Case Law Details
Divya Sree R O W Projects Vs Commissioner of Central Tax (CESTAT Bangalore)
After considering the submissions of both the parties and perusal of the material on record, I find that when the passenger lift was imported, it was classified under Chapter 84 and the Classification was accepted by the Department and once the classification is accepted by the Department, it cannot be changed at the receiver’s end by the Department in view of various decisions relied upon by the appellant cited supra. Further, as per the impugned order, two conditions have to be fulfilled for capital goods to claim CENVAT credit as mentioned in Rule 2(a) (A) of CCR, 2004 for eligibility of credit (a) They should fall under the category mentioned in Rule 2(a)(A), (b) They should be used as mentioned in Rule 2(a)(A) whereas as per the Commissioner, only first condition is satisfied and as per the learned Commissioner, the entire works contract is not service, only service portion in works contract is service which is evident by section 66E(h) of the Finance Act, 1994. Further, as per the Commissioner, the lifts fall under material portion of works contract and hence credit is not eligible. Further, I find that both the authorities have resorted to artificial bifurcation of the activity in the material and provision of service ignoring nature of the work. I also find that the imported lifts were used for the construction of building and therefore the appellant has used the capital goods for providing output service and this artificial bifurcation resorted to by the authorities, is beyond the statutory provision and the basis of denying the credit is not proper because the appellant has fulfilled the conditions in terms of Rule 2(p) of CCR which defines output service and as the lift is not used for providing the service specified in the Negative List and whole of the service tax is not paid by the recipient of service thereby the appellant has used the lift for providing the output service. I also find that the lift is essential for providing the output service and therefore, the appellant has fulfilled both the conditions to avail the credit, hence the denial of credit is not sustainable, simply because the lifts are fitted into the building does not have an impact on treatment of lifts as capital goods because even after fitting into the building, lift is a lift and covered under Chapter 84 and cannot be considered as input just to deny the benefit of CENVAT credit. Further, I find that as per the Construction Agreements also, lift is one of the common facility provided in the project and lift is a capital goods being used for providing taxable services on which service tax is being paid by the appellant, therefore denying benefit of credit on capital goods is not proper. Further, I find that the findings in Para 12.1 of the impugned order that the lifts were not used in providing service but used in supply of material hence not eligible for credit, is not sustainable in law because the capital goods used cannot be attributed to service portion and material portion as envisaged in the order. Therefore, the basis to deny the credit is not legally sustainable. Further, the decision relied upon by the learned AR in the case of Jabalpur Hotels (cited supra) is not applicable to the facts and circumstances of the present case because the said decision is under the GST Law and decision of advance ruling only therefore the same is not applicable to the facts of the case.
In view of my discussion above and relying upon the decisions cited supra by the appellant, I am of the view that the appellant is entitled to CENVAT credit on lift which is capital goods and the denial of the same is not sustainable therefore I set aside the impugned order by allowing the appeal of the appellant.
FULL TEXT OF THE CESTAT BANGALORE ORDER
The present appeal is directed against the impugned order dated 08.09.2020 passed by the Commissioner of Central Tax (Appeals) whereby the Commissioner (Appeals) upheld the Order-in-Original and rejected the appeal of the appellant.
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