TaxTMI 
TaxTMI 
2017 (11) TMI 301
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....of applicable interest on the amount confirmed in (i) above under rule 14 of Cenvat Credit Rules 2004 read with Section 75 of the Finance Act,1994; (iv) I impose penalty equal to amount confirmed in (i) above of Rs. 5,46,82,044/- under Rule 15(3)[Prior to 1.3.2010, under rule 15(2) and 15(4)] of the Cenvat Credit Rules,2004 for wrong availment of Cenvat Credit; (v) Service tax amount of Rs. 2,06,07,771/-( Rupees Two crore six lakh seven thousand seven hundred seventy one only), demanded in SCN, is confirmed and I order recovery of the same under section 73(2) of the Finance Act, 1994. (vi) I order recovery of applicable interest on the amount confirmed in (v) above under Section 75 of the Finance Act,1994. (vii) I impose penalty equal to amount confirmed in (v) above of Rs. 2,06,07,771/- under section 78 of the Finance Act, 1994. (viii) I impose penalty of Rs. 30,000/- under section 77(2) of the Finance, 1994 2. The details of the demand confirmed is as under: (A) Demand of Cenvat Credit of Rs. 5,46,82,044/- (March 2007 to March 2011. A.1. Credit on Cement, Steel, TMT Bars, Doors, Windows etc. used for construction o....
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....red by various manufacturers and supplied for installation in the mall. Merely because the duty was paid on capital goods is installed in the mall, it cannot be said that the same is immovable property. As regards Cenvat credit of Rs. 1,01,76,663/-, the credit was availed on various services such as architect service, business auxiliary service, C&F agency service, cargo handling service, works contract service, consulting engineer service, erection, commissioning and installation service, these services were used in the construction of mall. As per the above definition of input service used for setting up of the premises of provider of output service is admissible input service hence credit is admissible. As regard the cenvat credit of Rs. 55,01,660/-, the same is related to the various input service such as insurance, management maintenance and repair service etc., these services were used for the operation of the shopping mall. Therefore it is directly related to the output service i.e. renting of immovable property service, management maintenance and repair service, the credit was denied on the ground that these services were used before and after construction of mall. He submi....
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....ed services used for construction of immovable property such immovable property is neither subjected to Central Excise nor to service tax, therefore the same is not eligible for cenvat credit for providing the service of renting of immovable property. As regard judgment relied upon by the Ld. Counsel in the case of Sai Samhita and Mundra Port, the same were overruled by the Hon'ble Bombay High Court in the case of Bharti Airtel Ltd. Vs. Commissioner of Central Excise, Pune-III - 2014 (35 )STR 865 (Bom.). She submits that in the above judgement the construction work of storage and warehousing and port whereas in the present case it is a case of construction of shopping mall which was rented out, therefore the judgements are not applicable. She submits that regarding the cenvat credit on building material such as cement steel, angles, cahnnels etc. by Notification No. 16/2009-CE (NT) dt.7.7.2009 all these building mall were excluded from definition of input service. This issue has been settled by the Larger Bench in the case of Vandana Global Ltd. Vs. Commissioner of C. Ex., Raipur - 2010 (253) ELT 440 (Tri.-LB). Accordingly cenvat credit on goods such as cement steel, angles, channe....
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.... which are used for providing the output service. In the present case, cement, steel, for steel, angles, channels etc. were not used for providing output service i.e renting of immovable property. The same was used for providing construction service which is not the output service of the appellant, therefore the cenvat credit is not admissible. Moreover, w.e.f. 7.7.2009 the said goods were excluded from the definition of input service. The larger bench of this Tribunal in the case of Vandana Global Ltd.(Supra) also held that credit of goods used for construction of building/structure is not admissible. We therefore uphold the demand of service tax amounting to Rs. 1,63,67,075/-. As regard the cenvat credit availed amounting to Rs. 2,26,36,646/- on the capital goods, we find that all the capital goods fall under the definition of capital goods provided under cenvat credit rules 2004. The adjudicating authority denied the credit only on the ground that these capital goods after installation become immovable goods, therefore the credit is not admissible. We find that all the capital goods were cleared by the supplier on payment of duty therefore the capital goods as such can not be sa....
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....vice, architect service consulting engineer, erection, commissioning, installation etc, were used for setting up of shopping mall are input services. Therefore these services are clearly input service as per the definition given above, this issue has been settled in the various judgements which reproduced below:- (i) Maharashtra Cricket Association (supra) held that- 8. The issue involved is whether the services such as Architect Services, Consulting Engineers Services, Management Consultancy Services etc. used for construction of sports stadium are admissible input services for taking Cenvat Credit as against the output service of the appellant i.e. renting of the said stadium and other services on which services, service tax was discharged. Whether the service is input service or otherwise, it can be ascertained only on the basis of definition of 'input service' as provider under Rule 2(l) of Cenvat Credit Rules, 2004, which is reproduced below: "Input Services- As per Rule 2(l) of Cenvat Credit Rules, 2004, (prior to 1.4.2011) 'input service' means any service, i) used by a provider of taxable service for providing an output se....
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....ing up the premises of service provider must be allowed. 9. In view of this clear and unambiguous definition of input service, it is apparent that the Circular is contrary to the definition of input service which is not tenable. We found that the judgments, relied upon by the counsel, are directly applicable in the present case. However the Ld. Commissioner brushed aside the judgment only giving excuse that he is bound by the Board Circular. In the case of Navaratna S.G. Highway Prop. Pvt. Ltd. (supra), the division bench of Ahmadabad Tribunal in the identical case allowed the Cenvat Credit on the input services used for construction of immovable property which in turn used for renting and other services. The operative para is reproduced below:- "3.2 The definition of 'inputs' is limited to the definition of 'input services' as can be seen from the definition given above. Credit of duty paid on inputs is available when the inputs are used for providing an 'output service'. Therefore, there is a need to say that the inputs have been used for providing an 'output service'. In the case of 'input service', the definition includes inpu....
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....tial relief, if any, in accordance with law. (ii) Oberoi Mall Ltd. (supra) held that- 7. The submission made by the Ld. C.A. has strong force in as much, there is no dispute, that the appellant has constructed various malls and rented the same to various parties and discharge of service tax on rent received is also not disputed. The availment of Cenvat Credit on various input services for the construction of the malls and subsequent utilization, we find that in the case of Navratna S.G. Highway Properties (P) Ltd (supra) (wherein one of the member of this bench Shri M.V. Ravindran was presiding) this Tribunal held in favour of the assessee by recording as under: "3.2 The definition of inputs' is limited to the definition of input services' as can be seen from the definition given above. Credit of duty paid on inputs is available when the inputs are used for providing an output service'. Therefore, there is a need to say that the inputs have been used for providing an output service'. In the case of input service' the definition includes input services used by a provider of taxable service for providing an output service. Therefore the defini....
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....output service namely Renting of Immoveable Property Service. There is no hiding the fact that these services were received over a period of 5 years from 2007 to 2011. And it was only when the construction was ready for renting out they took centralized registration in 2011. In the centralized registration the input services as well as the services to be provided were declared. We find that as held by the Hon'ble High Court of Karnataka in the case of mPortal India Wireless Solutions Pvt. Ltd., there is no provision in the Cenvat Credit Rules which imposes a restriction on availment of credit on input services procured before registration is taken. Even though department has filed an appeal against this judgement, we are bound by judicial discipline to honor the judgment of the High Court. 5.1. The next issue for consideration is whether the input service credit is at all admissible for the construction of a mall which is used for providing Renting of Immoveable Property Service. Here again, we are bound to follow the judgments of the Andhra Pradesh High Court in the case of Sai Sahmita Storages (P) Ltd. 2011 (270) ELT 33 (A.P.) as well as the Tribunal judgment in the case of Na....
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....s but does not include any service provided for storage of agricultural produce or in service provided by cold storage. As per Section 65(105)(zza), read with Section 66 of the Finance Act, there shall be levied tax on storage and warehousing services at 12% of the value of taxable service. The service tax payable is determined in accordance with Section 67(4) read with the Service Tax Rules, 1994 made in exercise of the powers under Section 94 of the Finance Act. There is no dispute that every provider of taxable service is entitled to claim CENVAT credit in relation to input service. Rule 2(k) and (l) of the Rules are relevant and they read as under. 2. Definitions.- (k) inputmeans- (i) all goods, except light diesel oil, high speed diesel oil and 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 ste....
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....eed diesel oil and 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. The crucial requirement, therefore, is that all goods "used in or in relation to the manufacture" of final products qualify as input. This presupposes that the element of manufacturemust be present. 8. Yet again considering the inclusive part of the definition of "input", it was held as follows. All these considerations become relevant only when they are read with the expression "used in or in relation to the manufacture of final product" in the substantive/specific part of the definition. In each case it has to be established that inputs mentioned in the inclusive part is "used in or in relation to the manufacture of final product". It is the functional utility of the said item which would constitute the relevant consideration. Unless and until the said input is used in or in relation to the manufacture of final product within the factory of production, the said item would not become an eligible input. The said expression used in or in relation to the manufacture have many shades and would cover v....
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....er this will not be a bar in availing the credit as the appellant had taken centralized registration at Pune before availing the credit and they did not avail credit on any input services in Mumbai as reflected in the relevant ST-3 returns. It was also submitted by them that there is no other project in the company. Therefore we find no reason to deny the credit on this ground. 6. On the apprehension raised of Revenue as to how the verification could have been done in respect of services procured during the previous five years, we find that the appellant had submitted all documents including invoices before issue of show cause notice which enabled the department to make such verification. We may further go on to say that in the show cause notice no doubt has been expressed regarding the actual receipt of the services. As regards the verification of actual use of the input services, we find that the Annexure "A" to the show cause notice gives details of Cenvat credit availed on inputs and capital goods for the period 1.6.2007 to 31.3.2011 implying that department has conceded that the Cenvat credit was availed for the construction of mall and Renting of Immoveable Property Servic....
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.... the constructed area sold by them. In any case there is no confirmation of demand on this aspect. 7. It is obvious from the definition of input serviceas it stood prior to 11.4.2011 and after 1.4.2011 that, in the earlier period there was no restriction on use of the input service for construction of building or civil structure used for providing output service. Reliance on the case of Bharti Airtel Ltd. (supra) is misplaced. First, the Hon'ble High Court clearly held that their conclusion is based on the facts and circumstances which fell for their consideration in those appeals. Secondly, because in that case the input services/inputs were used in construction of towers which were held to be immoveable property and hence not excisable. And credit was sought on structural items such as iron and steel. Similarly even the judgement in case of Vodafone does not help the Revenue. In the present case, we find that almost the entire credit has been availed on input services which have been used for providing the output service that is Renting of Immoveable Property Service for which there was no restriction under the clause (i) of the definition of input service. The inclusive part ....