M/S Divekar Associates vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT No. I

Appeal No. ST/571/10

(Arising out of Order-in-Appeal No. PIII/VM/165/2010 dated 16.07.2010 passed by Commissioner of Central Excise (Appeals),Pune III)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

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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?

M/s Divekar Associates Appellant Vs.

Commissioner of Central Excise Pune III Respondent

Appearance:

Shri Anupam Dighe, Advocate for appellant Shri S.V. Nair, Asst. Commissioner (AR) for respondent

CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

Date of Hearing: 11.08.2015 Date of Decision: 11.08.2015

ORDER NO

Per: M.V. Ravindran

This appeal is directed against Order-in-Appeal No. PIII/VM/165/2010 dated 16.07.2010.

2. The relevant facts that arise for consideration are during the period 1999-2003 it was alleged that the appellant undertook various activities like carpentry work involving different types of furniture items, modular partitions, fixation of false ceiling, painting of walls and ceilings etc. which falls under the ambit of Interior decorator under Section 69 of the Finance Act, 1994 and having not discharged the service tax liability, show cause notice was issued by invoking the extended period. Appellant contested the show cause notice on merits. The adjudicating authority after following due process of law held that the appellant is liable to pay the service tax hence confirmed the demands with interest and also imposed penalties. Aggrieved by such an order, an appeal was preferred before the first appellate authority. The first appellate authority also concurred with the view of the adjudicating authority and rejected the appeal filed by the appellant.

3. Learned Counsel draw our attention to the allegation made in the show cause notice and the findings recorded by the adjudicating authority as well as first appellate authority. He would submit that both the authorities have categorically recorded that the appellants are engaged in the business of manufacturing of furniture as per the design and drawing specifically provided by the client. It is his submission that the said activity of the appellant could not fall under Section 65(59) of the Finance Act, 1994 which defines that Interior decorator services. He would submit that the activity undertaken by the appellant would fall under the category of Erection, Commissioning or Installation Services or under Commissioning or Installation Service which came into service tax net from 16th June 2005. It is his submission that identical issue came up before the Tribunal in the case of Spandrel v. CCE Hyderabad/Kochi  2010 (20) STR 129 (Tri.  Bang.) wherein the Bench held in favour of the appellant therein. He produces a copy of the said judgement. He would also submit that this view of the Bench was followed by the Tribunal in the case of Space Decorators v. CCE Pune III  2012 (26) STR 346 (Tri. Mumbai) and held that the activities could not fall under the category of Interior Decorator.

4. Learned D.R. on the other hand would submit that the activity undertaken by the appellant would fall under the services of Interior Decorator as they were engaged indirectly in the business of providing technical assistance or any other manner related to planning, design or beautification of spaces. His submission is that the appellant was enhancing the interior of the flat where they undertook the work of modular partition. It is his submission that the appellant in his statement stated that they are undertaking the activity of fixation of modular partitions, which would definitely fall under the category of interior decorator.

5. We have considered the submissions made by both sides and perused the records.

6. Undisputedly the facts are that the appellant are engaged in the business of manufacturing furniture as per the design drawing and specification provided by the client. They also undertook the work of modular partition and the activities were executed under the supervision through sub-contractor, manufacture all types of furniture at site out of their own raw material as per the requirement and design provided by their client on contract basis. These facts are recorded by the first appellate authority in para 8 of the impugned order.

6.1 On this factual matrix we have to consider whether these activities under dispute would fall under the category of interior decorator or otherwise. We need to go through the definition as amended in Section 65(59) of Finance Act, 1994:-

Clause 59 of Section 65 of the Finance Act, 1994 defines Interior Decorators as -

Interior Decorators means any person engaged whether directly or indirectly in the business of providing by way of advice, consultancy, technical assistance or in any other manner, services related to planning design or beautification of space whether manmade or otherwise and includes a landscape designer.

6.2 It can be seen from the above reproduced definition, the activities which are undertaken by the appellant are not falling under the category of interior decorator services. We find strong force in the submissions made by the learned Advocate that the issue is finally settled by the decision of this Tribunal in the case of Spandrel (supra) (in which one of us was a Member). We reproduce the relevant paragraphs:-

7. The term Commissioning or Installation has been defined under Section 65 (39a) of the Act, as:-

(i) Erection, commissioning or installation of Plant (Machinery Equipment or Structures whether fabricated or otherwise): or

(ii) Installation of -

(a) electrical and Electronic Devices including wiring or fitting therefor; or

(b) plumbing, drain laying or other installations for transport of fluids; or

(c) heating, ventilation or air-conditioning including related pipe, Work, duct work and sheet metal work; or

(d) thermal insulation, sound insulation, fire proofing or water proofing; or

(e) lift and escalator, fire escape staircases or travelators; or

(f) such other similar services;

8. The appellants are engaged in the business of manufacturing furniture as per the design drawing and specification provided by their client. They also undertook the work of modular partition and the activities were executed under their supervision through a sub contractor. They also manufacture all types of furniture at site out of their own raw material and under their supervision as per the requirement and design provided by their client on contract basis. The various kind of work includes carpentry work involving execution of different types of furniture, modular partitions fixation of false ceiling painting of walls and ceiling and all these activities are carried out under the control and supervision of the appellant as per the agreement I contracts entered into. These facts have been admitted by Shri.Divekar i.e. the appellant in his statement recorded under Section 14 of the Central Excise Act,1944. The service provided by the appellant is related to planning, designing and beautification of space.

6.3 In view of the foregoing and the facts and circumstances of this case as also the judicial pronouncement, we hold the impugned order is unsustainable and liable to be set aside and we do so.

7. Impugned order is set aside and the appeal is allowed with consequential relief.

(Dictated in Court)

(C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial)

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