Custom, Excise & Service Tax TribunalEsmart Energy Solutions Ltd vs Commissioner Of Cgst & Central ... on 28 November, 2023CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL\n                      MUMBAI\n\n                    REGIONAL BENCH - COURT NO. 01\n\n                Service Tax Appeal No. 86277 of 2018\n\n(Arising out of Order-in-Original No. NSK/CGST-CX/002/COM/11/2017-18 dated\n29.12.2017 passed by Commissioner of CGST & Central Excise, Nashik)\n\n\nM/s. Superwealth Financial Enterprises                  .....Appellant\nPvt. Ltd.\nGround Floor, 68/1, MIDC, Satpur,\nNashik 422 007.\n\n                             VERSUS\n\nCommissioner of Central Excise and                   .....RespondentService Tax, Nashik\nKendra Rajaswa Bhawan, Old Agra Road,\nGadkari Chowk,\nNashik 422 002.WITH\n\n\n                Service Tax Appeal No. 86615 of 2021\n\n(Arising out of Order-in-Original No. NSK/CGST-CX/COM/01/2021-22      dated\n06.04.2021 passed by Commissioner of CGST & Central Excise, Nashik)\n\n\nM/s. eSmart Energy Solutions Ltd.                        .....Appellant\nPlot No. 68/1,MIDC,Satpur,\nNashik 422 007.VERSUS\n\nCommissioner of CGST & Cen. Excise,                       .....Respondent\nNashik\nKendra Rajaswa Bhawan, Old Agra Road,\nGadkari Chowk,\nNashik 422 002.Appearance:Shri Prakash Shah and Shri Sachin Mishra, Advocates for the Appellants.Shri Piyush Badhe, Authorized Representative for the Respondent\n\n\n\nCORAM:HON'BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)\nHON'BLE MR. M.M. PARTHIBAN, MEMBER (TECHNICAL)\n                                               Appeal Nos. ST/86277/2018 &\n                                                            ST/86615/20212FINAL ORDER NO. A/87187-87188/2023\n\n                                         Date of Hearing: 28.11.2023\n                                         Date of Decision: 28.11.2023\n\nPER : S.K. MOHANTY\n\n\n\n      Issue involved in these two appeals is identical and accordingly,\nthe same are taken up for hearing together and a common order is\nbeing passed.2.    The appellants in these cases have entered into agreements\nwith various Municipalities/Municipal Corporations for implementation\nof energy conservation measures, installation of feeder panels for\nautomation along with metering operation, maintenance and repair\nservice of the Street Lighting fixtures etc. The contracts entered into\nbetween the parties have stipulated that the contractor should be\nentitled for the consideration on the basis of energy saving earned by\nthem i.e., "Pay from Savings" (ESCO) basis.      The appellants herein\nhave classified the said provision of service under the taxable category\nof "Scientific and Technical Consultancy Services" and "Maintenance\nand Repair Service", defined under theFinance Act, 1994.            The\nappellants availed Cenvat Credit of Central Excise duty paid on the\ninputs. During the course of verification of the records maintained by\nthe appellants, the audit wing of the service tax department observed\nthat the appellants have manufactured the LED Lights and fittings\nthereof in their factory and duly discharged the Central Excise duty\nliability on the clearance of the said goods from outside the factory.The department objected to the fact of availment of cenvat benefit on\nthe ground that the appellant cannot avail of such credit of duty paid\non their own finished goods, as the same cannot be treated as raw\nmaterial/inputs for provision of taxable output services.     Thus, the\nservice tax department concluded that the goods manufactured by the\nappellants cannot be considered as raw material/inputs for provision\nof service by appellant and accordingly, those manufactured goods\ncannot be termed as "inputs" as defined under Rule 2(k) of the\n                                                 Appeal Nos. ST/86277/2018 &\n                                                              ST/86615/20213CENVAT Credit Rules, 2004. Further, it was also contended by the\nRevenue that the ownership of the LED lamps and fittings thereof\nremain with the Municipality/Corporation upon expiry of the contract\nperiod and since, the appellants are not the owner of the goods\nsupplied by them, they cannot be considered as the beneficiary of\nservice tax or Central Excise duty paid on those goods, considering\nthe same as inputs.        The show cause notices issued in this regard\nwere adjudicated upon by the department in confirming the proposals\nmade in the show cause notices. The learned adjudicating authority\nhas held that since the assessee-appellants were in possession of the\nequipment and systems installed by them; and on expiry of the\ncontract period, the right of ownership of the said goods were vested\nwith the Municipalities/ Municipal Corporation, then in such case, the\nfinished goods manufactured by the Appellants cannot be considered\nas raw material/inputs for provision of taxable service by them. On\nthe basis of such observations, the learned adjudicating authority has\nheld that the LED lightings, fixtures and control panels manufactured\nand cleared by the assessee-appellants from their manufacturing\ndivision, cannot be treated as inputs at their own Service Division and\nthe Cenvat Credit of Central Excise duty paid at the time of clearance\nof these goods shall not be admissible to them as cenvat credit.\nFeeling aggrieved with the impugned order, the appellants have filed\nthese appeals before the Tribunal.3.    Learned Advocate appearing for the appellants pleaded that in\nrespect of the same premises, the appellants were registered with the\njurisdictional   Central    Excise   and   Service   Tax   authorities   for\nmanufacture of excisable goods and for provision of taxable services.\nAs a manufacturer, the appellant had duly discharged the Central\nExcise duty liability and that since those manufactured goods were\nused in the other unit of the appellant for providing the taxable\nservices, availment of cenvat credit, considering those goods as inputs\ncannot be faulted with. Thus, it was contended by learned Advocate\nthat denial of Cenvat benefit on the LED lights, fixtures and control\npanel by the department cannot be sustained.Appeal Nos. ST/86277/2018 &\n                                                                 ST/86615/202144.     On the other hand, learned AR appearing for the Revenue\nreiterated the findings recorded in the impugned order.5.     Heard both sides and perused the records.6.     It is an admitted fact on record that the appellants are the\nmanufacturer of excisable goods, namely LED lights, fixtures and\ncontrol panels etc. and on clearance of the same from the factory\npremises, they had discharged appropriate Central Excise duty\nliability.    It   is   also   an   admitted   position   that   those   goods\nmanufactured by the appellants were in fact used for provision of the\noutput service namely Scientific and Technical Consultancy Service\nand Maintenance and Repair Service to the contractee, viz., the\nvarious Municipalities/Municipality Corporations located within the\nstate of Gujarat and Orissa.7.     The issue involved in these appeals for consideration by the\nTribunal is whether, the disputed goods should be considered as\ninputs for the purpose of availment of Cenvat Credit in respect of the\nCentral Excise duty paid by the appellants. The definition of input is\ncontained in Rule 2(k) of the CENVAT Credit Rules, 2004.                  The\nrelevant definition is extracted herein below for is on reference."Rule 2(k) "input" means -(i) all goods used in the factory by the manufacturer of the\n         final product; or(ii) any goods including accessories, cleared along with the final\n         product, the value of which is included in the value of the final\n         product and goods used for providing free warranty for final\n         products; or(iii) all goods used for generation of electricity or steam or\n         pumping of water for captive use; or(iv) all goods used for providing any output service, or;(v) all capital goods which have a value upto ten thousand\n         rupees per piece,........."On perusal of the above definition, it would reveal that all goods\nused by any service provider, for providing any output service, should\nbe eligible for consideration as 'input'.        In this case, the disputed\ngoods namely LED lightings, fixtures and control panels were used by\n                                                     Appeal Nos. ST/86277/2018 &\n                                                                  ST/86615/20215the appellants for provision of the taxable services to the service\nrecipient i.e., the Municipality/Municipal Corporation.          Since, those\ndisputed goods in the form of inputs were used and utilized for\nprovision of the output service and service tax liability on provision of\nsuch services were duly discharged by the appellants, it cannot be\nsaid that the disputed goods shall not be considered as inputs for the\nprovision of the output services. Further, consideration of the\nownership is not a criteria for determining whether the disputed goods\nshould be eligible for the cenvat benefit or otherwise. The criteria laid\ndown in the CENVAT statute is only to ensure that the goods and\nservices were used for provision of the output service and those goods\nand services should have been levied with the taxes or duties. Since,\nthere is no restriction or embargo created in the statute, for\nestablishment of ownership of the goods, which are used for the\nprovision of the output service, in our considered view, the impugned\norders passed by the learned adjudicating authority cannot be\nsustained on such grounds. In other words, usage of inputs is only\nconfined to the factory in case of a manufacturer and premises in case\nof service provider.8.    Therefore, we do not find any merits in the impugned order,\ninsofar as the adjudged demands were confirmed on the appellants,\nholding that the disputed goods shall not be considered as inputs for\nthe   purpose     of   the   provision   of   the   taxable   output   service.\nAccordingly, by setting aside the impugned orders, the appeals are\nallowed in favour of the appellants, with consequential benefits, if any,\nas per law.(Dictated and pronounced in the open court)\n\n\n\n\n                                                (S.K. Mohanty)\n                                                Member (Judicial)\n\n\n                                                (M.M. Parthiban)\n                                                Member (Technical)\nSm