Commissioner Of Central Excise, Goa vs Kamat Constructions & Resorts Pvt. Ltd

(Arising out of Order-in-Appeal No. GOA-EXCUS-000-APP-094-14-15 dated 16/09/2014 passed by Commissioner of Central Excise (Appeals), Goa)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

====================================================== Commissioner of Central Excise, Goa Appellant Vs. Kamat Constructions & Resorts Pvt. Ltd. Respondent

Appearance: Shri A.B. Kulgod, Assistant Commissioner (AR), for Appellant Shri Bharat Raichandani, Advocate, for Respondent

CORAM: Honble Mr. M.V. Ravindran, Member (Judicial)

Date of Hearing : 27/10/2015 Date of Decision : 27/10/2015

ORDER NO

Per: M.V. Ravindran

This appeal is filed by the Revenue against Order-in-Appeal No. GOA-EXCUS-000-APP-094-14-15 dated 16/09/2014, the respondent has also filed a cross objection.

2. The respondents cross objection is nothing but submissions in support of the findings of first appellate authority and accordingly, it is disposed of.

3. Heard both sides and perused the records.

4. The issue that falls for consideration is whether the respondent was correct in availing the cenvat credit of the capital goods which was procured by them during the year 2005-06 and installed in their hotel which started functioning from 21 may, 2009. It is undisputed that the respondent has registered themselves with the authority as recipient for services and also provider of services. The capital goods which were purchased by the respondent were installed in the hotel premises and were undoubtedly used for providing our output services. On such a background, the first appellate authority has set aside order-in-original which denied the Cenvat credit of the Central Excise duty paid on all the capital goods which procured by the appellant in the period of 2005-06 to 2008-09. I find that the first appellate authority has given following reasoning to hold in favour of the respondent.

8.3 The case before me is simpler. It is 'not the case of the Department that the appellant was not. registered at all. The main ground is that the appellant as registered as 'service recipient' and got the registration modified' as' service "provider' subsequent to availing credit. There is no allegation that credit was availed without paying the duty' on' those capital goods., Going into, the circumstances, the "stand of the' appellant is convincing. I find the appellant' were in the process of setting up a hotel which has long 'gestation period. As explained by them the process involved consultation, Construction, purchase of equipment, their. transportation, etc. and, that without ,purchase of capital goods and their installation, the hotel' could not start any services. So, in the initial period, they, were registered as service receiver under registration under code, No, MCCK3603LST001 and in terms of Rule 4(1) STR, 1994, they only amended the registration certificate by adding new services when they started their activities of hotel operation from '21 st May, 2009. That means that in their case, they were registered when capital goods were received, albeit, as service receiver. If the Honble Tribunal has held admissibility of credit for those who were not registered at all, there is no reason why credit in the present case be not allowed. In this background and in view of the catena of case laws cited above, I find that the stand of the Department has no merit. The credit is to be allowed in the instant case.

9. In respect of the second question framed earlier, I find that the Appellant had received Capital Goods in the year 2008-09 and 2009-10, ,and took credit was taken in the year 2010-11. Thus, credit was taken in 2010-11, i.e. either at a gap of on<: year or two years from the time goods were received in their premises. This position must be seen in the light of the provisions of Rule 4(2) of CCR, 2004:

+(2) (a) The CENVAT credit in respect of capital goods received in a factory or in the premises of the provider of output service at any point of time in a given financial year shall be taken only for an amount not exceeding fifty per cent. of the duty paid on such capital goods in the same financial year:

(b) The balance of CENT/AT credit may be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of the manUfacturer, or in the premises of the provider of output service, if the capital goods, other than components, spares and accessories, refracturies and refractory materials, moulds and dies and goods falling under heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedule to the Excise Tariff Act, are in the possession of the manufacturer of final products) or provider of output service in such subsequent years.

[Emphasis added}

It is noticed that the aforesaid rule has receipt of capital goods in a factory or in the premises of the provider of output service at any point of time in a given financial year" as reference point linked to the first 50 credit of the duty paid on such capital goods. Then the remaining 50 credit can be taken in subsequent year in terms of clause (b) of. Rule 4(2) of CCR, 2004. Evidently, if the credit is not taken in the first or second year at all, then whenever credit is taken, the entire J.OO credit can be taken. In view of this legal position, I find that the appellant cannot be faulted for taking 100 credit in the subsequent year or tW9 years later than the receipt of capital goods in their hotel premises, which was later (f'2istered for providing output service in 2010-11.

10. In view of the answers to the two main question going in favour of appellant, the CENVAT Credit availed is held as admissible in the eyes of law, and thus the order of demand in the impugned order is liable to be set aside.

11. once the main activity of the appellant is found in order and no contravention is proved, consequent to which the amount of demand itself is held as non-sustainable, the question of levy of interest and imposition of penalty does not arise and thus the impugned order, on this point also, is liable to be set aside. I am, therefore, not delving into the plethora of case laws cited by the appellant on these issues.

5. As against such detailed finding, given by the first appellate authority, the revenue ground of appeal is not controverting the findings by any evidence which can be considered for coming with conclusion other than what first appellate authority has arrived at that the cenvat credit on the capital goods is allowable, which were received even when the respondent was not registered as service provider. It is common knowledge that the capital goods are received for installation during the construction activity and the service tax liability arises when the hotel starts functioning.

6. In view of the forgoing, I do not find any merits in the appeal filed by the revenue and the same is rejected.

(Dictated in Court)

(M.V. Ravindran) Member (Judicial)

akp APPEAL No.ST/90082/14-Mum ST/CO/91013/15-Mum

1 3 APPEAL No.ST/90082/14-Mum ST/CO/91013/15-Mum