AI Drafter 
TaxTMI 
TaxTMI 
2015 (12) TMI 1305
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....pes in their factory located at Gowdavalli, Hyderabad. They are availing the benefit of CENVAT credit of duty paid on MS Plates and other inputs procured by them for use in the manufacture of MS Pipes. The said pipes were being cleared by them on payment of duty of excise by utilizing the credit so availed. Howeverin some cases of clearance of pipes, the same were exempted from payment of duty of excise on the ground of being used in various Govt Projects and the appellant was reversing 6% of the price of the said exempted pipes in terms of the provisions of Rule 6 of the CENVAT Credit Rules 2004. There is no dispute on the said count. 2. M/s Megha was also providing services of laying down of pipelines for irrigation, lift irrigation sc....
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....rks contract service provided or to be provided, instead of paying service tax at the rate specified in section 66 of the Act, by paying an amount equivalent to four per cent of the gross amount charged for the works contract. Explanation. - For the purposes or this sub-rule, gross amount charged for the works contract shall be the sum, - (a) including - (i) the value of all goods used in or in relation to the execution of the works contract, Whether supplied under any other contract for a consideration or otherwise; and (ii) The value of all the services that are required to be provided for the execution of the works contract; b) excluding - (i) the value added tax or sales ....
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.... any CENVAT credit of duty of excise paid on such pipes. Thus according to the appellants they satisfied the said sub-rule 2 of Rule 3. 4. However, the Revenue was of the view that inasmuch as the manufacturing unit of the appellant and the service providing unit of the appellant is one and the same, the manufacturing unit having availed the credit of duty paid on the steel plates used in the manufacture of pipes, which stand utilized by them for payment of excise duty on the pipes, would amount to as if the service providing unit has availed the CENVAT credit. Accordingly after making investigation, a show cause notice dated 02.04.2012 was issued to the appellant proposing to deny the irregularly availed CENVAT credit of Rs. 85.90 crore....
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.... 6. However, the adjudicating authority did not find favour with the above contentions of the appellants. He held that inasmuch as both the wings of the appellants i.e. the manufacturing wing and the service provider wing relate to the same assessee, it has be held that the EPC contract obtained by the assessee, which involved execution of the works contract from the stage of procurement of material involved in Its execution would start from the stage of procurement of raw materials for the MS pipes. Inasmuch as the appellant has availed credit on the inputs used in the manufacture of the pipes and inasmuch as the appellant is one and only one, they would not be entitled to avail the said credit. Accordingly, he confirmed the demand along w....
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....ocured by them from the manufacturing unit could have been procured by them from an outside independent manufacturer also, in which case, there would have been no dispute about fulfilment of the condition of non-availment of the credit in terms of the composition scheme. In fact, the Commissioner in his impugned order has also observed that if the pipes would not have been produced by the service provider from their own manufacturing unit, there would have been no dispute as long as service provider unit does not avail credit on the MS pipes. We really fail to understand as to how the fact of procurement of MS pipes for completion of the service contract from the appellants own manufacturing unit would change the scenario. The role of the a....
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....lant is entitled to avail the credit. 9. The problem can also be viewed from another angle. If the Revenue is of the view that the EPC contract entered into by the service provider starts from the stage of procurement of raw materials for the pipes, then there was no requirement to pay duty of excise on the pipes as the entire process would get covered by the services so provided by the assessee attracting the composition scheme. No doubt the Revenue has considered the appellants as a manufacturer also so as to collect the duty of excise on the pipes so cleared by them. No objection was ever raised by the Revenues at the time of collection of duty of excise from their manufacturing unit located at Gowdavalli. It is only when the service ....