TaxTMI 
TaxTMI 
2025 (8) TMI 999
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.... CENVAT credit of 16.75 by way of excise duty, CVD and service tax. As regarding the import duty and for claiming the benefit of CVD, it was agreed that the import will be made on built to ship model and while issuing the purchase order for import, name and reference to the Appellant should be clearly mentioned in the consignee address, ship to address. As per the conditions, the contractor shall reflect the output service tax payable by him under the contract separately and not bundle it into the price. The contractor shall ensure that inputs service credit tax shall be correctly availed of the service tax paid by the contractor and such input credit shall not form part of the pricing to the employer. It is further stated that no service tax would be payable to the contractor for the portion of the works relating to civil construction as these services are exempted vide Notification No. 42/2010-ST dated 28.06.2010. It is further stated that the contractor shall also ensure that the sub-contractors for the civil construction portion shall not charge any service tax on the contractor in terms of the above-mentioned Exemption Notification. 3. Accordingly, entire amount of Rs. 796.....
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.... 3.1. Since availing the said CENVAT credit as ineligible credit, proceedings were initiated and Adjudication authority as per impugned order has confirmed the demand on duty and also imposed penalty under Section 78(1) of the Finance Act, 1994. Aggrieved by said order, present appeal is filed. 4. When the appeal came up for hearing, the Learned Counsel for the Appellant submits that in terms of Notification No. 42/2010 ST dated 28.06.2010 and Notification No. 25/2012 ST dated 20.06.2012 payment of service tax is exempted in respect of the construction activities done within the airport, that accordingly the service tax was not required to be charged by the person who is providing the services of construction, erection, commissioning or installation woks in the Airport, that L&T has availed the benefit of the exemption on the works contract executed by them at the airport and the exemption is not provided to BIAL as a service receiver. The Learned Counsel also draw our attention to the detail breakup of CVD against capital goods, CVD on inputs for the period from October, 2013 to March, 2015. The Learned Counsel also draw our attention to the excise tax invoices issued showing....
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....n the factory by the manufacturer of the final products or as per the Rule 4, all goods used for providing any output services. But exclude certain category. Thus, the goods which are used for providing output services can be classified under inputs unless they are specifically fall under the exclusion clause. Since the goods on which the inputs benefit is claimed by the Appellant is not listed as per the above said exclusion clause, the Appellant had rightly availed the CENVAT credit on input. 8. As regarding project import, the Learned Counsel submits that all goods imported under CTH 98.01, capital goods are eligible for CENVAT credit as per proviso to Rule 3 of the CENVAT Credit Rules, 2004. The goods falling under the said CTH would be eligible irrespective of actual nature of goods. The Learned Counsel for the Appellant also relied on the decision of the Tribunal in the matter of M/s. Visteon Automative Systems India Pvt. Ltd., and the Circular No. 490/56/99-CX dated October 25, 1999. 9. As regarding the claim on furniture and fittings, the Learned Counsel submits that it is used for providing amenities to the passengers in the Airport and as per the Circular No. 943/4/....
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....tion of works contract of civil construction which is exempted from payment of service tax is factually wrong and unsustainable. In terms of Rule 2(a) of the CCR, 2004 all the goods falling under CTH 82.84 85.90 including components and spares and pollution control equipment used for providing output service will become capital goods. Further in terms of Rule 2 (10) of the CCR, 2004 input service means any service used by provider of output service for providing output service and include services used in relation to modernization renovation or repairs of premises of provider of output service etc., but excludes service portion of the execution of works contract and services used for construction or execution of works contract of a building or a civil structure or a part thereof. 12. As regarding invoking the extended period of limitation, the Learned Counsel submits that there is no suppression of facts to invoking the extended period of limitation. 13. The Learned Authorised Representative (AR) for the Revenue reiterated the finding in the impugned order and submits that as per Rule 2(a) of the CCR, 2004, all the goods falling under CTH 82 84 85.90 including components and ....
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....rvice provided is not acceptable. 13. Heard both sides. We have considered the nature of contract and details of goods procured on behalf of the Appellant by the Contractor. As per Section 2(k) of the CENVAT Credit Rules, 2004, input is defined as all the goods used in the factory by the manufacturer of the final products or as per the Rule 4, all goods used for providing any output services. But exclude certain category. The EPC contract include execution of work comprising design, engineering, procurement, construction, erection, installation, setting to work, testing, pre commissioning and completion of the works detailed in the Employers requirement in the contract. But from the above contract, no presumption can be drawn that all the goods and services procured and utilised in execution of works contract will become part of the building/civil structure transferred to the assessee on completion of construction. It is true that as per the provisions of the CCR 2004, in the instant case, the credit is available only to the contractor who utilised the goods in question in execution of works contract for construction of building/civil structure and not to the assessee. 14. Th....
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....ompletion of construction. .............Further, it is clearly brought in the SCN that the service provided by the contractor to the assessee in execution of work contract is exempted from payment of service tax in terms of Notification No. 42/2010 ST dated 28.06.2010 and 25/2012 ST dated 20.06.2012 for the entire period of demand and accordingly, the said contractor has not paid any service tax in respect of the EPC project undertaken on behalf of the assessee. It is on record that the contractor has passed on the credit to the assessee as per the contract is totally illegal as the same is not charged or paid by the contractor in respect of his output service to the assessee. Further, the contractor also cannot avail the credit as the service provided by them to the assessee is exempted from payment of service tax. Hence, question of transfer of the credit of duties/taxes paid in respect of the goods procured and used in construction activity does not arise for the reasons both as per statute and as per exemption availed by the EPC contractor. I find form records that the assessee has chosen the avenue of consigning the goods in their name just to accommodate the eligibility of Ce....
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..... As per the above details, the amount of Cenvat Credit M/s L&T had agreed to pass on to the assessee i.e. BIAL is Rs 16.75 crores by way of Excise Duty, CVD and Service Tax." 17. In the preamble to the Schedule of Prices at Sl.No.3, it is mentioned as follows:- "3. Taxation "The Contract Sum shall include all applicable taxes, levies and duties etc..(except those specifically agreed to be excluded and reimbursed on actual basis under this section of contract). The Contractor shall cooperate and disclose to the Employer all such relevant information with regard to procurement of the material and services so that the Employer is completely informed about the procurement details and its tax implications (if any). The Contractor undertakes to implement the suggestions and options suggested by the Employer with regard to the procurement of goods and services in order to optimize the tax savings for the project and follows the instructions of the Employer's Representative in accordance with the Conditions of the Contract." 3.1 Customs duty on imports "The Contractor shall include all applicable customs duty on imports on project import....
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.... be intimated to the Contractor, and the Contractor shall not change service tax on such portion as well. 4. Cenvat Credit The Contractor shall ensure that the Cenvat credit is made available to the Employer. The Employer shall adjust the short fall in actual Cenvat credit amount from declared amount if any from amount payable to the Contractor. However no additional payment shall be made to the Contractor if actual Cenvat credit amount is more than the declared amount. The condition to Cenvat credit amount billed to the Employer by the Contractor is for: 1) Excise duty amount for those invoices billed to the Contractor with consignee Bangalore International Airport at the following address- BIAL, Administration Block, BIA, Bangalore-560033. 2) Counter veiling duty (CVD) on imports for those imports made with BOE in the name of employer. 3) Service Tax amount The above clauses of the agreement between the appellant and the Contractor clearly show that the contractor is to pass on the credit to the appellant. It is an admitted fact that the contractor is availing the benefit of Notification No.42/2010-ST dated 28.06.2010, henc....