IMPORTANT POINT
Assessee is not entitled to take total contract value which includes both goods and services and remit service tax on value as works contract service and, in the process, also entitled to avail CENVAT Credit on entire amount.

JUDGMENT :

M.R. Shah, J.

1. Feeling aggrieved and dissatisfied with the impugned judgment and order dated 09.11.2017 passed by the Customs, Excise and Service Tax Appellate Tribunal, Regional Bench at Allahabad (hereinafter referred to as ‘the Appellate Tribunal’) by which the learned Tribunal has allowed the said appeal preferred by the respondent and has set aside the Order-in-Original dated 31.03.2017 disallowing the CENVAT Credit, the Revenue has preferred the present appeal.

2. The facts leading to the present appeal in nutshell are as under:

2.1 The respondent – assessee was engaged in the business of manufacture, supply and erection at the site of prefabricated/preengineered steel buildings and parts thereof classifiable under the relevant Headings/subheadings of the First Schedule to the Central Excise Tariff Act, 1985. The respondent was having centralized registration for Service Tax with the Service Tax Department for services under "Commercial or Industrial Construction Service" and "Construction Services" right from the commencement of production. The goods manufactured were cleared from the place of manufacture on payment of central excise duty on which CENVAT Credit was made by the respondent. The unit at Greater Noida registered as a Centralized Service Provider, availed CENVAT Credit

(i) Excise duty paid by the units at the time of removal

(ii) duty paid on capital goods

(iii) service tax paid on input services. They paid service tax on the gross amount of contract for engineering, procurements supply, construction, erection etc. under the category "commercial or industrial constructions services" as referred under Section 65(105)(zzq) of the Finance Act, 1994 (hereinafter referred to as ‘the Act, 1994’).

2.2 Based on specific intelligence that the respondent had wrongly classified the services rendered by them, availed inadmissible CENVAT Credit and short paid the Service Tax in cash. Department was of the view that the services rendered by the respondent amounted to Works Contract which were chargeable to tax under sub clause [zzzza] of Section 65(105] of the Finance Act, 1994. Therefore, according to the Revenue on classifiable service under ‘works contract service’ the respondents availed CENVAT Credit on Central Excise duty paid on inputs.

2.3 Therefore, the Department issued a Show Cause Notice alleging inter alia that the respondent had utilized CENVAT Credit of Rs.1,12,60,92,760/on building material during June, 2007 to March, 2012 which was inadmissible. It was alleged that the said amount had been recovered as service tax from the customer under Section 73(1) of the Act, 1994. It appeared to the Revenue that services should have been classified under “Works Contract Service”. It was mandatory for the respondent to either follow Rule 2A of Service Tax (Determination of Value) Rules, 2006 or adopt Composition Scheme. The said Rule 2A and Composition Scheme do not allow the availment of CENVAT Credit on input. Therefore, it appeared to the Revenue that the CENVAT Credit of Rs.112,60,92,760/as availed on input was inadmissible and therefore, the said debit has resulted in short payment of Service Tax.

2.4 The Show Cause Notice was related to the period from June, 2007 to March, 2012. The respondent was called upon to show cause as to why the services being provided by them be reclassified under "Works Contract Service" in place of "Commercial or Industrial Construction Services", inadmissible CENVAT Credit of building material amounting to Rs.112,60,92,760/be disallowed in terms of Rules 2 & 3(1) of CENVAT Credit Rules, 2004; an amount of Rs.22,37,01,811/on account of short paid Service Tax towards the liability debited from the inadmissible Cenvat Credit on construction materials be recovered under Section 73(1) of the Act, 1994; an amount of Rs.90,23,90,907/alleged to have been collected as cash in excess of the Service Tax assessed/determined by passing the inadmissible CENVAT Credit to their recipients of taxa