TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 616
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....y thousand five hundred and ninety two only) (including Ed. Cess and S & H Ed. Cess), to M/s. Dredging Corporation of India, Visakhapatnam under Rule 14 of the Cenvat Credit Rules, 2004 and further order M/s. Dredging Corporation of India, Visakhapatnam to pay an amount of Rs. 33,64,90,592/- (Rupees Thirty three crores sixty four lakhs ninety thousand five hundred and ninety two only) (including Ed. Cess and S & H Ed. Cess) under Rule 14 of Cenvat Credit Rules 2004 read with Section 73 of the Finance Act, 1994. b. I order M/s. Dredging Corporation of India, Visakhapatnam, to pay interest under Rule 14 of the Cenvat Credit Rules 2004 read with Section 75 of the Finance Act, 1994 at the appropriate rate, on the amount demanded at (a) above. c. I do not impose any penalty under Rule 15(1) of the Cenvat Credit Rules 2004. d. I also do not impose any penalty under Rule 15A of the Cenvat Credit Rules, 2004. 3. Brief fact of the case is that the assesse is engaged in providing various taxable services including dredging services, business auxiliary services and insurance auxiliary services and accordingly obtained Service Tax registration with the jurisdictio....
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....on any input or capital goods received in the factory of manufacturer of final product or premises of the provider of output service on or after the 10th day of September 2004, therefore, the concerned dredger must fall under the category of either input or capital goods under CCR. 6. Learned Counsel for the assessee argued that the dredger used by the Company for output services, i.e., dredging service, are covered under the definition of 'inputs' under Rule 2(k) (iv) i.e. all goods used for providing output service, if the same is not covered under the exclusions provided in the said provision. One such exclusion covers 'capital goods'. Dredger in the instant case is being used in the provision of output service as mentioned in the impugned order. Therefore, the dredgers are covered by the plain language of Rule 2(k)(iv). The reference to the terms 'capital goods' used in exclusion clause is very much in the context of the CCR 2004 and accordingly has to be interpreted strictly as defined under Rule 2(a) of the CCR. Learned Counsel for the appellant also argued that no recourse can be made to any definition under the Income Tax Act or any other legislation for the same....
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....been claimed. It is submitted that depreciation has not been claimed on the CVD portion of the said goods and therefore no double entitlement under two different Acts. Moreover, there is no exclusion or bar under any of the provisions of the CCR barring availment of credit of goods as 'inputs' on the basis that the same has been treated as capital assets in the books of accounts or under some other statute. Capitalization of goods for income tax purposes will not in any way bar availment of credit of the same as 'inputs' for the purpose of availment of Cenvat Credit and the said treatment under income tax is completely immaterial. Learned Counsel for the assessee in this regard relied on the following case laws: • Dish TV India Ltd., Vs Commissioner of CGST, Noida [2024 SCC OnLine CESTAT 508 (Tri-All.)] • Shree Rama MultiTech Ltd. Vs CCE, Ahmedabad [2011 (266) ELT 81 (Tri. - Ahmd.)] 8. On the other hand, Learned AR points out that since it is admittedly a capital good for the purpose of income tax, same has to be understood in the sense that these are capital goods, irrespective of whether it is explicitely covered within the definition ....
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....claim of the assesse is that the dredgers are covered under the definition of 'inputs' under Rule 2(k)(iv) of the CCR 2004. Rule 2(k) defines input at the time of import as under: "input" means - (i) all goods used in the factory by the manufacturer of the final product; or (ii) any goods including accessories, cleared along with the final product, the value of which is included in the value of the final product and goods used for providing free warranty for final products; or (iii) all goods used for generation of electricity or steam [or pumping of water] for captive use; or (iv) all goods used for providing any [output service; or] but excludes- (A) light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol; (B) any goods used for- (a) construction or execution of works contract of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for support of capital goods, except for the provision of service portion in the execution of a works contract or construction service as listed under clause (b) of section 66E of the Act;....
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....l interpretation is unambiguous. It is a general principle of interpretation, since there is no ambiguity in the Rule. Para 4.5 and 4.7 are cited below for ease of reference: 4.5 Set top boxes classifiable under Chapter 85 do not find any mention in the exclusion category. That being so, we do not find any reason why these goods could not have been treated as input for provision of the output services by the Appellant. It is a well settled principle in the law that the taxing statute needs to be construed strictly according to the words phrases used in the statute; there can be no other interpretation when literal interpretation is unambiguous. Such a preposition flows from the following cases:- A. Sneh Enterprises [2006 (202) E.L.T. 7 (S.C.)]. "25. While dealing with a taxing provision, the principle of 'Strict Interpretation' should be applied. The Court shall not interpret the statutory provision in such a manner which would create an additional fiscal burden on a person. It would never be done by invoking the provisions of another Act, which are not attracted. It is also trite that while two interpretations are 8 Service Tax Appeal No.70317 of 2018 po....
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....tes, the Court has to apply strict rule of interpretation. The penal statute which tends to deprive a person of right to life and liberty has to be given strict interpretation or else many innocent might become victims of discretionary decision-making. Insofar as taxation statutes are concerned, Article 265 of the Constitution [265. Taxes not to be imposed save by authority of law - No tax shall be levied or collected except by authority of law.] prohibits the State from extracting tax from the citizens without authority of law. It is axiomatic that taxation statute has to be interpreted strictly because State cannot at their whims and fancies burden the citizens without authority of law. In other words, when competent Legislature mandates taxing certain persons/certain objects in certain circumstances, it cannot be expanded/interpreted to include those, which were not intended by the Legislature. 22. At the outset, we must clarify the position of 'plain meaning rule or clear and unambiguous rule' with respect of tax law. 'The plain meaning rule' suggests that when the language in the statute is plain and unambiguous, the Court has to read and understand the plain language....
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....aning may be wider than the other, and the strict (i.e., narrow) sense is not necessarily the strict (i.e., literal) sense." John Salmond, Jurisprudence 171 n. (t) (Glanville L. Williams ed., 10th ed. 1947). 24. As contended by Ms. Pinky Anand, Learned Additional Solicitor General, the principle of literal interpretation and the principle of strict interpretation are sometimes used interchangeably. This principle, however, may not be sustainable in all contexts and situations. There is certainly scope to sustain an argument that all cases of literal interpretation would involve strict rule of interpretation, but strict rule may not necessarily involve the former, especially in the area of taxation. The decision of this Court in Punjab Land Development and Reclamation Corporation Ltd., Chandigarh v. Presiding Officer, Labour Court Chandigarh and Ors., (1990) 3 SCC 682, made the said distinction, and explained the literal rule- "The literal rules of construction require the wording of the Act to be construed according to its literal and grammatical meaning whatever the result may be. Unless otherwise provided, the same word must normally be construed throughout the ....
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.... regard to the strict letter of the law. If the revenue satisfies the court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case of not covered within the four corners of the provisions of the taxing statue, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the Legislature and by considering what was the substance of the matter." 4.7 There is no dispute that Cenvat credit is admissible to the Appellant. Revenue's only dispute is with regards to the admissibility under capital goods for any inputs and that too on the basis of accountancy practices followed by the Appellant. We do not find any merits in the argument that just because these goods have been capitalized in the books of accounts, they could not have been treated as input. In the case of Tuticorin Alkali Chemicals & fertilizers Ltd. [[1997] 6 SCC 117] Hon'ble Supreme Court has observed as follows: "29.It is true that this Court has very often referred to accounting practice for ascertainment of profit made by a company or value of the assets of a company. But when the question is whether a rece....
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.... If the dredger is treated as capital, in view of it's being treated as one under the Income Tax Act, then it gets excluded from being treated as input. Further, if the expression capital good used in the exclusion clause under Rule 2(k) is to be construed in terms of the definition of capital goods under the CCR itself, then dredger would not be considered as capital goods and hence the exclusion clause would not be applicable to the assesse. We find that the Rule 2 of the CCR 2004 provides for definition which starts with "in these rules, unless the context otherwise requires (a) capital goods means and (k) input means". Therefore, the issue is whether the context allows the Department to go beyond the explicite definition given to the word "capital goods" or it enables the Department to enlarge the scope so as to interpret the term capital goods differently under Rule 2(a) and under Rule 2(k). We find that, essentially when the term "unless the context otherwise required" is used in any legal drafting, it essentially allows for certain flexibility in the interpretation while deciding the scope of definition used. It may also provide that definitions may not necessarily be applie....
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.... at Rule 2(K)(C) has to be understood in the context in which it has been used under Rule 2(k). It is to be seen that motor vehicles are also excluded from being considered as inputs, whereas, motor vehicles have been considered as capital good also under Rule 2(a)(B). Similarly, dumpers and tippers falling under Chapter 27 have also been treated as capital goods for providing certain specific service. Therefore, in an event where the dumpers and tippers are treated as capital goods, the same would not be treated as input for providing output service, but will still be covered within the definition of capital goods. Therefore, we find that the argument taken by the Revenue that the scope is to inprete the expression capital goods differently for the purpose of Rule 2(a) and for the purpose of Rule 2(k) is not in sync with the scheme of CCR, which is a special code by itself and even if the context has to be analysed in which these definitions are to be interpreted differently, it has to be looked beyond the CCR or for that matter beyond the parent act i.e Central Excise Act and Finance Act 1994, under which CCR has been formulated. Since the term capital goods has not been defined ....