Larsen & Toubro Ltd Vs Pr. Commissioner of Central Tax (CESTAT Hyderabad)
The appeal challenged Order-in-Original No. 10/2013-ST-HYD-III-Adjn (Commnr) (TRF) dated 25.03.2013, by which CENVAT credit of Rs. 2,22,31,277/- was disallowed under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 73 of the Finance Act, 1994, along with interest, and an equal penalty was imposed under Rule 15(4) of the CENVAT Credit Rules read with Section 78 of the Finance Act.
Rashtriya Ispat Nigam Ltd. floated an international tender for the design, engineering, manufacture, supply, erection, commissioning and performance guarantee of Blast Furnace No. 3 at Visakhapatnam Steel Plant. A consortium comprising Larsen & Toubro Ltd., Paul Wurth Italia S.P.A. (PWI) and Paul Wurth India Pvt. Ltd. was formed for execution of the project, with PWI designated as the consortium leader and principal contractor. Under a supplementary agreement dated 12.04.2007, the consortium members agreed to pay a leadership fee to PWI at 4.3% of their respective contract value. The appellant paid service tax on the leadership fee under the Reverse Charge Mechanism by classifying it as Consulting Engineer Service under Section 66A of the Finance Act, 1994. The tax paid was distributed through the Input Service Distributor (ISD) mechanism and availed as CENVAT credit.
