Custom, Excise & Service Tax Tribunal
Uni Ads Ltd vs Commissioner Of Central Excise, ... on 30 January, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: ST/326/2010-SM [Arising out of Order-In-Appeal No 78-2009 dated 26/11/2009 passed by CC,CE&ST(Appeals-II), Hyderabad] For approval and signature: HON'BLE Shri B.S.V.MURTHY, TECHNICAL MEMBER 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? UNI ADS LTD 7-1-212/8, SIVBAGH AMEERPET, HYDERABAD Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax HYDERABAD-II NULL L.B STADIUM ROAD, BASHEERBAGH, HYDERABAD, - 500004 ANDHRA PRADESH Respondent(s)
Appearance:
Ms. L. Madhavi, Advocate B.V KUMAR LAW ASSOCIATES #103,17TH "C" MAINROAD, 5TH BLOCK, KORAMANGALA , BANGALORE - 560095 KARNATAKA For the Appellant Shri S. Teli, Deputy Commissioner(AR) For the Respondent Date of Hearing: 30/01/2015 Date of Decision: 30/01/2015 CORAM:
HON'BLE Shri B.S.V.MURTHY, TECHNICAL MEMBER Final Order No. 20335 / 2015 Per : B.S.V. MURTHY The appellants are in the field of Advertising Business and are registered under Section 69 of the Finance Act, 1994 read with Rule 4(1) of the STR 1994 bearing ST Registration No. AAACU2715MST001, for payment of Service Tax under the category of "Advertising Agency". The Appellants have been availing the facility of Cenvat Credit under CCR, 2004, in respect of inputs utilized in the Taxable Services provided by them.
2. A show-cause notice C. No. IV / 16 /203 / 2009-S.Tax (Gr. VIII) dt. 25.6.2009, was issued to the Appellants in which it was, inter alia, alleged as follows:
i. The Appellants have taken Cenvat Credit of Rs'a 36,48,658/- during the period July 2007 to September 2008 on angles, shapes, sections, channels, bars, plates, beams, tubes, sheets, nuts & bolts and services which are being utilized for the fabrication and erection of "Unipoles" / Hoardings and Services used in relation to erection of Unipoles / Hoardings. "Unipoles / Hoardings" fall under Chapter 73 of the CETA, 1985 under the heading of 'Articles of Iron & Steel and hence cannot be treated as 'Capital Goods' and consequently no credit is available.
ii. Further, these items are steel structures and having been built into the concrete became immovable and by reason of which they cease to be goods. The fact of their cessation to be goods excludes them from the purview of excisable gods and accordingly availment of credit on any material that goes into these structures become irregular credit in as much as these structures are neither manufactured nor excisable goods.
iii. Uni Ads have also taken Cenvat Credit of Service Tax of Rs. 14,014/- paid on car insurance which is not input service for providing of their output service as there is no nexus between the car insurance and their output service i.e., Advertising Agency Service. Further, Uni Ads have failed to produce the Original Bill / Invoice / Challan in respect of Credit availed on Car Insurance [Invoice / Bill No. 1801372311107840 dtd. 11.8.2007] iv. The Appellants have suppressed the fact of taking of Cenvat Credit on angles, shapes, sections, channels, bars, plates, beams, tubes, sheets, nuts & bolts and on services which are used for fabrication and erection of Unipoles / Hoardings, on Car Insurance with an intention to avail the Cenvat Credit irregularly. Hence, it appears that the proviso to sub section (1) of Sec. 73 of FA, 1994, is invokable in this case.
3. Heard both the sides. Learned advocate submitted that appellant has taken CENVAT credit on steel items used for fabrication and erection of hoardings, central medians, bus shelters and unipoles which are erected for fixing advertising hoardings for the purposes of display of advertisements. The issue is whether the appellants are eligible to take CENVAT credit on steel items used for this purpose. There is no dispute that the items used are angles, shapes, sections, channels etc. falling under Chapter 73 of Central Excise Tariff Act and Chapter 73 is not one of the items notified under capital goods. It is the claim of the learned counsel that they have to be treated as inputs. Alternatively he would submit that the demand relates to the period July 2007 to September 2008 whereas show-cause notice issued on 26/05/2009.
4. I have considered the submissions. It was submitted by the learned counsel vehemently that the fabricated and erected structures for the purpose of display of advertisements have to be considered as movable property and they can be removed from one place and installed in another place. This is a very debatable issue. Even though photographs were produced on going through the photographs, it is difficult to come to a conclusion. Nevertheless it is quite clear that the issue is debatable and on this ground itself extended period could not have been invoked since two ways are possible. It was pointed out by the learned AR that Honble High Court of Bombay in the case of Bharti Airtel Ltd. Vs. CCE, Pune-III [2014(35) STR 865 (Bom.)] in somewhat similar circumstances has held that CENVAT credit would not be admissible. Para 31 & 32 of this order are relevant and are reproduced below:-
31. In the light of the aforesaid discussion we examine whether on the rules as they stand the appellants would be entitled to the credit of the duty paid on the item in question on the output service namely the cellular service. We may observe that a plain reading of the definition of `capital goods' as defined under Rule 2(a)(A) of the Credit Rules show that all goods falling under Chapter82, Chapter 85, Chapter 90, Heading No.6805, grinding wheels and the like, and parts thereof falling under Heading 6804 of the First Schedule to the Central Excise Tariff Act; pollution control equipments; components, spares and accessories of the goods specified at sub-clauses (i) and (ii) which are used either in the factory for manufacture of final products but does not include any equipment or appliance used in the office and those used for providing output service. Further in the CKD or SKD condition the tower and parts thereof would fall under the Chapter Heading 7308 of the Central Excise Tariff Act. Heading 7308 is not specified in clause (i) or clause (ii) of Rule 2(a)(A) of Credit Rules so as to be capital goods. Further the appellants contention that they were entitled for credit of the duty paid as the Base Transreceiver Station (BTS) is a single integrated system consisting of tower, GSM or Microwave Antennas, Prefabricated building, isolation transformers, electrical equipments, generator sets, feeder cables etc. and that these systems are to be treated as "composite system" classified under Chapter 85.25 of the Traffic Act and be treated as 'capital goods' and credit be allowed, also is not acceptable. It is clear that each of the component had independent functions and hence, they cannot be treated and classified as single unit. It is clear that all capital goods are not eligible for credit and only those relatable to the output services would be eligible for credit. The goods in question in any case cannot be held to be capital goods for the purpose of Cenvat credit as they are neither components, spares and accessories of goods falling under any of the chapters or headings of the Central Excise Tariff Schedule as specified in sub-clause (i) of the capital goods. Hence a combined reading of sub-clauses (a) (A) (i) and (iii) and sub rule (2) indicates that only the category of goods in Rule 2(a)(A) falling under clause (i) and (iii) used for providing output services can only qualify as capital goods and none other. Admittedly the goods in question namely the tower and part thereof, the PFB and the printers do not fall within the definition of capital goods and hence the appellants cannot claim the credit of duty paid on these items. Even applying the ratio of the judgments as relied upon by the appellants as observed above the said goods in the present context cannot be classified as capital goods.
32. As regards second contention of the appellants that the tower and part thereof, the PFB and the printers would also falls under the definition of 'input' as defined under Rule 2 (k) also cannot be sustained. The definition of inputs as defined under Rule 2(k) includes all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production, and as provided in sub-clause (ii) all goods except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service. Explanation (2) of sub-rule (k) is also which provides that input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer. A plain reading of the definition of input indicates that in the present context, clause (i) of Rule 2(k) may not be of relevance as same pertains to manufacturing activity and pertains to goods used in relation to manufacture of final product or any other purpose within the factory of production. Sub-clause (ii) has been referred to as relevant by the appellant as the same pertains to goods except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service. Tower and parts thereof are fastened and are fixed to the earth and after their erection become immovable and therefore cannot be goods.
4. Therefore for the normal period, it has to be held that appellant is not eligible for the benefit of CENVAT credit. Since the issue is a debatable one and arguable one and in view of the fact that extended period has been held as not invokable, in my opinion, penalty cannot be imposed. In view of the above discussion, the demand for CENVAT credit within the normal period with interest is upheld and penalty and demand for the period beyond the normal period are set aside.
(Operative portion of this order pronounced in the court) B.S.V.MURTHY TECHNICAL MEMBER Raja..
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