2017 (1) TMI 1124 - AT - Central Excise

Works contract - CENVAT credit - Commercial and industrial services - increase in installed capacity of the appellants plant - Held that - the exclusion of services relating to construction or execution of works contract of a building or a civil structure or a part thereof, was introduced vide N/N. 03/2011-Cus-NT, w.e.f. 01-04-2011. These changes brought about in Rule 2(l) w.e.f. 01-04-2011 are clearly prospective in nature - reliance placed in the case of Liugong Indian Pvt. Ltd. vs CCE, Indore 2014 (3) TMI 984 - CESTAT NEW DELHI , where it was held that the services of setting up modernisation to be eligible for credit prior to 01-04-2011 - the denial of credit on these services prior to 01-04-2011 cannot be sustained and is set aside - for the purpose of calculation of the actual credit the same will have to be decided after verification of invoices if they are for the period after 01-04-2011, the matter is remanded - matter on remand. CENVAT credit - erection, commissioning and installation services - Held that - these are in no way expressly stated in the definition of input services under 2(l) of Cenval Credit Rules, 2004, before or after the amendment brought about aforesaid - denial of credit not justified and is set aside. CENVAT credit - Maintenance of Railway sidings - Held that - without the railway sidings laid outside the factory so as to connect factory with a railway station, no purpose would be served - credit allowed. Appeal allowed - partly decided in favor of appellant and part matter on remand.

Summary

Issues:
1. Credit on Commercial and industrial services
2. Credit on erection, commissioning, and installation services
3. Credit on services related to maintenance of railway siding

Issue 1: Credit on Commercial and Industrial Services:
The dispute involves the eligibility of credit on services amounting to a significant sum for increasing the installed capacity of the appellant's plant. The Tribunal observed that changes introduced in Rule 2(l) w.e.f. 01-04-2011 were prospective and not retrospective. Referring to a previous case, the Tribunal held that services related to setting up modernization were eligible for credit before 01-04-2011. Consequently, the denial of credit for services before this date was set aside, pending verification of invoices post-01-04-2011. The matter was remanded for this specific purpose, affirming the appellant's eligibility for credit on services pre-01-04-2011.

Issue 2: Credit on Erection, Commissioning, and Installation Services:
Regarding the denial of credit on erection, commissioning, and installation services, the Tribunal noted that these were not expressly mentioned in the definition of input services. The Tribunal considered the details of the agreement which specified the work order for erection and installation of machinery. Consequently, the denial of credit on these services was deemed incorrect and set aside.

Issue 3: Credit on Maintenance of Railway Siding Services:
The dispute centered around the eligibility of credit for maintenance services related to railway siding, specifically concerning an amount in question. The appellant argued that the railway sidings outside the factory premises were integral to the manufacturing process, citing examples from previous cases. The Tribunal agreed with the appellant, emphasizing the importance of these sidings for transportation and manufacturing activities. Relying on legal precedents and the appellant's submissions, the Tribunal held that the credit on service tax paid for maintenance of railway sidings was admissible. Consequently, the denial of credit on maintenance of railway sidings was set aside, affirming the appellant's eligibility for this service.

In conclusion, the Appellate Tribunal CESTAT HYDERABAD delivered a detailed judgment addressing three key issues related to the eligibility of credits on various services. The Tribunal upheld the appellant's eligibility for credit on commercial and industrial services pre-01-04-2011, erection, commissioning, and installation services, as well as maintenance of railway siding services. The judgment provided a thorough analysis of legal interpretations, previous cases, and the integral connection of these services to the manufacturing activities of the appellant.