TaxTMI 
TaxTMI 
TaxTMI 
2014 (11) TMI 578
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....s client is a composite contract which include Designing, Engineering, Manufacture, Supply, Erection and Installation and Commissioning of 'Gasifier Systems'. He made the bench go through one such contract dated 17.7.2010 entered between the appellant and M/s. R.S. Steels and Engineering Limited and argued that the entire contract is for desigining, Manufacturing, Installation and Commissioning. That as per Clause 9 of this contract, it is the responsibility of the appellant to depute engineers for Erection, Installation and Commissioning of the 'Gasifier System' free of cost. That for such Erection, Installation and Commissioning appellant availed the services of others and has taken credit of such service tax paid by the service providers. That as per the invoices raised by the appellant Central Excise duty is paid on the entire contracted value including Erection, Installation and Commissioning charges. That certain conditions mentioned on the invoices are general and have been incorrectly relied upon by the first appellate authority in Para-8 of the OIA dated 06.6.2012. That both the lower authorities have failed to appreciate the clauses of the contracts entered wherein entire....
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....) of the Cenvat Credit Rules, 2004 were from the place of removal and in the present proceedings the period involved is from November 2007 to March 2011. That once extended period is not applicable then penalties are also not imposable up on the appellant. 3. Shri Jeetesh Nagori (AR) appearing on behalf of the Revenue argued that with effect from 01.4.2008 the words 'from the place of removal' were replaced by the words 'up to the place of removal in the definition of 'Input Services' as given in the Cenvat Credit Rules, 2004. That even after this amendment also appellant continued to take CENVAT credit which were beyond the place of removal. It was his case that in spite of clear cut provisions of the Cenvat Credit Rules, 2004 appellant took CENVAT credit, therefore, extended period is applicable and appellant has been correctly visited with penalties. 3.1 On merits learned AR argued that services of Erection, Installation and Commissioning are availed beyond the place of removal and can not be considered as services availed in relation to manufacture as these services availed has nothing to do with the manufacturing activities. He relied upon the following case laws in support....
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.... the extended period and imposition of penalties are attracted against the appellant in the present facts and circumstances. 4.1 Definition of 'Input Services' as given in Rule 2(l) of the Cenvat Credit Rules, 2004 during the relevant period after 01.4.2008 was as follows:- 2(l) '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 up to the place of removal), and includes services used in relation to setting up, modernization, 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 up to 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 relating, share registry, and security, inward transportation of inputs or capital goods and outward transportation up to the place of removal: Before 01.4.....
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.... the supplier of the machine is not only selling the machine but is also providing the service of erection and commissioning. Once erection and commissioning cost is included, in the transaction value, the natural conclusion that would emerge is that the processes undertaken in the buyers premises are actually incidental to manufacturing activity undertaken in the manufacturers premises. What has been sold in this case is the complete machine duly erected and commissioned and operational. The incidental process of erection and commissioning being incidental to manufacture, has to be treated as continuation of the earlier process which started in the manufacturers premises. In this case even though the position of the machine in CKD condition gets transferred to the buyer when it is removed from the factory as per the contract, the question to be examined is whether such a service is related directly or indirectly to the manufacture of their goods in question. As already mentioned by me earlier, the process of erection and commissioning at the buyers premises is incidental to the manufacture of the machine and therefore the erection and commissioning services provided also can b....
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....ut Service' given in Rule 2(l) of the Cenvat Credit Rules, 2004. This part of the definition has not undergone any change either before 01.4.2008 or after 01.4.2008. Case law of CCE, Ahmedabad-II vs. Cadila Healthcare Limited (supra) relied upon by the Revenue rather fortifies the above view. In Para 5.1 (xix) Hon'ble Gujarat High Court has observed as follows:- 5.1 (xix) In the facts of the present case the assessee is engaged in the manufacture of medicaments. By their very nature, the drugs manufactured by the assessee prior to final production thereof are required to be subjected to technical testing and analysis before entering into commercial production. For such purpose, the products are manufactured in small trial batches and thereafter, sent for testing and analysis purpose. Undisputedly, when the goods are removed for testing and analysis, excise duty has been paid thereon. Since production of medicaments are subject to approval by the regulatory authorities of various countries to which such drugs are exported, the assessee is required to obtain approval before starting commercial production. T....