2018 (3) TMI 1842 - AT - Service Tax

CENVAT Credit - inputs - AFFF Concentrate, Industrial Paint/Thinner/Primer and Grease, Safety Vests, Angles, Channels, Coils and Barbed Tapes, Rheoduild 821 etc. - HELD THAT - The appellant has submitted that the industrial paints are used for corrosion control of the steel structures and physical barrier between the steel substrate and corrosive elements such as atmosphere. Therefore, continuously having nexus in providing the output service. Similarly, industrial lubricants were used for lubricating marine loading arms which are part of capital goods for handling and loading of petroleum products, therefore, it has also nexus with the output services provided by the appellant. The Angles and Panels used in the storage tanks, which ultimately used for providing storage and warehousing service, are eligible to credit - The Rheobuild 821 is also used for mixing with cement for construction of structures, hence, admissible to credit. The appellant-assessee has not pressed denial of credit in respect of Safety Work Vest and Coil and Barbed Tapes involving total credit of ₹ 2,271/- and 10,665/-, however, they assailed the order for denial of credit on Rheobuild 821, Angles and Panels used for structure of storage tanks. Appeal allowed in part.

Summary

Issues Involved:
Appeal by Revenue and Assessee against OIA-RAJ-EXCUS-000-APP-078-15-16 dated 28.03.2016 passed by Commissioner (Appeals-III), Central Excise-Rajkot.

Analysis:

Issue 1: Eligibility of Cenvat Credit on Various Inputs
The appellant availed Cenvat credit on inputs like AFFF Concentrate, Industrial Paint/Thinner/Primer, Grease, Safety Vests, Angles, Channels, Coils, Barbed Tapes, and Rheoduild 821. The Revenue contended that some of these inputs did not fall within the definition of inputs under Rule 2(k) of CCR, 2004. The Ld. Commissioner (Appeals) partly allowed the appeals, recognizing certain inputs as eligible for credit. The Assessee argued that items like industrial paints, thinners, greaser, AFFF Concentrate, and Rheobuild 821 were essential for maintenance or construction of capital goods, thus eligible for credit. The Tribunal agreed with the Assessee, allowing credit on these items based on their nexus with the services provided.

Issue 2: Denial of Credit on Specific Items
The Ld. Commissioner (Appeals) denied credit on items like Safety Work Vest, Coil, Barbed Tapes, and Rheobuild 821 Angles and Panels. The Assessee did not contest the denial of credit for Safety Work Vest and Coil, but challenged the denial on Rheobuild 821, Angles, and Panels used in the construction of storage tanks. The Tribunal held that these items were indeed eligible for credit as they were directly related to providing storage and warehousing services. Consequently, the Tribunal allowed partial credit on these items, overturning the denial by the Ld. Commissioner (Appeals).

Conclusion:
The Tribunal dismissed the Revenue's appeal as lacking merit and partly allowed the Assessee's appeal, granting credit on specific inputs that were deemed essential for maintenance, construction, or directly linked to the services provided. The appeals were disposed of accordingly, affirming the eligibility of Cenvat credit on certain inputs while upholding the denial on others based on their nexus with the output services.