LARSEN & TOUBRO LTD. Vs. COMMR. OF CUS. & C. EX.
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL BANGALORE
LARSEN AND TOUBRO LTD.
Commr. of Cus. And C. Ex.
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(1.) THE appellant entered into Tripartite consortium agreement and applied for the International tender invited by M/s. Rashtriya Ispat Nigam Limited (RINL) for design, manufacture, supply, erection, testing and commissioning of Blast Furnace.
(2.) The total project value was Rs. 920 crores and the appellant's portion of the project was Rs. 808.2 crores. The appellant along with the other parties entered into consortium agreement viz. M/s. Pau Wurth Italia, S.P.A. Italy and M/s. Pau Wurth India Pvt. Ltd. (PWIPL) and the appellant entered into other original three consortium agreements namely supply of designs and drawings of Blast Furnace, supply of indigenous plant, machinery and equipment for Blast Furnace and Civil and Structural works including supply of materials, storage, erection, testing and commissioning. In terms of the supplementary agreements, the appellant and M/s. Pau Wurth India Pvt. Ltd. (PWIPL) are liable to pay leadership fee of 4.3% of their respective share of project to M/s. Pau Wurth Italia (PWI). This amount was paid by the appellant and Service Tax was also paid under the heading 'Consulting Engineer Services' as recipient of services since the provider of service did not have an office in India and the liability fall on the appellant. Payments were made in July, 2008 and August, 2008. The show cause notice dated 3 -10 -2011, proposal to deny Cenvat credit of Rs. 2,22,31,277/ - availed by the appellant on the ground that credit of Service Tax on leadership fee to the extent to value of supply of goods is not eligible as credit and on the ground that the said activity is trading activity and the same is exempted service. The ld. Counsel presents several decisions to support his submission that trading was not an exempted service prior to 1 -4 -2011, the date on which specific provisions were made to treat trading as a deemed service and exempt it; the activity undertaken by the appellant under different contracts cannot be considered as a single composite contract activity; just because the appellant had claimed benefit of Notification No. 12/2003 -S.T. to exclude value of goods supplied. It cannot be said that they had undertaken trading activity. He also submit, that under the circumstances, extended period could not have been invoked. The appellant had a bona fide belief about admissibility of credit.
(3.) WE do not consider it is necessary going in to all these arguments. Rules 6(1), (2), (3) and 3(a) of Cenvat Credit Rules, 2004 (CCR) are relevant. Provisions which provide as well as exempted goods or a service provider is providing taxable and exempted services, he is required to maintain separate accounts in respect of inputs and input services and follow the provisions of Rule 3(a) of CCR if he is not doing so. However, Rule 6(5) of CCR provides that notwithstanding anything contained in sub -rules (1), (2) and (3) of Rule 6 of CCR, credit of the whole of the Service Tax is available in respect of services listed therein unless paid services are used exclusively in the manufacture of exempted goods or provision of exempted services. When a manufacturer is producing dutiable in 'Consulting Engineer Services' which the service on which Cenvat credit has been taken in this case is also included in the list of services contained in Rule 6(5) of CCR. Nowhere, there is a finding that appellant has used 'Consulting Engineer Services' exclusively for manufacture of exempted goods or providing exempted services. The ground taken by the Revenue is that the appellant has entered into independent contract for supply of goods and services. Therefore, one of the grounds taken is that if the supply of goods is involved, credit proportionate to that extent is not admissible. However, Rule 6(5) of Cenvat Credit Rules, 2004 does not distinguish between the activities undertaken as part of composite contract or independent contracts. So long as an assessee is not undertaking manufacture of dutiable and exempted goods or providing taxable and exempted services, unless the credit is exclusively used for providing exempted services or manufactured goods credit cannot be denied in respect of services listed in Rule 6(5). This being the position, in the absence of any finding that services have been used exclusively in the manufacture of exempted goods or providing exempted services, credit cannot be denied in respect of services listed in Rule 6(5) of Cenvat Credit Rules.;
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