TaxTMI 
TaxTMI 
2022 (8) TMI 468
X X X X Extracts X X X X
X X X X Extracts X X X X
....renovation project the Appellants decided to set up a Coke Oven Plant in their factory premises for which the Appellants gave contracts to a number of service providers. 3. The contractors paid service tax on the services provided by them. The Appellants took credit of the service tax so paid, as tax paid on 'input service'. 4. The department took the view that the services provided by the contractors were in the nature of 'works contract services' which, was excluded from the definition of 'input service' under the Cenvat Credit Rules, 2004. Accordingly, the following three show cause notices were issued demanding total ineligible Cenvat credit of Rs. 1,93,93,204/-, along with interest and equal amount of penalty : Sl. No. Show Cause Notice number and date Period involved Cenvat Credit involved (Rs.) 1. 15/Commr/Bol/14 dated 4-3-2014 01-04-2011 to 31-10-2013 1,84,94,031 2. 06/2014-15 dated 12-11-2014. 01-11-2013 to 30-08-2014. 2,62,037 3. 69/ADC/CE/DGP/15 dated 05-10-2015. 01-09-2014 to 31-07-2015. 6,37,136 TOTAL 1,93,93,204 5. In their replies, all dated 17-02....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t service'. The services procured by the Appellants from various service providers were for the purposes of fabrication, erection, installation and commissioning of the Coke Oven Project which was not covered by the exclusion clause of the definition of 'input service'. 8.4 The services received by the Appellants from some service providers for the purpose of fabrication, erection and commissioning of different parts of the Coke Oven Project in the factory premises of the Appellants, as part of their modernization project, also involved some civil work. However, these minor civil works were not for construction or execution of works contract for a building or civil structures or for laying of foundation or support for capital goods. Hence, the services received by the Appellants were not covered by the exclusion clause in the definition of 'input service'. 8.5 The work of the Coke Oven Project was for the modernization of the appellants' factory. Modernization of the factory was specifically covered in the inclusive definition of 'input service' during both the periods. In their replies, all dated 17.02.2016 the Appellants had specifically pointed out as under:- " Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ention does not stand. 8.10 In paras 4.4.8 and 4.4.9 of the impugned Order, the Adjudicating Authority has held that the input services received by the Appellants were not integrally connected and had no nexus with the final product. It was submitted that this was not an issue raised in any of the show cause notices and, hence, the Adjudicating Authority had gone beyond the scope of show cause notice, which was not permissible. 8.11 With effect from 01-04-2011, Rule 14 of the Cenvat Credit Rules, 2004, was amended to provide that interest would be charged only if the Cenvat credit had not only been wrongly taken but also utilized. In the instant case, interest, if any, can be charged only for the period when the amount lying in credit fell below the inadmissible credit at that point of time. No verification has been done in this regard. 8.12 This appears to be, at best, a case of interpretation of the definition of 'input service' and 'works contract service' for which neither any penalty is called for nor can the extended time limit be invoked on the grounds of suppression of facts or willful misstatement with intent to evade taxes. 8.13 The reasons for alleging suppre....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Act (hereinafter referred as 'specified services'), in so far as they are used for - (a) Construction of a building or a civil structure or a part thereof; or (b) Laying of foundation or making or structures for support of capital goods, except for the provision of one or more of the specified services; or (B) ......... 12. During the above period the above sub-clauses of clause(105) of section 65 of the Finance Act,1994, read as under: "(p) to any person, by an architect in his professional capacity, in any manner; (zn) to any person, by any other person, in relation to port services in a port, in any manner: Provided that then provisions of Section 65A shall not apply to any service when the same is rendered wholly within the port; (zzl) to any person, by any other person, in relation to port services in other port, in any manner; Provided that the provisions of section 65A shall not apply to any service when the same is rendered wholly within other port; (zzm) to any person, by airports authority or by any other person, in any airport for a civil enclave; Provided that the provisions of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....calator, fire escape staircases or elevators; or (b) Construction of a new building or a civil structure or a part thereof, or of a pipe line or conduit, primarily for the purposes of commerce or industry; or (c) Construction of a new residential complex or a part thereof; or (d) Completion and finishing services, repaid alteration, renovation or restoration of, or similar services, in relation to (b) and (c); or (e) Turnkey projects including engineering, procurement and construction or commissioning (EPC) projects. 13. With effect from 1.7.2012 the definition of 'input service' reads as under:- 2(l) "input service" means any service, - (i) used by a provider of output service for providing an output service; or (ii) used by a 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 modernisation, 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 res....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y. Explanation. - For the purposes of this clause,- (I) the expression "competent authority" means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely :- (A) architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972); or (B) chartered engineer registered with the Institution of Engineers (India); or (C) licensed surveyor of the respective local body of the city or town or village or development or planning authority; (II) the expression "construction" includes additions, alterations, replacements or remodeling of any existing civil structure; (c) temporary transfer or permitting the use or enjoyment of any intellectual property right; (d) development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software; (e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Low Density Polythylene Plant (LLDPE), the Captive Power Plant etc. This project was nomenclated by the appellant as the J3 project. The erection, commission, installation service and works contract service in dispute were rendered under 81 contracts by 41 contractors/ service providers. ................................ 4.10 Without prejudice to our above findings, we further find that the appellant's factory is admittedly huge existing petroleum industry and working for decades. The ECIS service was used for expansion, renovation and modernization of overall existing petroleum plant. As per inclusion clause of the definition the services relating to modernization, renovation is an admissible input service. In our view, even though service of construction of building or civil structure are falling under the exclusion clause but even if similar service is used for renovation and modernization of existing factory, the credit is admissible. The exclusion applies only in respect of such service as specified therein which are used for initial setting of the factory. It is pertinent to note that when the exclusion was brought in the rules, services relating to sett....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it. In the result, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per the law." 19. Reliance was also placed on the decision in the case of Mahle Engines Components India P. Ltd Vs. Commr. Of C. Ex., Indore -2018 (363) E.L.T. 1150 (Tri. - Del.) wherein it was held as under:- "6. With regard to the availment of Cenvat credit of the Service tax on painting of the factory building & machinery, I find that the Authorities below have denied Cenvat credit on the ground the construction of building or civil structure is falling under the Exclusion Clause contained in the definition of "input service" under Rule 2(1) of the Rules. However, on perusal of the sample copies of the invoices issued by the service provider, I find that the services were provided in relation to the painting of the factory building and plant & machinery, which are appropriately classifiable under category of "renovation or repair of the factory" contained in the inclusive part of the definition of the "input service". Thus, I am of the considered view that such service falls under the purview of the "input service" for the purpose of availment of Cenvat ....