Susheel Engineering Corporation vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. II

APPEAL No.E/1145/10

(Arising out of Order-in-Appeal No.YDB/237/M-II/2010 dated 05/05/2010 passed by Commissioner of Central Excise (Appeals), Mumbai)

For approval and signature:

Honble Mr. Anil Choudhary, Member (Judicial)

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 :Yes 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? ========================================

Susheel Engineering Corporation Appellant Vs. Commissioner of Central Excise, Respondent Mumbai

Appearance:

Ms.Arpana H. Advocate for appellant Shri.N.N.Prabhudesai, Supdt. (AR), for respondent

CORAM:

Honble Mr.Anil Choudhary, Member (Judicial)

Date of Hearing : 01/09/2015 Date of Decision : 01/09/2015

ORDER NO

Per: Anil Choudhary

1. The appellant, M/s.Susheel Engineering Corporation is a manufacturer of conduct system and MS fabricates and appealed against the order passed by the Commissioner (Appeals) dated 05/05/2010.

2. The appellant availed Cenvat Credit on inputs and input services during the course of manufacture of their output products. The appellant also does job works and in some cases, they also undertake erection, installation and commissioning of the conduct systems manufactured by them at the premises of the buyer. Pursuant to the investigation at the premises of the appellant, a show-cause notice dated 10/06/2008 was issued invoking extended period for the period 01/04/2005 to 31/02/2008 alleging therein the appellant had taken credit of Rs.3,29,697/- on erection, installation and commissioning services and the same is not admissible as the appellant is not the receiver and the service was provided by third party to the customer of the appellant. An amount of Rs.1,247/- the credit taken on GTA appears to be not admissible being outward transportation from the place of removal and from the place of delivery. An amount of Rs.3,407/- the credit taken on telephone services appears to be not admissible as the telephone connection was not in the name of the appellant. For the credit of Rs.14,524/- taken on BAS (job work) appears to be not admissible as the service tax was not payable in view of the exemption Notification No.8/2005-ST dated 01/03/2005. Further, credit of Rs.97,103/- appears to be not admissible on the ground that documents based on which the credit was taken were not valid. It was further willfully suppressed the fact that they intend to avail Cenvat credit. The appellant contested the show-cause notice by filing the reply and the same was adjudicated by the order-in-original dated 31/10/2008 confirming the proposed demand of Rs.14,524/- for job work relying on the ruling of this Tribunal in the case of CCE Vs. DIL Ltd.  2008 (9) STR 411 (TRI  Mum). Being aggrieved by the order, the appellant preferred an appeal before this Tribunal.

3. As regards the erection, installation and commissioning services, it is urged that in the show-cause notice it was alleged that the services provided by the third party to the customers of the appellant whereas in the adjudication order, the same was traveled beyond the scope of show-cause notice and confirmed the proposed amount holding that the service was given to buyer beyond the place of removal. It is further stated by the learned Counsel, it is evident from the purchase order given by the customers wherein the quotation given by the agent of the appellant for sale of the conductor it was mentioned that installation charges are included. The purchase order was given by the buyers with reference to the quotation dated 08/11/2006 and accordingly, the appellant supplied the product at the quoted price as is evident from the tax invoice dated 16/11/2006 of its buyer M/s.Eco Plywoods (P) Ltd. Further, the appellant relies on the ruling of this Tribunal in the case of Koch-Glitsch India Ltd. Vs. CCE, Vadodara  2009 (13) STR 636 (Tri-Ahmd) wherein the sub-contractor had taken Cenvat credit of service tax paid by the sub-contractor and the same was proposed to be disallowed in view of the CBEC instructions providing that the sub-contractor is not liable to pay service tax and the tax liability is on the main contractor.

They referred on the earlier decision in the case of CCE Vs. Tube Investments of India  2004 (176) ELT 363 (Tri) and it was held that once the duty is actually paid by the input supplier or the recipient manufacturer is entitled to the credit irrespective to the fact that whether such inputs were liable to duty or not. Following the same analogy, this Tribunal found that it covers the issue under the fact not disputed that sub-contractor provided the services to the main contractor and they were not accountable to the service receiver. Though the assessee had the choice to pay service tax either themselves instead of making the sub-contractor to make service tax and take credit of the same and utilise the credit for payment of tax by the contractor. It is held that revenue cannot have any demand on such circumstances and the credit taken by the contractor assessee cannot be denied. The learned Counsel also relying on the ruling in the case of Autoprint Machnery Manufacturers Pvt. Ltd., Vs. CCE, Coimbatore  2010 (19) STR 428 (Tri-Chennai) wherein it was held that the credit was taken by the manufacturer but the service tax paid on installation and training which was objected by the Revenue on the ground that installation and training was carried out not in the factory premises of the appellants but at the premises of their customers and on the ground that the service cannot be treated as an input service for the reason that it is not used by the manufacturer either directly or indirectly in or in relation to the manufacture of final products and clearance thereof from the place of removal.

This Tribunal held that such credit was available to the manufacturer assessee following the earlier ruling in the case of CCE Vapi Vs. Alidhara Textool Engineers Pvt. Ltd  2009 (14) STR 305 (Tri-Ahmd).

4. The learned DR opposing the availability of Cenvat credit points out that in the case of Alidhara Textool Engineers Pvt. Ltd. case, the machinery was cleared from the factory in CKD condition and these were assembled at the premises of the buyers and was an extension of the process of manufacture. The learned DR further relies on the ruling in the case of Deepak Fertilizers & Petrochemicals Corporation Ltd. Vs. CCE, Belapur  2013 (288) ELT 316 (Tri-Mumbai) wherein it was held that in the case of assessee availing Cenvat credit in the process of installation of ammonia storage tank facility at JNPT for storage of input/raw-materials meant for manufacturing of final product. This Tribunal held that as the service has been used outside the factory the definition of input service also includes input service used in relation to the storage up to the place of removal. Hence the Cenvat credit on storage upto place of removal will include the storage of final products and not storage of inputs because whenever legislature wanted to give the benefit in respect of inputs it has done so by specifically mentioning as procurement of inputs and inward transportation of the inputs. Accordingly, it was held by this Tribunal that input services used in relation to storage of inputs outside the factory will not be eligible for the credit. The learned Counsel for the appellant assessee states that the said ruling of the Tribunal have been modified by the Honble Bombay High Court in the case of 2013 (32) STR 532 holding that the Cenvat credit is allowable on storage of input outside the factory premises.

5. Having considered the rival contention, I find that the appellants have paid excise duty on the same price on the invoice price of the conductors which includes the installation charges. Accordingly, the said services of installation, erection and commissioning provided by a third party have been utilised by the appellant in the course of its business of manufacture and sale. Accordingly, I find that the said services have been utilised in the course of manufacturing and accordingly, the Cenvat credit is allowable. The appellant also points out that out of total amount of Rs.3,29,697/- in respect of erection and commissioning and installation services of Rs.86,808/- on account of credit on service tax paid by sub-contractor wherein the appellant have undertaken sub-contract for erection and commissioning. The appellant also paid service tax on the provision of said services and as such the input service credit taken of Rs.86,808/- is allowable which is paid by the sub-contractor. I hold that the said credit of Rs.86,808/- also allowable. It is also held that the services in respect of clearance of the final product from the place of removal. Under the circumstances, if the premises of the buyers as the appellant had taken both selling of the products as well as the installation which is included in the selling price.

6. As regards the amount of Rs.1,247/- on GTA, it is prior to 01/04/2008, whereas under Rule 2 (l) of Cenvat Credit Rules the expression was from the place of removal which was subsequently amended with effect from 01/04/2008 upto the place of removal. Accordingly, the credit of outward transportation of Rs.1,247/- is fit to be allowed.

7. The learned DR relies on the Ruling of the Honble Calcutta High Court in the case of CCE, Kolkata Vs. Vesuvious India Ltd.  2014 (34) STR 26 (Cal) on the issue of service tax paid by the manufacturer on outward transportation of the goods upto the point of delivery to the customers was claimed as an input service under the Cenvat Credit Rules. The Honble High Court held that the amendment made with effect from 01/04/2008 substituting the word from by the word upto all that has been done to clarify the issue. Neither the services rendered to the customer for the purpose of delivering the goods at the destination was covered by the definition of input service prior to 01/04/2008 nor is the same covered after 01/04/2008. On reading the definition under Cenvat Credit Rules 2 (l) (ii) it would appear that outward transportation charges of Rs is claimable only with regards to those transports which were made from one place of removal to another place of removal. The learned DR further points out that the Commissioner has recorded the findings that transport charges recovered separately from the buyers and did not confirm an integral part of the price of the goods and as such the Cenvat credit is not allowable. The learned Counsel for the appellant points out that ruling of Honble High Court in the case of Vesuvious India Ltd. have been differentiated and deferred in the case of Uttam Glva Steels Ltd., Vs. CCE, Raigad  2015-TIOL-03-CESTAT-MUM, a single member bench of this Tribunal wherein input credit was denied in respect of outward transportation charges for the period 2005-06, on the premises that Cenvat credit on outward transportation is chargeable upto the place of removal. As such, the same to be allowable following the ruling of Honble Gujarat High Court in the case of - 2012 (25) STR 4 and also the ruling of the Honble Karnata High Court in the case of ..  2011 (23) STR 97. It is also pointed out by the learned Counsel that it also referred with a view taken in Vesuvious India Ltd case and in the case of CCE, Chennai Vs. Ultratech Cements Ltd.  2014-TIOL-563-CESTAT-Mad.

8. In view of the decision taken b y the Honble Gujarat High Court and Karnataka High Court, the same to be followed by this Tribunal. The view taken by the Kalkatta High Court on Cenvat credit is allowable on GTA. So far as the credit taken of Rs.3,407/- on the telephone service is concerned, it is an admitted fact that the said telephone connections although justifying that it occupies in the factory premises, in the admitted that during the period under consideration, the appellant is on the occupation of the premises in the case manufacturing activities and they have utilising the telephone credit I also find that the appellant paid most of the bills for the telephone through account pay cheques and the payments are reflected in the bank statements. Under the circumstances, I hold that the Cenvat credit is allowed.

9. So far as disallowance of credit of Rs.97,103/- on account of inadmissible documents the learned Counsel submits that the appellant had filed details of taking Cenvat credit on the input services from time to time as is evident from the copy of the invoices at para 209 & 212 of the appeal memorandum. From the acknowledgement for the return for the month of July 2005 it appears that the zerox copies of Modvat invoices have been filed along with ER-1 return. Also from the acknowledgement for the month of January 2006 also it is evident that the appellant had filed zerox copy of the Cenvat invoices as well as the copy of the RG-23 Part II register in support of credit availed along with ER-1 return. As such, the limitation will not be available. On the other hand the learned DR states that the appellant cannot take the benefit of extended period as the credit is not available on account of defective documents. The credit taken is improper and the same cannot be upheld.

10. Having considered the rival contention, I find that the appellant have not brought any additional records even at the first appellate stage before this tribunal in support of the allowability of the credit disallowed. As such, I uphold the allowance of input credit on account of defective documents.

11. Thus the appeal is allowed in part as indicated above with consequential benefits, if any, in accordance with law.

(Dictated in Court)

(Anil Choudhary) Member (Judicial)

pj

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