TaxTMI 
TaxTMI 
TaxTMI 
2021 (10) TMI 383
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....e time with the most advanced automated system, the appellant awarded contract to one, M/s. S K Samanta & Co. (the Contractor), for the work of "Planning, Designing, Engineering, Construction, Fabrication, Supply, Erection, Trial Run, Commissioning and Testing of Coal Handling Plant (CHP) of 5.0 Mtpa capacity with loading arrangements through 'SILO' consisting of all Civil, Structural, Electrical and Mechanical works and all other accessories and facilities required to make it complete in all respect along with approach road on Turn-Key basis". The Contractor in his invoices charged service tax on 40% of the total value of contract inclusive of goods and services in compliance with Rule 2A of the Service Tax (Determination of Value) Rules, 2006 for discharging his service tax liability, of which the appellant availed Cenvat credit under Rule 2(l) of the CENVAT Credit Rules, 2004. The Ld. Commissioner in the impugned order has disputed the said valuation to deny the credit to the appellant. He has observed in para no. 5.6 to para 5.8 of the impugned order that the subject contract is pre-dominantly for construction of structural works in order to bring into existence the Coal Handl....
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....civil and structural works. Turnkey contract is a composite single contract and the same is not excluded from the definition of 'input service' under Rule 2(l) of the Credit Rules. He relied on the decisions in the case of C Cheriathan Vs. P Narayanan AIR 2009 SC 1502 and Ishikawajma-Harima Heavy Industries Ltd. 2007 (6) S.T.R. 3 (S.C.) to submit that it is a well-settled principle of interpretation that the true nature of a transaction is reflected through the intention of the parties to such transaction. The law requires the agreement to be read as a whole and the intention of the parties is to be gathered from a holistic reading of the subject agreement. He submitted that taking into consideration the intention of the parties to contract and reading the contract as a whole, it would clearly follow that the contract is not related to merely a civil work or structure but setting up of CHP on turnkey basis. (iv) He relied on the recent decision of the Tribunal in the case of Pepsico India Holdings (P) Ltd TS-328-CESTAT HYD wherein it has been held that credit would be allowed even though the words "setting up of factory" has been deleted from the definition of 'input service' w.e.....
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....portion. He emphasised that the words "setting up of factory" has been omitted from the definition of input service w.e.f. 01.04.2011 and hence, credit is not available on services for setting up of CHP. He also submitted that services for civil structure is specifically excluded for availment of credit. He accordingly prayed that the appeal filed by the assesse be rejected being devoid of any merit. 5. Heard both sides through video conferencing and perused the appeal records. 6. The issue before us is whether credit is available on Coal Handing Plant (CHP), which has been set up by the appellant for evacuation of coal from its mining premises. It is relevant to note the preamble to the contract which reads as below:- "It is proposed to install a Rapid Loading system through Silo for fast evacuation of coal. The coal handling plant shall have facilities for receiving coal from tippers of 25T capacity, crushing of coal to (-) 100 mm size, conveying, storing, reclamation and loading into railway wagons. The coal handing plant has also been provided with suitable fire-fighting automatic sampling arrangement and communication facilities. This tender document is for construction of....
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....part of the definition and an inclusive part of the definition. This inclusive part specifically included the services availed for setting up the factory. After 1.4.2011, it has three parts- a main part, an inclusive part and an exclusive part. The services used for setting up the factory are neither in the inclusive part of the definition nor the exclusive part of the definition. Therefore, such services were neither specifically included nor were specifically excluded. 17. It takes us to the main part of the definition which must be examined. If it is wide enough to cover the services in question, CENVAT credit will be available, otherwise it will not be available. The main part includes "services used by a 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." The term manufacture is not defined in the Rules. 18. The definitions as per rule 2 of CCR 2004 reads as follows: RULE 2. Definitions. -(1) In these rules, unless the context otherwise requires, (a) (b).... (l) (2) The words and expressions used in these rules and not defined but defined in the Excise ....
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....mbiguously covered as 'input services' under Rule 2 (l) (ii) of the CENVAT Credit Rules, 2004 as they stood during the relevant period (post 1.4.2011). The mere fact that it is again not mentioned in the inclusive part of the definition makes no difference. Once it is covered in the main part of the definition of input service, unless it is specifically excluded under the exclusion part of the definition, the appellant is entitled to CENVAT credit on the input services used. This Bench has already taken this view in Kellogs. Similar views have been taken by the other Benches in the other cases mentioned above. 23. In view of the above, the impugned orders denying CENVAT credit and ordering its recovery along with interest and imposing penalties cannot be sustained. The impugned orders are set aside and the appeals are allowed with consequential reliefs, if any." 7. We thus find that services used for setting up of the factory even after 01.04.2011 would be eligible for credit. The Ld. Commissioner has allowed credit on certain invoices assuming the same to be pure services and disallowed the credit on remaining portion by considering the same to be in the nature of civil portion....
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..... Only the structural support for all these machines can facilitate the desired location, height, angle of inclination of the machine. In the absence of the structural support neither the machine can be installed nor it can function nor it can be aligned with other related machinery to produce desired results."... 8. We also find that the user test principles have also been recently followed by the Hon'ble Madras High Court in the case of The Ramco Cements Limited(in Order dated 11.10.2017) wherein the Hon'ble High Court followed its earlier decision dated 10.07.2017 in ThiruArooran Sugars vs. CESTAT, Chennai. While placing reliance on the Hon'ble Supreme Court's decision in Jawahar Mills Limited's case, the High Court reiterated the legal position to hold that steel and cements used for the purpose of construction of plant comprising of concrete foundations, concrete silos for storing raw materials, clinker and cement, heater tower structure, etc cannot be said to have been used for civil construction but for the construction which are absolutely necessary for establishing a manufacturing unit. Further, the Hon'ble Chhattisgarh High Court in the case of CCE vs. Vimla Infrastructu....