVI. C.S.)
MEMBER(JUDICIAL)
Dks
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