TaxTMI 
TaxTMI 
TaxTMI 
2016 (8) TMI 91
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....disputed in the show cause notice, have been held by the respondent to be admissible, which finding has become final as the same was not reviewed nor appealed against. 3. The credit in respect of the following input services is in dispute: i) Services rendered by the pipeline laying contractors who have been appointed by the Appellant for laying the pipeline, which was used for rendering its output service. ii) Services rendered by service providers who were appointed by the Appellant, for rendering interalia the following services; a) design and engineering the pipeline, b) GTA services, c) Rent-a-cab services, d) CHA services, e) Business Auxiliary services, etc. These service providers are for ease of reference being referred to hereinafter as "other than pipeline laying contractors". 4. The credit on capital goods which is under dispute was undisputedly availed on specified capital goods such as pipes, valves, pumps, and compressor. The credit on the very same capital goods, availed post commissioning of the pipeline is not in dispute. 5. The notice issued to the appellant sought to deny the credit availed by it on the services rendered by the pipeline laying co....
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....ssibility of credit on input services used for construction, used for setting up of a factory or warehouse had specifically considered and held to be admissible by the Hon'ble Punjab and Haryana High Court in the case of CCE vs Bellsonica Auto Components India Pvt Ltd 2015 (40) STR 41 (P&H). To the same effect is the decision of the CESTAT in the following cases: a) Gujarat State Petronet Ltd vs CCE - Order No.10473-10477/WZB/AHMD/2013 dated 15.4.2013 and the ROM order thereon viz: Order No.A/14188-14190/WZB/AHMD/2013 dated 18.9.2013. b) Carrier Air conditioning and Refrigeration Ltd vs CCE 2016-TIOL-450-CESTAT-AHM. c) Vamona Developers Pvt Ltd vsCCE 2015-TIOL-2705-CESTAT-AHM d) MCA vs CCE 2015-TIOL-2418-CESTAT-AHM e) Varun Industries vs CCE 2015 (317) ELT 731 CESTAT ii) Insofar as the decision in the case of Bharti Airtel that has been relied upon by the Respondent is concerned, it was submitted that the said decision was concerned only with the admissibility or otherwise of cenvat credit of various steel items as inputs/capital goods and there was no dispute therein with regard to credit on input services. iii) Insofar as the credit of the tax paid by the service prov....
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....enial of the credit in respect of the tax paid by the pipeline laying contractors on the premise that the said services had been availed of for creation of a immoveable property ii) Denial of Credit in respect of the other service provider and in respect of capital goods on the ground that the same were not used by the Appellant for rendering its output service but were instead used by the pipe line laying contractors. 10. Insofar as the denial of the credit of tax paid by the pipe line laying contractors is concerned, the ground assigned by the Respondent for denying credit is clearly fallacious and contrary to the definition of input services, which is reproduced here-in-below for ease of reference. (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 upto 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 p....
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.... used in the definition of input service. To us it appears completely inconceivable that when the Central Government framed the definition of input service to cover therein services used for setting up a factory /premises of an output service provider, it intended to cover only such input services that were consumed in relation to setting up a factory/office that was mobile or could be moved from one place to other and not a factory or office that was attached to earth and immoveable. To our understanding it is only in exceptional situations that one can have factory/premises which are not immoveable, most factories and premises will be immoveable. In our view any service used in relation to setting up a premises of output service provider is eligible for credit and the concept of movability or immovability, is irrelevant for determining eligibility to input service credit. 13. The aforesaid view of ours also finds support in the judgement of the Hon'ble Punjab and Haryana High Court in the case of Bellsonica Auto Components India Pvt Ltd 2015 (40) STR 41 (P&H), wherein the Hon'ble High Court had upheld the order of the CESTAT holding that credit was admissible on the input servic....
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....t of the services for laying of the pipeline was admissible in the hands of the service recipient. The relevant observations of the Tribunal in this regard are extracted herein below: "'As regards the service rendered by the EPC contractors the grounds canvassed is that what has emerged is an immoveable property which is neither a service nor goods. In this case, it has to be noted that the EPC contractor has not paid service tax on the pipeline system but on the services provided for constructing the system. Definition of input service clearly covers this and it cannot be said that the service is not provided to output service..........." 15. The Appellant has cited several other decisions of the CESTAT on this issue, having otherwise come to the conclusion that on a plain reading of the definition of input services, Appellant was eligible for the credit of the tax paid by the service provider in respect of the services rendered for laying of the pipeline, we are not adverting to the other authorities that had been cited by the Appellant in its favour. 16. Before concluding, it will be not out of place to mention here that the decision of the Hon'ble Bombay High Court in the ca....
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....e. The Appellant has demonstrated before us that it was eligible to avail cenvat credit of services rendered by the other service providers, who were engaged by the Appellant for engineering and designing the pipeline;(consulting engineer services) for movement of pipes and other materials (GTA); for movement of the Appellants personnel as also of the contractor engaged by it (Rent-a-cab); for clearances of the pipes and other material imported by it (CHA); as also for coating of the pipes that were to be laid, (BAS). All these service providers wereengaged, contracted and paid for by the Appellant. It is the Appellant who has availed the services from the different service providers for ultimate rendition of its output services, being transportation of goods through pipeline. 19. The mere fact that some of these services could as well have been contracted for, by the pipeline laying contractors if the agreement between the Appellant and the pipeline laying contractor so envisaged, such a hypothetical possibility cannot lead to denial of credit in the hands of the Appellant, who has contracted for and availed of the services. In any service contract, it is the scope of the agreeme....
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....s. We had not recorded any findings on the input services received by the Appellant directly from the service providers in respect of the laying down of the pipelines system. We also note that in paragraph No.5.3, we have specifically stated that the service tax paid by the EPC contractors is for the services rendered by them for constructing the pipeline system and definition of input services clearly covers this kind of services and cenvat credit is eligible to be availed of services tax paid by EPC contractors. To that extent, it needs to be clarified that any service tax paid by the Appellant himself to the service providers in respect of Engineering Consultancy, Inspection services, etc, received from other contractors directly and used in execution of the pipeline system which is used the Appellant for providing an output services i.e. "Transportation of goods through pipelines or other conduit services "they are eligible to avail cenvat credit............................." 21. The Ld Authorised Representative appearing for the revenue did not seriously dispute that the ratio laid down by the Tribunal in the case of GSPL would apply insofar as credit availed of the tax....
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....o which they were fabricated was a specified capital goods. On the alternate contention of the assesse therein that credit on the angles, channels which were used for the fabrication of the tower which was to house the base trans receiver station was admissible as an accessory for the base trans receiver station is concerned, the Hon'ble High Court has held that Angles, Channels could not be said to be components, spares and accessories of the base trans receiver station, which is a specified capital goods. 26. The decision of the Hon'ble High Court has been rendered in the context of the specific facts of that case. It is settled law laid down by the Apex Court that a decision or an order is not to be applied as Euclid's theorem and that one additional or different fact can make a world of difference to the conclusion arrived at Alnoori Tobacco Products vs CCE 2004 (170) ELT 135. In the instant case the pipes, compressor, valves, etc on which credit has been availed as capital goods are undisputedly all specified capital goods by themselves. The right to avail credit in respect of such capital goods accrues the minute they are received in the premises of the provider of output se....
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....appliances and also components, spares and accessories of the goods falling under the aforesaid Chapters. In the present case, the plant has been set up using various machinery and equipments falling under Chapter 82, 84, 85 or 90 or components, spares or accessories of these goods and these facts are not disputed. Merely because the various machinery, equipment, appliances and parts have been assembled at the site to set up the Oxygen Plant and such a plant being immovable property, Cenvat credit is sought to be denied. Nowhere in the Cenvat Credit Rules, it is envisaged that the machinery, equipment, appliances or their components should be used as such in the manufacture of excisable goods. The manufacturing plant facility in a factory would comprise of a number of capital goods and all these things have to be assembled together so that they act in unison to perform the required processes. For example, in a sugar factory there may be a Boiler plant for generation of steam, a crusher installed for crushing of the sugar cane, a distillation plant for undertaking the various chemical processes involved in the manufacture of sugar. The boiler, crusher and distillation equipment, all....
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....pital goods under Rule 2(A) of the Cenvat Credit Rules, 2004 and so long as they are used within the factory of production for the manufacture of excisable goods which are chargeable to duty, the benefit of capital goods credit cannot be denied and we hold accordingly. 5.3 As regards the reliance placed by the Revenue on the Vandana Global (supra), the said case did not deal with the admissibility of Cenvat credit on capital goods. The issue before the Larger Bench was whether angles, channels, cement, etc., used in the erection of structures for the support of capital goods would be eligible for capital goods credit as parts and components of capital goods. The Larger Bench held that such cement, angles, channels, components, etc., used in the fabrication of structures for installation of production machinery cannot be considered as inputs for the manufacture of capital goods and, therefore, it was held that they will not be eligible for the Cenvat credit of excise duty paid under the category of capital goods. In the said decision, there was no finding by the Larger Bench stating that capital goods credit is not admissible in respect of machinery, equipments and appliances used ....