2018 (7) TMI 152 - AT - Central Excise

CENVAT credit - repair and maintenance of building etc. - denial on the ground that the same was treated as construction services, which stand excluded from the ambit of Rule 2 (l) of Cenvat Credit Rules 2004 w.e.f. 01.04.2011 - Held that - Whether the work contracts in the present case were for new construction or for repair and maintenance is required to be examined - Being the factual dispute, the same can be resolved only at the level of the adjudicating authority - matter remanded to the original adjudicating authority for examining the documents and for re-deciding the issue - appeal allowed by way of remand.

Summary

Issues:
- Availment of credit of service tax on repair and maintenance services
- Interpretation of exclusion clause in Rule 2(l) of Cenvat Credit Rules 2004
- Dispute regarding whether works contract was for repair and maintenance or new construction

Analysis:
The judgment pertains to three appeals being disposed of collectively due to identical issues. The appellant had availed credit for service tax on repair and maintenance services, which the lower authorities denied, categorizing them as construction services excluded from Rule 2(l) of Cenvat Credit Rules 2004. The appellant argued that repair and maintenance services are distinct from works contract services related to construction, citing the definition of input services and relevant circulars and tribunal decisions. The appellant contended that repair and maintenance of the factory falls within the definition of input services, as per the circular and tribunal decisions provided. The appellant sought to overturn the denial of credit and allow the appeals.

The Revenue, represented by the Ld. DR, highlighted the Commissioner (Appeals)'s findings that lacked evidence from the appellants to prove that the works contract was solely for repair and maintenance, not new civil construction. The Commissioner (Appeals) referenced the Board's Circular permitting Cenvat credit for repair of factories but not for construction activities. The Revenue argued that a factual dispute existed regarding the nature of the works contract.

In response, the Ld. Representative presented invoices demonstrating that the works contract indeed focused on repair and maintenance, not new construction. The representative refuted the Commissioner (Appeals)'s observation, asserting the factual accuracy of the invoices submitted. The legal position, as per prior tribunal decisions and circulars, necessitated a detailed examination to determine whether the works contract pertained to new construction or repair and maintenance. Given the factual dispute, the matter was remanded to the original adjudicating authority for a thorough review of documents and a fresh decision based on the tribunal decisions cited.

In conclusion, the judgment set aside the impugned orders and directed a re-examination by the adjudicating authority to determine the nature of the works contract in light of the tribunal decisions and relevant legal provisions. All three appeals were disposed of accordingly.