Custom, Excise & Service Tax Tribunal
The Kerala Minerals & Metals Ltd vs The Commissioner Of Central Excise, ... on 24 November, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeals (s) Involved: E/21352/2014 [Arising out of Order-in-Appeal No.17/2014-CE dated 9.1.2014 passed by the Commissioner of Central Excise, Customs and Service Tax (Appeals), Bangalore.] The Kerala Minerals & Metals Ltd. Appellant(s) Versus The Commissioner of Central Excise, Trivandrum. Respondent(s)
Appearance:
Mr. Prinsun Philip, Advocate For the Appellant Mr. Naveen Kushalappa, AR For the Respondent Date of Hearing: 03.08.2017 Date of Decision: 24.11.2017 CORAM:
HON'BLE SHRI S.S. GARG, JUDICIAL MEMBER Final Order No. _22899_ / 2017 Per : S.S. GARG The present appeal is directed against the impugned order dated 9.1.2014 passed by the Commissioner (A) wherein the Commissioner (A) has rejected the appeal of the appellant.
2. Briefly the facts of the present case are that the appellant is manufacturer of Titanium Dioxide, Beneficiated Ilmanite, Titanium Tetrachloride, etc., falling under Chapter 28 of the Central Excise Tariff Act and availing CENVAT credit of Central Excise duty paid on inputs and capital goods as well as service tax paid on input services in accordance with the provisions of the CENVAT Credit Rules, 2004. They have engaged M/s. Hind Erectors, Kollam; M/s. Sancto Construction, Kollam; M/s. Hemco Constructions, Karungappally; M/s. Goodwill Power Co. Ltd., Cochin, Cornier Generator Sale Service Ltd., Ernakulam; M/s. Polycast Industries, Udyogamandal and M/s. Vijaya Ele-Tech (P) Ltd., Cochin for various kinds of construction works like erection of structures, fabrication, etc., under works contract service. On verification of the statutory returns of the appellant showing the CENVAT credit taken during the month, filed along with ER-1 returns, it was noticed that they had taken CENVAT credit on works contract service after 1.4.2011 in contravention of Clause (k) of Rule 2 of CENVAT Credit Rules. They had taken ineligible CENVAT credit to the tune of Rs.2,24,339/- from the months of June 2011 to October 2011, in violation of Rule 3 read with Rule 2(k) and (1) of the CENVAT Credit Rules, 2004. Accordingly, a show-cause notice was issued demanding the ineligible CENVAT credit of Rs.2,24,339/- with interest under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A and 11AB of the Central Excise Act, 1944 and proposing penalty under Rule 15(1) of the CENVAT Credit Rules, 2004. After due process of law, the original authority confirmed an amount of Rs.2,19,531/- under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1994 along with interest read with Section 11AA of the Central Excise Act, 1944 and imposing a penalty of Rs.2,000/- under Rule 15(1) of the CENVAT Credit Rules, 2004. CENVAT Credit of Rs.4,808/- was dropped as the same was taken in relation to service tax paid on repair and maintenance service and is eligible for CENVAT Credit. Aggrieved by the said order, the appellant filed appeal before the Commissioner (A) who rejected the appeal and hence, the present appeal.
3. Heard both the parties and perused the records.
4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same is passed without considering the position of law and without considering the documents and invoices on record. He also submitted that the adjudicating authority vide OIO dated 10.10.2012 allowed the CENVAT credit on the services availed from Hemco Construction, Karunagapally and Cornier Sales and Services Ltd., Ernakulam and the services availed from other contractors were held to be ineligible and therefore, the credit of Rs.2,19,531/- was disallowed. He further submitted that the finding in the impugned order that the work awarded to contractors do not qualify as an input service is not sustainable in law. He further submitted that the nature of work awarded to various contractors clearly shows that the same do not come within the excluded category in the amended definition of input service and therefore, the appellants are eligible for the credit. He further submitted that as far as Hind Erectors are concerned, the appellant awarded the work for fabrication, painting, erection and testing of carbon steel and SS304 piping required for the 500 TPY Titanium Sponge Project as per the work order dated 27.8.2009 and the said work was completed before 1.4.2011 and the invoice was raised on 21.1.2011 and payment was made on 7.2.2011, which clearly shows that the credit availed by the appellant is proper and valid. Similarly with regard to Polycast Industries, the Commissioner of Central Excise passed the order No.TVM/EXCUS-000-04-13-14 dated 31.10.2013 for the period November 2011 to March 2012 held that the appellant has validly availed credit in respect of the services provided by Polycast Industries and the said copy of the order is also annexed with the appeal. Further, in the case of Sanco Construction, the labour contract was for installation and commissioning of NaOH storage tank in the water treatment plant, replacement of certain damaged structural parts at the Ilumenite Beneficiation Plant, dismantle of boxing up of A stream RG blower section line, replacement of tail scrubber outlet bellow FRP pipeline in ARP 2nd Stream, Cleaning of Nozzles in cooling Tower and Repositioning of valve in IBP pump motor assembly at ARP iron oxide pond. It is clear from the nature of works that they do not come under the excluded category and therefore, the services provided by Sancto Construction qualify as input service and appellants are entitled to CENVAT credit on the amount paid to the contractor. As far as Goodwill Power Company is concerned, the contract was for electrical maintenance work replacement of cable trays and its supports. The work involved is electrical maintenance work. The nature of work would show that the service provided qualify as input service and appellant is eligible to avail credit on the amount paid to the contractor. Further, in the case of Vijaya-ELE-Tech (P) Ltd., the contract was for replacement for corroded GI cable tray and MS supports of U-200 chlorinate and condensation area, which is In relation to electrical maintenance work and therefore, it falls under the excluded category and the appellant is eligible to avail CENVAT credit on the amount paid to the contractor.
5. On the other hand, the learned AR reiterated the findings of the impugned order.
6. After considering the submissions of both the parties and perusal of the material on record, and after going through the various contracts awarded to various contractors and their invoices which clearly shows that the work awarded to those contractors fall in the definition of input service even after 1.4.2011 and they are not excluded by the amendment to input service w.e.f. 1.4.2011. Therefore, considering the nature of the work, I hold that all these services availed by the appellant from the various contractors fall in the definition of input service and the appellant is entitled to CENVAT credit and the impugned order denying the same is not sustainable in law and the same is set aside by allowing the appeal of the appellant.
(Order was pronounced in open court on 24.11.2017.) S.S. GARG JUDICIAL MEMBER rv 6 1