Custom, Excise & Service Tax Tribunal
M/S. Idea Cellular Ltd vs Commissioner Of Central Excise, ... on 30 November, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. ST/87864/2014 (Arising out of Order-in-Original No. 27/ST/RN/SCL/MIII/13-14 dated 26.03.2014 passed by the Commissioner of Central Excise, Mumbai-II ) For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No
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 : No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
======================================================
M/s. Idea Cellular Ltd.
:
Appellant
VS
Commissioner of Central Excise, Mumbai-II
:
Respondent
Appearance
Shri S.S. Gupta, C.A. for Appellant
Shri B.Kumar Iyer, Supdt. (A.R) for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Date of hearing : 30/11/2015
Date of Pronouncement: 22/03/2016
ORDER NO.
The appeal is directed against Order-in-Original No. 27/ST/RN/SCL/MIII/13-14 dated 26.03.2014 passed by the Commissioner of Central Excise, Mumbai-II, wherein the Ld. Commissioner out of total credit of Rs.1,28,27,801/- proposed to be disallowed in the show cause notice dt. 26.3.2013, an amount of Rs.5,27,136/- was disallowed on the services, such as Consulting Engineers Service, Designer Service, Technical Testing & Analysis Service used for erection of BTS Towers. However, a credit of Rs.1,23,00,665/- in respect of Optical Fibre Cable Duct falling under Chapter heading 3917 of the Central Excise Tariff Act, 1985 was allowed. Therefore the only issue remains to be decided is credit of Rs.5,27,136/- and the various input services and penalty of Rs.25,000/- imposed upon the appellant under Rule 15(1) of the Cenvat Credit Rules, 2004. The Ld. Commissioner while disallowing the credit on aforesaid services observed as under:
The input service namely Construction Service Erection & Commissioning Service are pertaining to creation of the immovable structures, viz., BTS Towers & Shelters which do not qualify to be either Capital Goods or Inputs, as already discussed above. These services do not have any direct nexus with the output services being rendered by the Noticee i.e. Telecom Service. The expression Activities relating to business such as was deleted from the definition of input services w.e.f.01.04.2011 and the period involved in this show cause notice is after 01.04.2011. These services are not specifically mentioned in the definition of input service under Rule 2(1) of the Cenvat Credit Rules, 2004. Accordingly these services are held not eligible for Cenvat Credit. Therefore, I disallow the Credit availed on input service while receiving certain services like erection, commissioning and installation etc., for erection of BTS Towers and shelters & other services such as Consultancy Engineers Services, Design Services, Technical Testing & Analysis service to the tune of Rs. 5,27,136/-. Aggrieved by the adjudication order the appellant is before me.
2. Shri S.S. Gupta Ld. Chartered Accountant along with Manoj Chauhan Chartered Accountant appeared on behalf of the appellant. He fairly concedes that Cenvat Credit in respect of construction and works contract is not admissible after 1.4.2011 as the said services were excluded from the purview of input service. He further submits that apart from construction and works contract service, remaining services are related to erection, commissioning and installation service, consultancy engineers service, business auxiliary services and business support services. He submits that these services are directly used for providing the output service. Therefore these services are even covered under the main clause of the definition of input services. He further submits that the Ld. Commissioner firstly disallowed the credit considering the services as Erection, Commissioning and Installation, Design Services, Technical Testing & Analysis service whereas the services are erection, commissioning and installation service, consultancy engineers service, business auxiliary service & business support services. Therefore, the finding of the Ld. Commissioner is wrong on the basis that the services involved is different from the services considered and discussed by him in the impugned order. He submits that after 1.4.2011, as per the amended definition of input service, certain services were excluded, which are only two services of the present case i.e. construction of towers and works contract, except these two services, other services are not falling under exclusion category, credit cannot be denied on such services. In support, he has placed reliance on the following judgement:
(i) Commr. of C. Ex. Visakhapatanam-II Vs. Sai Sahmita Storages (P) Ltd.
2011 (23) S.T.R. 341 (A.P.)
(ii) Mundra ports and Special Economic Zone Ltd. Vs. Commissioner of Central Excise and Customs 2015-TIOL-1288-HC-AHM-ST
(iii) Commissioner of Central Excise Commissionerate, Delhi-III Vs. M/s. Bellsonics Auto Components India P. Ltd.
2015 (7) TMI 930-PUNJAB & HARYANA HIGH COURT
(iv) Commissioner of C.Ex. Ahmedabad-II Vs. Cadila Healthcare Ltd.
2013 (30) S.T.R. 3 (Guj.)
(v) Navratna S.G. Highway Prop. Pvt. Ltd. Vs. Commr. of S.T., Ahmedabad 2012 (28) S.T.R. 166 (Tri.-Ahmd.)
(vi) Gujarat State Petronet Ltd. Vs. Commr. of Cus. & C. Ex., Ahmedabad 2013 (32) S.T.R. 510 (Tri.-Ahmd.)
3. On the other hand, Shri B. Kumar Iyer Ld. Supdt. (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that the Ld. Commissioner has given categorical finding that as per the amended definition w.e.f. 1.4.2011 these services are not specifically mentioned in the definition of input, service therefore he correctly denied the credit. In support he placed reliance on the following judgments:
(i) Bharti Airtel Ltd. Vs. Commissioner of C. Ex., Pune-III 2014 (35) S.T.R. 865 (Bom.)
(ii) Vodafone India Ltd. Vs. Commissioner of Central Excise 2015-TIOL-2098-HC-MUM-ST
4. I have carefully considered the submissions made by both the sides. I find that the appellant is providing telecom services. They availed Cenvat Credit in respect of construction service, erection, commissioning and installation service, consultancy engineers service & though in the order it was mentioned the design service, technical analysis services. As per the claim of the appellant the Cenvat Credit of Rs.5,27,136/- is on business auxiliary service and business support services also. During the hearing, the Ld. Chartered Accountant of the appellant placed the bifurcation of the input service and credit availed thereon as under:
October 2011 to June 2012 Category of Service Total Construction Services 101,628 Erection, Commissioning & Installation Service 204,810 Woks Contract Service 109,431 Consultancy Engineers Services 8,240 Business Auxiliary Services 86,015 Business Support Services 17,011 Total 527,136 From the above chart, it is clear that there are some different services as mentioned by the Ld. Commissioner in the impugned order then the claim of the appellant. I find that there is a amendment in the definition of input service w.e.f.1.4.2011 the amended definition reads as under:
(1) input service means any service,
(i) used by a provider of taxable service for providing an output service; or
(ii) used by a 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 modernisation, renovation or repairs of a 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, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; but excludes services, (A) specified in sub-clauses (p), (zn), (zzl), (zzm), (zzq), (zzzh) and (zzzza) of clause (105) of section 65 of the Finance Act (hereinafter referred as specified services), insofar as they are used for
(a) construction 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, except for the provision of one or more of the specified services; or (B) specified in sub-clauses (d), (o), (zo) and (zzzzj) of clause (105) of section 65 of the Finance Act, insofar as they relate to a motor vehicle except when used for the provision of taxable services for which the credit on motor vehicle is available as capital goods; or (C) such as those provided in relation to 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 on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;.
From the above definition, it is clear that the following services provided for construction of building or a civil structure or a part thereof are excluded for the definition of input service.
(p) Architects Service (zn) Ports Service (zzl) Ports Service (zzm) Airports Authority Service (zzq) Commercial or Industrial Constructions Service (zzzh) Construction of Complexs service (zzzza) Works Contracts Service Therefore, as clearly conceded by the Ld. Chartered Accountant services of construction and works contract are excluded from the definition of input service, therefore the Cenvat Credit on the said two services are disallowed. As regard other services there is a dispute between the Ld. Commissioner and the appellant that some of the services like design service, technical testing and analysis service are in fact business auxiliary service and business support service, which needs verification by the adjudicating authority. However, irrespective of difference of service whether it is design service, technical testing and analysis service or business auxiliary service and business support service, the same for not falling under the exclusion category, therefore the credit cannot be denied on these services. Similarly, the services like erection, commissioning and installation and consultancy engineers service are also not excluded in the amended definition of input service. Therefore in my considered view, except the construction service and works contract service the credit on other services are admissible. As regard the judgments relied upon by the Ld. AR in the case of Bharti Airtel Ltd. (Supra) and Vodafone India Ltd. (supra), the issue relates to the Cenvat Credit on material used for setting up towers prefabricated buildings with antenna etc. whereas in the present case the issue is on the input services received by the appellant. Therefore, the fact of the case relied upon by the Revenue are totally different from the facts of the present case, hence the said judgements are not relevant. As per my above discussion, I am of the considered view that Cenvat Credit in respect of input services except the service of construction service and works contract service is admissible. A regard penalty, I find that the issue relates to the interpretation of definition of input service and on most of the services credit is admissible and the credit is inadmissible in respect of construction and works contract service, only due to the reason that there is exclusion w.e.f.1.4.2011. In this facts and circumstances, I do not see any malafide intention on the part of the appellant. Therefore penalty of Rs.25,000/- imposed by the lower authorities under Rule 25 is hereby set aside. The appeal is partly allowed in the above terms.
(Pronounced in court on 22/03/2016)
(Ramesh Nair)
Member (Judicial)
SM.
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Appeal No. ST/87864/2014