Custom, Excise & Service Tax Tribunal
M/S. Liugong Indian Pvt. Ltd vs C.C.E. & S.T.- Indore on 31 March, 2014
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI COURT NO. I Date of hearing/Decision:31.03.14 Stay Application No. E/Stay/58341/2013 EX[DB] in Appeal No. E/57746/2013 M/s. Liugong Indian Pvt. Ltd. Appellant Vs. C.C.E. & S.T.- Indore Respondent
[Arising out of Order-In-Original No.1/Commr./ST/IND/2013, dt.27.02.2013, passed by Commissioner, Customs, Central Excise & Service Tax, Indore] For approval and signature:
Honble Mr. Justice G.Raghuram, President Hon'ble Mr. Rakesh Kumar, Member (Technical) 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 Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? Present:
Sh. B.L.Narsimhan, Advocate - for the appellant Sh. Pramod Kumar, Jt.CDR - for the Respondent Coram :
Honble Mr. Justice G.Raghuram, President Hon'ble Mr. Rakesh Kumar, Member (Technical) FINAL ORDER NO. 51702/2014 Per Rakesh Kumar:-
The facts leading to the filing of this appeal and stay application are in brief as under:-
1.1 The appellant are manufacturers of construction equipment and earth movers, chargeable to Central Excise duty. They availed Cenvat Credit of excise duty paid on input and capital goods and service tax paid on input services as per the provisions of Cenvat Credit Rules. The period of dispute is from 2008-20098 to 2009-2010. During this period they availed the service of M/s. Interarch Building Products Pvt. Ltd., M/s. United Project Construction Ltd. and M/s Shastri Consultants Pvt. Ltd. for setting up of their factory. They took Cenvat Credit of Rs.2,41,30,321/- in respect of the services availed for setting up of the factory. The Department issued a Show Cause Notice dt. 17.06.11 for recovery of the above mentioned amount of service tax along with interest thereon and also for imposition of penalty on them under Rule 15 of the Cenvat Credit Rules, 2004 on the ground that the various services used for setting up of the factory, are not eligible for Cenvat Credit, as the same have resulted in coming into existence of an immovable property, which is not excisable. In this regard the reliance have been placed on the Boards Circular No.98/1/08-ST dt. 04.01.08 wherein it was clarified that commercial or industrial construction service or work contract service used for bringing into existence an immovable property, are not eligible for Cenvat Credit, as immovable property is neither goods nor service .
1.2 The above Show Cause Notice was adjudicated by the Commissioner vide order-in-original dt. 28.02.2012 by which the above mentioned Cenvat Credit demand was confirmed along with interest and penalty of equal amount was imposed on the appellant. Against this order of the Commissioner, this appeal has been filed along with stay application.
2. Though the matter was listed only for the hearing of the miscellaneous application, for early hearing of the stay application, after hearing same for the sometime, the Bench was of the view that the appeal itself can be taken up for final disposal as only a very short issue is involved. Accordingly with the consent of both sides, the matter was heard for final disposal.
3. Sh. B.L.Narsimhan, Advocate, the learned counsel for the appellant, pleaded that during the period of dispute, the definition of input service as given in Rule 2(l) of Cenvat Credit Rules, 2004 specifically covered the service used in relation to setting up, modernization, renovation, or repairs of a factory or premises of provider of output service or an office relating to such factory or premises, that word setting up was omitted by Notification No.3/2011/CE(NT) dt. 01.03.2011 w.e.f. 01.04.2011, that since during the period of dispute the service of initial setting up of factory was specifically covered by the definition of input service, the services, in question, have to be treated as input service would be eligible for Cenvat Credit, that the Tribunal in the case of Bellsonica Auto Component India Pvt. Ltd. (Final Order No.58639/2013 EX[DB] dt. 28.11.2013) in respect of period prior to 01.04.11 wherein an identical issue was involved, has held that services would used in relation to setting up of the factory premises would be eligible for Cenvat Credit, that the ratio of this judgment is squarely applicable to the facts of the goods, that same view has been taken by the Tribunal in the cases of Suzuki Motorcycle (I) Pvt. Ltd. Vs. CCE, Delhi-II, Gurgaon reported in 2011(267) ELT-216(Tri.-Del.) and also in the case of Madhusudan Auto Ltd. Vs. CCE, Delhi-III reported in 2011(231)-STR-277 (Tri. Del.), and that in view of the above submissions, the impugned order is not correct.
4. Sh. Pramod Kumar, the learned Jt. CDR, defended the impugned order by reiterating the findings of the Commissioner and emphasized that services, in question, used for setting up of the manufacturing plant, which is an immovable property, are not eligible for Cenvat Credit.
5. We have considered the submissions from both the sides and perused the records. There is no dispute that the services, in question, in respect of which the Cenvat Credit has been taken are the services relating to setting up of the factory and have been used for this purpose only. During the period of dispute the definition of input service as given in Rule 2(l) of Cenvat Credit Rules, 2004 was as under:-
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 upto the place of removal] and includes services used in relation to setting up, modernization, renovation or repairs of factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal.
It is only with effect from 01.04.2011 by amendment to the Rule 2(l) that words setting up were omitted. The period of dispute in this case is from 2008-2009 to 2009-2010 i.e. the period prior to 01.04.11 when the definition of input service specifically included the services used in relation to setting up of the factory or premises of the provider of output service. Thus the services, in question, used for setting up of factory have to be treated as input service and would be eligible for Cenvat Credit, as the factory has been setup for manufacture of final products which are liable to Central Excise duty. Therefore denial of Cenvat Credit, in question, is contrary to the provisions of Rule 2(l) of Cenvat Credit Rules, 2004. We find that the same view has been taken by the Tribunal in the case of Bellsonica Auto Component India Pvt. Ltd.(Supra) and also in the case of Madhusudan Auto Ltd.(Supra). The impugned order, therefore, is not sustainable. The same is set aside. The appeal is allowed.
(Justice G.Raghuram) President (Rakesh Kumar) Member (Technical) S.Kaur 1