2017 (10) TMI 493 - AT - Central Excise

CENVAT credit - sub-contract - erection, commissioning and installation service - Held that - the appellant is entitled to CENVAT credit of service tax paid on erection, commissioning and installation as the said issue is clearly covered in favor of the appellant by the decision in the case of Veena Industries Ltd. 2016 (1) TMI 161 - CESTAT AHMEDABAD , the Division Bench of this Tribunal has held that it is undisputed that the appellant is a provider of taxable service and they provided the same. They are utilizing the input service provided by subcontractors while providing output service, therefore, the appellants are entitled to CENVAT credit of service tax paid on input service provided by subcontractors - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against rejection of input service tax credit on erection and commissioning services.

Analysis:

1. Facts of the Case: The appellants, manufacturers of excisable goods, availed input service tax credit for erection and commissioning services provided by sub-contractors. The Department Audit observed discrepancies in the availed credit, leading to a show-cause notice demanding repayment of wrongly availed credit, applicable interest, and penalty.

2. Contentions of Appellant: The appellant argued that they are entitled to the credit as they are registered under the category of erection, commission, and installation service. They maintained separate invoices for the sale of goods and for erection services, paying service tax on the latter. The appellant claimed that the credit was rightfully taken for the subcontractor's services.

3. Legal Precedents: The appellant cited various judicial precedents to support their claim, emphasizing that the immobility of the goods does not affect the eligibility of input service credit. They relied on decisions such as Veena Industries Ltd. and BSNL cases to strengthen their argument.

4. Period of Limitation: The appellant contended that the longer period of limitation invoked for the demand was incorrect, as the show-cause notice was issued after the audit, rendering the demand time-barred. They cited legal cases like Essel Propack Ltd. and Blue Star Ltd. to support their argument against the extended limitation period.

5. Department's Stand: The learned AR reiterated the findings of the impugned order, opposing the appellant's contentions regarding the admissibility of the input service tax credit on erection and commissioning services.

6. Tribunal's Decision: After considering both parties' submissions and legal precedents, the Tribunal held in favor of the appellant. Citing previous decisions, including Veena Industries Ltd., the Tribunal concluded that the appellant was entitled to CENVAT credit for the service tax paid on erection, commissioning, and installation services provided by subcontractors. Consequently, the impugned order was set aside, and the appeal of the appellant was allowed.