2012 (10) TMI 378 - AT - Service Tax

Cenvat credit - assessee had taken service tax credit of service tax paid on civil construction work in the factory Held that - Services used in connection with the setting up, modernization, renovation or repair of the factory or premises of output service provider, or office relating to such factory or premises are covered by the definition of input service - requirement of pre-deposit of Cenvat credit demand, interest and penalty is waived

Summary

Issues:
1. Eligibility of Cenvat credit for service tax paid on civil construction work in the factory.
2. Interpretation of the definition of 'input service' under the Cenvat Credit Rules, 2004.

Eligibility of Cenvat Credit:
The case involved a dispute regarding the eligibility of Cenvat credit for service tax paid on civil construction work in the factory. The Department contended that the service of civil construction work was not covered by the definition of 'input service,' leading to a show cause notice for recovery of allegedly wrongly taken Cenvat credit. The Addl. Commissioner confirmed the demand, imposing interest and penalty. On appeal, the Commissioner (Appeals) upheld the decision, prompting the appellant to file the current appeal.

Interpretation of 'Input Service' Definition:
During the hearing, the appellant argued that the civil construction service was availed in connection with setting up the factory, making it eligible for Cenvat credit under Rule 2(l) of the Cenvat Credit Rules, 2004. The appellant cited precedents where similar construction services were deemed eligible for credit. The Tribunal analyzed the definition of 'input service' and concluded that services used in connection with setting up, modernization, renovation, or repair of the factory or related offices fall within the definition. Consequently, the Tribunal found that the civil construction services in question were covered by the definition of 'input service,' supporting its decision with a relevant judgment. As a result, the Tribunal waived the pre-deposit requirement for the Cenvat credit demand, interest, and penalty, staying the recovery pending the appeal's disposal.