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Judgment
The present appeal is directed against the impugned order dated 14/09/2018 passed by the Commissioner (Appeals) wherein Commissioner (Appeals) has rejected the appeal of the appellant. Briefly the facts of the present case are that the appellant is a Co-operative Sugar Factory and is also holding Service Tax registration and is engaged in the manufacture of sugar falling under CETH 17011490 and molasses under CETH 17031000 and are availing the cenvat credit in respect of duty paid on capital goods, input and input services in terms of Cenvat Credit Rules, 2004. Appellant undertook renovation project of their sugar unit and for that work they have engaged M/s. Manana Construction and M/s. ISGEC Heavy Engineering Ltd. During the audit of the unit, it was observed by the Department that the appellant has wrongly availed cenvat credit of service tax to the extent of Rs. 33,63,072/- (Rupees Thirty Three Lakhs Sixty Three Thousand and Seventy Two only) and Swach Bharat cess of Rs. 1,20,109/- (Rupees One Lakh Twenty Thousand One Hundred and Nine only) and on the basis of invoice issued by M/s. Manana Construction dated 17/06/2016 and also wrongly availed service tax credit of Rs. 3,64,000/- (Rupees Three Lakhs Sixty Four Thousand only) and swach Bharat cess of Rs. 13,000/- on the basis of invoice issued by M/s. ISGEC Heavy Engineering Ltd. Department objected to the said credit and asked the appellant to reverse the same on the ground that the entire services pertaining to civil works in the case of Manana Construction and in the case of M/s. ISGEC Heavy Engineering, it pertains to works contracts. Thereafter, a show-cause dated 30/11/2016 covering the period from January 2016 to March 2016 was issued and after following the due process, the demand was confirmed and on appeal by the Commissioner, the Order-in-Original was upheld.
Heard both the parties and perused the records.
Learned counsel for the appellant submitted that the impugned order has been passed without properly appreciating the facts and the evidence on record and the documents produced by the appellant. He further submitted that in the case of Manana Construction, the appellant has entered into three different contracts viz. (a) supply of material for civil construction (b) supply of labour for civil construction (c) supply of labour for installation of plant and machinery. He further submitted that supply of material for civil construction does not attract any service tax and only VAT is levied and with regard to the remaining two contracts which are purely service contracts and service tax is payable on the same. He further submitted that with regard to the tax invoice issued by Manana Construction, service tax to the extent of Rs. 33,63072/- (Rupees Thirty Three Lakhs Sixty Three Thousand and Seventy Two only) and Swachh Bharath cess of Rs. 1,20,109/- (Rupees One Lakh Twenty Thousand One Hundred and Nine only) was paid and the same was availed as cenvat credit. He further submitted that during the audit itself, appellant has reversed the amount of Rs. 8,40,768/- (Rupees Eight Lakhs Forty Thousand Seven Hundred and Sixty Eight only) availed on service tax paid on civil construction portion only. He further submitted that the said reversal was on proportionate basis and with regard to the remaining credit, the appellant was entitled to the said credit as the input services availed by the appellant falls in the definition of 'input services' as provided under Rule 2(l) of Cenvat Credit Rules, 2004. He also submitted that with regard to M/s. ISGEC Heavy Engineering Ltd., appellants entered into two different contracts viz. supply, erection and installation of plant and machinery, supply of labour for installation of plant and machinery and further submitted that supply, erection and installation of plant and machinery does not attract any tax as it is a pure plant and machinery supply contract where excise duty/VAT is levied and with regard to second contract i.e. supply of labour for installation of plant and machinery is a pure service contract and service tax is payable on the same. He further submitted that the invoice issued by the ISGEC Heavy Engineering dated 25/04/2016 wherein service tax to the extent of Rs. 3,64,000/- (Rupees Three Lakhs Sixty Four Thousand only) and Swach Bharat cess of Rs. 13,000/- (Rupees Thirteen Thousand only) was levied and paid and cenvat credit was rightly availed because the input service availed by the appellant falls in the definition of 'input service' as provided under Rule 2(l) of Cenvat Credit Rules, 2004. He further submitted that there is no works contract involved in the present case and there is no composite service/contract involved.
On the other hand, the learned AR defended the impugned order and submitted that the appellant in the invoice issued by Manana Construction dated 17/06/2016 labour charges upto 40% has been shown but what is the basis of the same has not been clearly explained by the appellant. He further submitted that though the appellant has produced agreements between the appellant and the Manana Construction as well as different agreements with M/s. ISGEC Heavy Engineering Ltd. but all these documents were not produced before the original authority as has been observed by the original authority in its order dated 08/12/2017 in para 8.4. He further submitted that in the absence of production of all the documents it is not possible to ascertain the nature of the agreement and the cenvat credit availed on different input services and the nature of input services involved in the present case. He further submitted that this case is a fit case for remanding back to the original authority to examine all the agreements between the parties and various invoices and work order and then decide the show-cause notice issued to the appellant.
After considering the submissions of both the parties and on perusal of the material on record, I find that as per the submission of the appellant, the appellant has entered into three different contracts with Manana Construction viz. supply of material for civil construction, supply of labour for civil construction and supply of labour for installation of plant and machinery and as per the appellant he is liable to pay service tax only on supply of labour for civil construction and supply of labour for installation of plant and machinery and is not laible to pay service tax on supply of material for civil construction and further as per the appellant, he has already reversed Rs. 8,40,768/- (Rupees Eight Lakhs Forty Thousand Seven Hundred and Sixty Eight only) on proportionate basis, the service tax pertaining to supply of labour for civil construction and the remaining amount is entitled to avail as cenvat credit of the same and similarly for ISGEC Heavy Engineering the appellant submitted that they have entered into two different contracts but all the contracts entered into between the appellant and two different parties viz. Manana Construction and M/s. ISGEC Heavy Engineering Ltd. have not been produced before the original authority to verify the claim of the appellant. Further, I find that in para 8.4 of the Order-in-Original passed by the Assistant Commissioner wherein he has recorded that the appellant has not filed any supporting documents such as agreement copy, work order etc and has only made a bald statement which cannot be relied for granting any benefit to the appellant. Though the learned counsel for the appellant submitted that they have produced a relevant documents before the authorities below but the same were not considered. In view of these circumstances, I am of the considered view that this case needs to be remanded back to the original authority to examine all the documents afresh and then decide the claim of the appellant and determine the demand, if any. The appellant is directed to produce all the relevant agreements, work contracts and invoices before the original authority which after giving an opportunity of hearing to the appellants will pass a fresh order in accordance with law. The original authority will decide the claim of the appellant within a period of three months after receiving the certified copy of this order. The appeal is accordingly disposed of by way of remand.
(Operative portion of the Order was pronounced in Open Court on 30/03/2021)