2018 (5) TMI 765 - AT - Central Excise

CENVAT credit - construction service - Rule 2(l) of the Cenvat Credit Rules, 2004 - Held that - The invoice issued by the contractor shows that the same was issued prior to 1.4.2011 and it is obvious that the description of work mentioned in the said invoice was completed prior to 1.4.2011 - Since, the embargo of not allowing the Cenvat credit on construction service was brought to the definition of input service with effect from 1.4.2011 by N/N. 3/2011-CE (NT), the work completed prior to such effective date will not be governed under the amended definition of input service. Under the unamended definition of input service (effective up to 31.3.2011), there were no restriction imposed for not taking Cenvat credit on the construction service. Thus, the credit should be allowed to the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availability of Cenvat credit on construction service received before and after 1.4.2011.
2. Interpretation of the definition of input service under the Cenvat Credit Rules, 2004.
3. Applicability of Notification No. 3/2011-CE (NT) on Cenvat credit.

Issue 1: Availability of Cenvat credit on construction service received before and after 1.4.2011:
The appellant, engaged in aerated water manufacturing, entered into an agreement with a contractor for construction work. The contractor issued an invoice on 14.3.2011 for completed work, including service tax. The appellant availed Cenvat credit based on the unamended definition of input service effective until 31.3.2011. The Revenue disputed the credit post 1.4.2011 due to an amendment excluding construction services. The Tribunal noted that the work described in the invoice was completed before 1.4.2011, allowing the credit under the unamended definition. The Tribunal emphasized that the amended definition did not apply retroactively, thus upholding the appellant's right to the credit.

Issue 2: Interpretation of the definition of input service under the Cenvat Credit Rules, 2004:
The Tribunal analyzed the definition of input service under the Cenvat Credit Rules, 2004, specifically Rule 2(l). It considered the timing of completion of construction work in relation to the effective date of the amended definition. The Tribunal highlighted that the unamended definition did not restrict Cenvat credit on construction services before 1.4.2011. By scrutinizing the invoice date and completion of work, the Tribunal concluded that the appellant rightfully availed the credit as per the rules in force at the time of service receipt.

Issue 3: Applicability of Notification No. 3/2011-CE (NT) on Cenvat credit:
The Tribunal addressed the impact of Notification No. 3/2011-CE (NT) on the availability of Cenvat credit for construction services. It noted that the notification introduced restrictions on Cenvat credit for construction services effective from 1.4.2011. However, since the work in question was completed before this date, the Tribunal ruled that the appellant was entitled to the credit under the previous, unrestricted definition of input service. The Tribunal emphasized that the appellant's usage of the taxable service for manufacturing justified the Cenvat credit, ultimately allowing the appeal in favor of the appellant.

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